Market-based renewables: How flexible hydrogen electrolyzers stabilize wind and solar market values

Wind and solar energy are often expected to fall victim to their own success: the higher their share in electricity production, the more their revenue on electricity markets (their “market value”) declines. While in conventional power systems, the market value may converge to zero, this study demonstrates that “green” hydrogen production, through adding electricity demand in low-price hours, can effectively and permanently halt the decline. With an analytical derivation, a Monte Carlo simulation, and a numerical electricity market model, I find that – due to flexible hydrogen production – market values in 2050 likely converge above €19 ± 9 per MWh for solar energy and above €27 ± 8 per MWh for wind energy. This is in the range of the projected levelized costs of renewables and has profound implications. Market-based renewables may hence be within reach.