Renewable hydrogen: The system-wide impact of PPAs and additionality requirements for selected European countries

Novel electricity (attribute) purchase conditions were introduced for the production of “renewable” hydrogen in the EU and “clean” hydrogen in the US. This paper uses energy system modelling to analyse the one-at-a-time impact of such conditions for a system-wide network of seven European countries, including the electricity and heat sector. We compare the resulting cost-optimal energy systems for 2030 with a counterfactual scenario without electricity (attribute) purchase conditions—analysing the additionality of the interventions. The study investigates a wide range of possible purchase conditions, such as annual and hourly matching through power purchase agreements (PPAs) with local renewable energy sources (RES) versus purchasing renewable energy certificates (RECs) from new sources through virtual PPAs and sourcing from existing RES. We analyse their effects on additional RES, carbon emissions, and system costs. Overall, we find significant spillover effects that lead to increasing emissions in the heat sector and neighbouring countries due to electricity trade and counterbalancing, which in some cases reverses the intended policy effects. However, we also find positive spillover effects due to the use of additional RES for power-to-heat. In general, these effects result in relatively small system-wide emissions impacts and additional costs (between 1.3–2e/kgH2) compared to a counterfactual without added hydrogen demand. We conclude that granting regulatory exemptions based solely on local grid conditions can have adverse effects—a systems-based approach is needed.