One potential market opportunity for hydrogen is the use of hydrogen as an energy storage mechanism for electric utilities.  Electric utilities can use stored energy in a variety of applications.  One important potential application for energy storage is to provide for better load management.  This can include both the matching of variable renewable energy sources with electricity demand and also the leveling of available electricity production capacity across off-peak and on-peak demand times.  Hydrogen used as an energy carrier might hold promise for these energy storage applications.

In this study, the potential for using stored hydrogen for load leveling and renewables matching in the electric sector was investigated.  A hydrogen-based storage system will include several basic system components, including an electrolyzer system to produce hydrogen via water electrolysis, a hydrogen storage system, and a system to convert stored hydrogen back into electricity for use in meeting peak electricity demand.  Several basic system configurations were investigated, including the use of either steel tanks or geologic caverns for hydrogen storage, and the use of either hydrogen-fueled internal combustion engines or fuel cells for conversion of stored hydrogen into electricity.

The study considered three timeframes:  near-term, mid-term (2010-2020), and long-term (2020-2030).  The analysis considered 50MW capacity storage systems capable of producing electricity for six hours of peak-demand daily (300MWh per day).  For each basic configuration, an optimized system was modeled based on consideration of the capital costs, operating and maintenance costs, replacement costs, and efficiencies of each of the sub-system components.

This investigation found that on-peak electricity can be produced in the near-term for about 30 to 75 cents per kilowatt-hour, depending on the system configuration.  In the longer term, improvements in the capital costs and system efficiencies of electrolyzers and fuel-cells allow on-peak electricity to be produced from hydrogen-based energy storage systems for less than 15 cents per kilowatt-hour.