The EU Delegated Act III, part of the Renewable Energy Directive (RED II), sets specific criteria for hydrogen production to be classified as “renewable” or “green” hydrogen within the European Union. Meeting these standards is crucial for hydrogen projects to qualify for regulatory support, financial incentives, and access to growing demand for green hydrogen. Here’s an energy supply strategy focused on compliance with Delegated Act III:
1. Ensure Renewable Electricity Supply Alignment with Delegated Act III
Delegated Act III requires that renewable hydrogen production use electricity from additional renewable sources. Compliance can be achieved by:
• Sourcing from Directly Linked Renewable Installations:
• Develop or contract renewable energy sources (e.g., wind or solar farms) that are directly connected to the hydrogen production facility. This setup aligns with the act’s requirement that green hydrogen uses renewable electricity that is either directly connected or demonstrably “additional” to existing capacity.
• For regions with favorable renewable resources, co-locating hydrogen production with dedicated solar or wind installations ensures a consistent, renewable energy supply.
• Additionality and New Capacity:
• Build new renewable energy capacity or secure Power Purchase Agreements (PPAs) from new facilities. This meets the additionality requirement of Delegated Act III, as the directive emphasizes that renewable electricity used for hydrogen production should be above and beyond existing renewable resources.
• New capacity can include adding solar panels, wind turbines, or other renewable sources that weren’t in operation before the hydrogen project, ensuring no diversion of renewable electricity from other needs.
• Grid-Sourced Renewable Energy with Guarantees of Origin (GO):
• If using grid electricity, purchase renewable energy certificates or Guarantees of Origin (GOs) that prove the electricity was generated from renewable sources. However, this approach needs careful alignment with Delegated Act III’s temporal and geographic matching criteria.
2. Temporal and Geographic Matching
To meet the Delegated Act III requirements, the hydrogen project must ensure that the renewable electricity supply is synchronized with production timelines:
• Hourly Matching:
• Implement real-time, or at least hourly, matching of electricity consumption with renewable generation to demonstrate compliance with the temporal matching requirement. Use smart meters and energy management systems to track and verify that production is only occurring when renewable electricity is available.
• This may require hydrogen production facilities to scale up or down according to renewable energy availability, creating an operational model where production is intermittent and follows renewable generation patterns.
• Geographic Proximity:
• Ensure that the renewable energy source is in close geographic proximity to the hydrogen production facility, as specified by Delegated Act 3. This minimizes grid dependency and aligns with requirements to limit renewable electricity from far-off regions or countries.
3. Invest in Energy Storage to Maintain Continuity
Hydrogen production relies on consistent electricity, so integrating energy storage helps maintain production without compromising compliance:
• Battery Storage Systems:
• Use battery storage to capture and store excess renewable energy generated during peak times, then use it to power electrolysis during times when renewable generation dips (e.g., at night for solar projects).
• Battery systems also help achieve the hourly matching requirement, as stored renewable energy can smooth out fluctuations, ensuring a stable supply for hydrogen production without requiring constant adjustments.
• Hydrogen Storage for Load Balancing:
• Install hydrogen storage units to store excess production during periods of high renewable electricity availability. This stored hydrogen can be used to smooth demand fluctuations or supply local industries during low-production periods.
4.Leverage Long-Term PPAs with New Renewable Sources
• Long-Term PPAs for Cost Stability:
• Establish PPAs with renewable energy providers committed to new capacity construction to meet Delegated Act III’s additionality requirement. By locking in energy prices through long-term contracts, the project can stabilize costs and reduce the impact of electricity price fluctuations.
• Partnering with renewable projects with different generation patterns (e.g., solar and wind) also helps balance supply, especially since hydrogen production must align with renewable generation timelines.
• Financial Models for Joint Ownership:
• Consider co-investing in new renewable capacity to meet additionality requirements directly. Joint ownership or investment in renewable projects can reduce long-term electricity costs and provide more control over energy supply, especially in high-demand scenarios.
5. Flexible Electrolyzer Operation for Intermittent Production
• Load Flexibility:
• Choose electrolyzers that can ramp up or down efficiently, allowing production to follow renewable generation cycles. Delegated Act III’s requirements favor intermittent production in line with renewable availability, so flexible electrolyzers (e.g., PEM or advanced alkaline) help optimize operations.
• Electrolyzers can also be programmed to operate only when renewable electricity is verified, reducing compliance risks and minimizing energy wastage.
• Automated Controls for Real-Time Adjustment:
• Implement automated energy management systems to adjust electrolyzer output in real-time according to renewable energy availability, ensuring compliance with Delegated Act III’s hourly matching requirement.
6. Optimize Location for Renewable Access and Distribution
• Site Selection Near Renewable Resources:
• Position hydrogen facilities near areas with high renewable energy potential to reduce reliance on the grid and simplify compliance with geographic matching requirements. Coastal or rural areas with strong wind or solar resources are ideal for this strategy.
• Site proximity also reduces transmission losses and aligns with requirements for renewable sourcing that minimizes distance between generation and hydrogen production.
• Access to Local Off-Takers and Infrastructure:
• Choose locations near local off-takers or industrial clusters to reduce transportation costs and establish a local customer base for hydrogen. This strategy supports both commercial viability and regulatory compliance.
7. Documentation, Verification, and Certification
• Real-Time Monitoring and Auditing:
• Invest in advanced monitoring and auditing tools to provide a transparent record of energy consumption, production timing, and renewable energy sources. This documentation supports compliance with Delegated Act III and helps build trust with stakeholders and regulators.
• Automated reporting systems can generate hourly or daily compliance reports, providing data for certification processes and simplifying adherence.
• Certifications and Guarantees of Origin:
• Obtain certification for renewable hydrogen from recognized bodies, ensuring that all aspects of Delegated Act III are documented and verified. Guarantees of Origin or similar documentation will help confirm compliance, especially for hydrogen intended for export or government programs.
8. Adapt to Future Policy Changes and Technology Advances
• Prepare for Potential Policy Adjustments:
• The Delegated Act III standards may evolve as the hydrogen market matures, so stay flexible and monitor EU policy updates closely. Prepare to adjust operations as new regulations are introduced to maintain green hydrogen status.
• Innovate with Emerging Technologies:
• Explore and invest in technologies that improve efficiency and adaptability, such as advanced storage solutions, hybrid renewable setups, and improved electrolyzer technologies. Investing in flexible, innovative solutions now can reduce costs and help meet any future tightening of compliance standards.
Conclusion
This strategy aligns hydrogen production with Delegated Act III by focusing on direct and additional renewable energy sourcing, synchronizing production with renewable generation, and implementing robust compliance monitoring. This approach not only meets regulatory standards but also optimizes costs and operational reliability, providing a clear path to produce compliant, renewable hydrogen for the European market