Demonstration of large-scale rapid response electrolysis to provide grid balancing services and to supply hydrogen markets

This Innovation Action seeks proposals which demonstrate improved electrolyser technologies beyond actual state-of-the-art receiving revenue by providing grid balancing services and demand management, whilst distributing and receiving revenues from hydrogen (and potentially oxygen) for high value markets.

The objective of the project is to deploy and monitor improved electrolyser systems configured to attract revenues from grid services and leveraging timely power price opportunities, in addition to providing hydrogen (and potentially oxygen) for high value markets.

The scope of the project is:

• To develop a large scale electrolyser in excess of 3MW of sufficiently rapid response time (of the order of a few seconds), to participate in the existing primary and secondary grid balancing markets. The installed power and operating regime should be duly justified to identify the advantages offered to the grid within the long term business model. The hydrogen purity should meet the application requirements. The output pressure shall be designed to fulfil, when possible, the required pressure for the hydrogen application targeted - including buffer storage needs if any - and reduce as far as possible the need for dedicated hydrogen compression units downstream. Storage and compression are not in the scope of this topic.
• To focus on the inclusion of specific improvements of the current state-of-the-art related to the electrolyser operation under partial loads, quick response, system operation for providing reserve and frequency response services, forecasting models for electricity price and renewable energy production
• To demonstrate an energy consumption consistent with 2020 expectations of 52 kWh/kg @1000+/kg for alkaline technology and 48 kWh/kg @1000+/kg for PEM technology at nominal power*.
• To demonstrate a CAPEX for the electrolyser consistent with 2020 expectations of 630 €/kW for alkaline technology and 1000 €/kW for PEM technology at nominal power. These target costs do not include the specific tailoring of the electrolysis to be compatible with the grid services to be brought.
• To demonstrate the benefits from grid services revenue streams and power price opportunities, as foreseen in the ongoing implementation and revision of the electricity markets. Here, the consortium will demonstrate that they are able to obtain these revenues by entering into commercial contracts with the grid operators or utilities who value these services. The value could be demonstrated also by other means that confirms the revenue potential.
• A comprehensive operation plan must be put in place. State of the art electrolysers and downstream systems must be installed and operated for a minimum period of two years
• Electrolyser systems will strive to demonstrate a sufficient level of responsiveness to meet the requirements of the grid services and power price opportunities (e.g. for rapid modulation, rapid start, frequency response, as required by the services offered to the grid); this will be done in collaboration with grid operators.

The proposal will indicate the operating scenarios, the duration of production, the quantities of hydrogen produced and the use foreseen. Consortia will preferably build upon outcome from previous projects funded by the FCH-JU and on already feasible business cases, so that potential customers (transport use, industry or utility) do not discontinue the use of the installation after project end, but on the contrary support continued market roll-out efforts. The proposal must include an initial plan for use of the installation after the project.

TRL is expected to go from 6 (technology demonstrated in relevant environment) or 7 (system prototype demonstration in operational environment) to 8 (system complete and qualified).

Eligible consortia will analyse and compare the value chains for the business cases considered, such as for instance electrolyser and hydrogen technology developers, electricity grid operators, gas companies, HRS network operators, industrial hydrogen customers, utilities and energy companies. Specifically, the partnership must include strong links to:

• the necessary contractual and commercial expertise to access revenues from the grid services and/or power price opportunities
• technical expertise for the design, provision and operation of the electrolyser and associated hydrogen distribution and supply technologies
• market access for downstream provision of hydrogen for high value markets such as industrial gas, transport fuel or power-to-gas

To be eligible for participation a consortium must contain at least one constituent entity of the Industry or Research Grouping.

The maximum FCH 2 JU contribution for this topic is EUR 16 million. This funding is to be allocated to 2 projects:

• One project demonstrating PEM technology of at least 6 MW. This must be achieved with either two electrolysers of at least 3 MW or one single electrolyser of at least 6 MW. The maximum FCH 2 JU contribution of this topic is 12 M€.
• One project demonstrating pressurized alkaline technology of at least 3 MW. The maximum FCH 2 JU contribution of this topic is 4 M€.

The funding includes the additional activities suggested under the scope of the topic. The capacity of the electrolyser should be linked to the budget via the cost KPIs in the MAWP but also reflect the specific tailoring costs for ensuring electrolysis is compatible with the grid services requirements. The grid connection costs and the electricity costs for the test phase are eligible for the funding. On the contrary, electricity costs during business operation are not eligible.

Expected duration: 4-5 years

*Water Electrolysis in the European Union (2014) (http://www.fch.europa.eu/node/783 reference: page 11-13)

The penetration of intermittent renewable electricity based on solar and wind energy increases the need to match supply and demand for power. Electrolysis is a means to convert excess electricity into hydrogen that can be stored and re-electrified at a later time, or used for other energy consuming or industrial processes. As a flexible load the electrolyser can also offer grid balancing services provided that it is of sufficient capacity and responsiveness to participate in the power industry’s balancing markets.

This topic aims to demonstrate services that electrolysis can provide to the grid operator and electrolyser operation in relation to the power market price. Electrolysers need to be developed so that they are suitable for participating in grid balancing markets. For example, innovation is required to develop PEM electrolysers of much greater capacity (by approximately one order of magnitude) than the largest versions in use today. When market prices are low, extra hydrogen can be economically produced. In addition, income can be earned by electrolyser operators for providing grid services, while selling the hydrogen (and potentially oxygen) produced on the market.

The challenges are:

• Demonstration of large electrolysis units (>3 MW) using the latest available PEM or pressurized alkaline technology
• Providing grid balancing services/power demand management on a commercial basis

Recent years of R&D have significantly improved the production ramp up and down flexibility of electrolysis technology and improved the scalability from kW to MW size. What is still lacking is large scale infield demonstration at sites where both multiple grid services are required and where hydrogen can be distributed and offered for high value markets, such as e.g. industrial gases, transport fuel and power-to-gas. Only such applications can provide both the scale for providing grid balancing and reaching cost levels where additional revenue can be generated from hydrogen distribution and sales.

The proposal is expected to demonstrate in an operational environment improved electrolysis technology configured to attract revenues from grid services and/or power price opportunities in addition to providing hydrogen for high value markets.

The consortium will ensure that actions are included in the project in order to generate learning and reach KPI and commercial targets, such as:

• Demonstrate feasible operation of large scale rapid response electrolysis
• Implement the necessary grid interfaces to provide grid balancing services
• The environmental performance of the system will be evaluated in alignment with the recommendations of the CertifHy project – with a particular attention to the CO2 intensity of the hydrogen produced, which should include an understanding of the CO2 impact of the grid services mode selected and CO2 footprint impact in the addressed hydrogen end-user markets
• Techno-economic analysis of the performance of these systems
• Projections of the value and size of the markets addressed by provision of the grid balancing services and supply to multiple hydrogen markets
• Assessment and operation experience of the contractual and hardware arrangements required to access the balancing services and operate the electrolyser systems
• Assessment and operation experience, including safety, of the contractual and hardware arrangements required to distribute and supply hydrogen to multiple markets such as industrial gas, transport fuel and/or power-to-gas
• Assessment of the legislative and RCS implications of these systems and any issues identified in obtaining consents to operate the system
• Recommendations for policy makers and regulators on measures required to stimulate the market for these systems

Public-facing versions of these ‘lessons learnt’ reports should be prepared and disseminated across Europe and potentially wider.