Stochastic Optimisation of Power Purchase Agreements for Green Hydrogen Projects: A Case Study in Portugal
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- Green hydrogen is an emerging energy source with numerous applications. It can be used as a feedstock, a fuel, or an energy carrier or storage option. However, producing this energy source requires renewable energy, and due to its availability and price volatility, it is necessary to establish agreements to define upfront the risk profile of the green H2 production. The European Union is therefore supporting H2 projects to face the industry's novelty risk, low economics, and to address energy dependency. Although Iberia provides a good framework for renewable energy sourcing, the green H2 demand is mainly located in northern Europe, which contributes to a mismatch of regional supply and demand. Therefore, in this study, a case study was carried out on a green hydrogen facility project in the south of Portugal. Thus, the study relies on the development of a two-step model in which, first, Baseload agreements are established using a stochastic optimisation model with two different objective functions- maximising PPA PV and minimising the PPA PV standard deviation- considering wind power. Following this, an analysis is conducted that combines these optimal agreements with Pay-as-Produced agreements, where a solar source is tested, and the PPA PV of the entire portfolio is also analysed. A distinctive feature of this study is the inclusion of arbitrage opportunities between electricity spot prices and the agreed price when determining the optimal Baseload agreement. The results indicate that the model adheres to the specified constraints while addressing the risks linked to green hydrogen production, including capacity, profile, market, and demand risks. The methodology applied in a real Case Study can also be utilised for other research on green hydrogen production, aiming to determine the optimal electricity supply volume and stabilise production. Additionally, it facilitates negotiations for green hydrogen agreements with consumers by aligning expected production with Baseload and Pay-as-Produced agreements.