In this report, we present our winning solution to the 16th AIMMS-MOPTA Optimization Modeling Competition on whether a fully renewable energy grid would benefit from adding green hydrogen as a supplemental flexible source to power generation.

We propose a two-stage stochastic optimization model where investment decisions in renewable plants and hydrogen storage are minimized in the first stage, and operational costs of running the hydrogen storage systems in the second stage. This model accounts for uncertainties in both solar and wind generation.

All in all, the results in this report show that there is potential for green hydrogen as a source of baseload support in the transition to a fully renewable-powered energy grid. For the data considered, we see that a fully renewable network driven by green hydrogen has a greater potential to succeed under realities where wind generation is high. In addition, we note that the main driver for the potential and profitability of green hydrogen lies in the electricity demand and prices, as opposed to those for gas. We also conclude that the investment in long-term liquid hydrogen storage is more valuable for taking full advantage of hydrogen as a baseload source than that in shorter-term intraday hydrogen gas storage. Finally, we have seen that our model is robust to changes in the investment costs for the data collected.

For future work, we suggest a further exploration of uncertainties, by using more accurate scenarios for wind and solar generation, or by considering other sources of uncertainty, such as the residential demand patterns or variability of technology investment costs. Lastly, a more extensive long-term analysis of the green hydrogen viability could be carried out by performing further sensibility analyses, and computing the net discounted present value for long-term investments.