Renewable-Colocated Green Hydrogen Production: Optimality, Profitability, and Policy Impacts

We study the optimal green hydrogen production and energy market participation of a renewable-colocated hydrogen producer (RCHP) that utilizes onsite renewable generation for both hydrogen production and grid services. Under deterministic and stochastic profit-maximization frameworks, we analyze RCHP's multiple market participation models and derive closed-form optimal scheduling policies that dynamically allocate renewable energy to hydrogen production and electricity export to the wholesale market. Analytical characterizations of the RCHP's operating profit and the optimal sizing of renewable and electrolyzer capacities are obtained. We use real-time renewable production and electricity price data from three independent system operators to assess impacts from market prices and environmental policies of renewable energy and green hydrogen subsidies on RCHP's profitability.