Decarbonization synergies from joint planning of electricity and hydrogen production: A Texas case study

Hydrogen (H₂) shows promise as an energy carrier in contributing to emissions reductions from sectors which have been difficult to decarbonize, like industry and transportation. At the same time, flexible H₂ production via electrolysis can also support cost-effective integration of high shares of variable renewable energy (VRE) in the power system. In this work, we develop a least-cost investment planning model to co-optimize investments in electricity and H₂ infrastructure to serve electricity and H₂ demands under various low-carbon scenarios. Applying the model to a case study of Texas in 2050, we find that H₂ is produced in approximately equal amounts from electricity and natural gas under the least-cost expansion plan with a CO₂ price of $30–60/tonne. An increasing CO₂ price favors electrolysis, while increasing H₂ demand favors H₂ production from Steam Methane Reforming (SMR) of natural gas. H₂ production is found to be a cost effective solution to reduce emissions in the electric power system as it provides flexibility otherwise provided by natural gas power plants and enables high shares of VRE with less battery storage. Additionally, the availability of flexible electricity demand via electrolysis makes carbon capture and storage (CCS) deployment for SMR cost-effective at lower CO₂ prices ($90/tonne CO₂) than for power generation ($180/tonne CO₂). The total emissions attributable to H₂ production is found to be dependent on the H₂ demand. The marginal emissions from H₂ production increase with the H₂ demand for CO₂ prices less than $90/tonne CO₂, due to shift in supply from electrolysis to SMR. For a CO₂ price of $60/tonne we estimate the production weighted-average H₂ price to be between $1.30–1.66/kg across three H₂ demand scenarios. These findings indicate the importance of joint planning of electricity and H₂ infrastructure for cost-effective energy system decarbonization.