When does hydrogen become competitive? Cost and efficiency thresholds for storage in a pan-European renewable energy system

This paper examines the integration of hydrogen storage in renewable-intensive energy systems through the application of stochastic optimization processes, followed by a comprehensive sensitivity analysis. Our findings indicate that while current hydrogen storage technology is costly and inefficient, reducing hydrogen costs to 12.5% of current levels and increasing round-trip efficiency to 70% could make it competitive. These requirements are challenging but feasible, given positive predictions on cost reduction and efficiency attainability currently. Furthermore, we find that assuming the hydrogen’s competitiveness, including hydrogen storage can reduce total energy system costs by partly replacing lithium batteries to lower storage costs, and increasing grid flexibility to lower transmission costs. Additionally, integrating hydrogen can decrease the share of nuclear and fossil fuels in the generation mix, thereby reducing generation costs. Italy and Germany are identified as primary targets for hydrogen expansion in Europe. Lastly, in the scenario of limited lithium battery expansion due to the expected lithium shortage in Europe by 2030, hydrogen will need to be introduced into the energy system earlier than anticipated to compensate for increasing system storage demand.