Price levels needed for redispatch power to incentivize electrolyser siting

Determine whether purchasing otherwise downward-redispatched renewable electricity via German regional redispatch markets for use by proton exchange membrane electrolysers yields sufficiently low onsite hydrogen supply costs to incentivize regional electrolyser siting and market participation, and identify the specific redispatch market price levels at which such incentives arise.

Background

The European Union mandated market-based redispatch to utilize curtailed renewable energy, and Germany implemented regional redispatch markets (§13k EnWG) where electrical loads, including water electrolysers, can purchase otherwise curtailed renewable electricity as hourly products. These markets began a two-year test phase in October 2024.

Electrolyser participation could both reduce redispatch curtailment and lower green hydrogen production costs, potentially accelerating deployment. However, because real redispatch price formation and availability are uncertain and may vary regionally and inter-annually, it is necessary to assess whether redispatch power can reduce onsite hydrogen supply costs enough to incentivize electrolyser siting and participation, and to quantify the price levels at which this occurs.