Energy 249 (2022) 123638

Contents lists available at ScienceDirect

Energy
journal homepage: www.elsevier.com/locate/energy

A techno-economic assessment framework for hydrogen energy

storage toward multiple energy delivery pathways and grid services
Di Wu*, Dexin Wang, Thiagarajan Ramachandran, Jamie Holladay
Pacific Northwest National Laboratory, Richland, WA, 99352, USA

a r t i c l e i n f o a b s t r a c t

Article history: Hydrogen energy storage (HES) transforms and stores electric energy from the grid into hydrogen, and
Received 5 December 2021 supplements other energy storage and demand response resources in addressing challenges in
Received in revised form renewable-intensive power systems. Understanding how to optimally utilize an HES system to maximize
18 February 2022
its economic benefits from stacked value streams is highly important to its development and deploy-
Accepted 2 March 2022
ment. This paper presents a techno-economic assessment framework for an HES system considering
Available online 9 March 2022
three common energy delivery pathways and multiple grid and end-user services. Models are developed
to capture the operational capability, flexibility, and constraints associated with hydrogen production,
Keywords:
Economic analysis
compression, storage, and utilization as well as different grid services in an economic assessment. To
Energy storage define the technically achievable benefits, an optimal dispatch formulation is proposed to maximize the
Hydrogen electrolysis economic benefits over a representative year with an hourly time step considering the trade-offs among
Grid services different value streams. Representative case studies are designed and carried out to show how system
Optimization configuration, energy delivery pathways, and grid services may affect economic benefits. It was found
Stacked value streams that value streams from bundling grid services account for up to 76% of the total benefits and are critical
for an HES project to be financially viable.
© 2022 Elsevier Ltd. All rights reserved.

1. Introduction
With a growing emphasis on energy security and environmental
protection, renewable energy has developed rapidly worldwide.
The increasing penetration of renewable generation imposes a
number of challenges on power system operation due to its natural
uncertainty and variability [1]. Recent developments and advances
in energy storage systems (ESSs) provide a promising solution for
increasing flexibility and improving reliability of power systems [2].
Main guidelines for proper selection of ESSs are provided in Ref. [3],
considering many factors, such as renewable energy sources,
location, infrastructure. ESSs can generate multiple value streams
from both grid and end-user services [4] and can help to improve
resilience [5]. In Ref. [6], the authors present a taxonomy for
assigning benefits to various services provided by ESSs and sum-
marize ranges of values to major ESS services. A global state-of-the-
art review of the techno-economic and regulatory status of energy
storage and power quality services at the distribution level can be
* Corresponding author.
E-mail address: di.wu@pnnl.gov (D. Wu).
found in Ref. [7]. Different from electrical ESSs such as pump hydro
and batteries that absorb and output electrical energy, hydrogen
energy storage (HES), as a key chemical storage technology, trans-
forms and stores electric energy from the grid into hydrogen. In the
cases without the re-electrification capability, the technology is
often referred to as power-to-gas (P2G) [8], which is a promising
option for hydrogen and/or methane production using electric
energy.
In an HES system, the electrolysis uses electricity to split water
into hydrogen and oxygen. Hydrogen can react with carbon dioxide
to form methane, which can be stored in and transported through
the extensive existing natural gas networks with less restriction
than hydrogen [9]. The produced hydrogen and synthetic methane
can be used as alternatives to carbon-intensive fossil fuels, feed-
stock in chemical and processing industries, and heat and power
generation [10]. When interacting with the grid, an HES system can
be operated as a controllable load and generation to provide
various grid and end-user services [11]. Hydrogen can be stored in
immense underground caverns, which opens up opportunities for
seasonal energy storage. Compared to other energy storage tech-
nologies, another advantage of HES is its energy storage capacity
can be scaled independently from power and hydrogen production

https://doi.org/10.1016/j.energy.2022.123638
0360-5442/© 2022 Elsevier Ltd. All rights reserved.
D. Wu, D. Wang, T. Ramachandran et al. Energy 249 (2022) 123638

Nomenclature ½pFC
k
; pFC
k  Lower and upper bound of power consumption of a
fuel cell in hour k, respectively (MW)

Sets Decision Variables

½N DC
j  A set that contains all hours within a demand charge [PAS] Revenue from ancillary services ($)
period j [PDR] Revenue from demand response ($)
½N DR
j  A set that contains all hours within a demand [PNP] Revenue from gases injected into natural gas
response period j pipelines ($)
½N k  A set that contains all hours that are used to calculate [PTI] Revenue from hydrogen sale for transportation fuel
the baseline load of hour k and industrial gas ($)
½bEk  A binary variable that indicates on/off status of an
Parameters electrolyzer in hour k
[a] The maximum admixture rate by volume for ½bMk  A binary variable that indicates on/off status of a
hydrogen directly injected into gas pipelines methanation reactor in hour k
(unitless) ½bFC
k  A binary variable that indicates on/off status of a fuel
[DT] Time step size, which is an hour in this paper cell in hour k
[kSC, kTC] Ratio of hydrogen intake to electricity consumed by a [CEE] Cost of electric energy (including the negative cost of
storage compressor and tube compressor, the regenerated electricity when there is a co-located
respectively (kg/MWh) power conversion device) ($)
[kE] Ratio of hydrogen produced to electricity consumed [Cc] Cost for purchasing carbon dioxide ($)
by an electrolyzer (kg/MWh) [ck] The amount of carbon dioxide required for
[kM] Ratio of hydrogen converted to electricity methanation in hour k (kg)
consumption by a methanation reactor (kg/MWh) ½C M
VOM  Variable O&M cost of the methanation reactor ($)
[kFC] Ratio of electricity produced to hydrogen consumed [hk] The amount of hydrogen produced by the
by a fuel cell (MWh/kg) electrolyzer in hour k (kg)
½mDC
j  Demand charge rate of month j ($/MW-month) ½hSC;in  The amount of hydrogen intake by a storage
½mDR
j  Demand response incentive rate of month j ($/MW- k
compressor in hour k (kg)
month) ½hSC;out  The amount of hydrogen output from a storage
½mEE
k
 Price for obtaining electric energy in hour k ($/MWh) k
compressor in hour k (kg)
½mNP
k
 Sale price of gases injected into natural gas pipelines ½H Sk  The amount of hydrogen stored in dedicated
in hour k ($/MMBtu) hydrogen storage at the beginning of hour k (kg)
½mTI
k
 Sale price of hydrogen as transportation fuel or ½hS;out  The amount of hydrogen withdrawn from the
k
industrial gas ($/kg) dedicated hydrogen storage in hour k (kg)
½mRk  Regulation prices in hour k ($/MW) ½hTC;in  The amount of hydrogen intake by a tube compressor
½mMVOM  Variable O&M cost rate of the methanation reactor k
in hour k (kg)
($/h) ½hTC;out  The amount of hydrogen output from a tube
[nh] Heating value of hydrogen (MMBtu/kg) k
compressor in hour k (kg)
[nm] Heating value of menthane (MMBtu/kg) ½hMk  The amount of hydrogen converted to methane in
rk The density of hydrogen at the pressure and hour k (kg)
temperature injected into natural gas pipelines (kg/ ½hPk  The amount of hydrogen injected into pipelines from
ft3) an electrolyzer in hour k (kg)
s ,s
SC TC
Hydrogen loss factor in the compression process for ½hRI
k  The amount of hydrogen injected into a natural gas
hydrogen storage and tube injection, respectively reservoir in hour k (kg)
(unitless) ½hRO
k  The amount of hydrogen injected into pipelines from
SC;in
½H  The maximum amount of hydrogen that a storage a natural gass reservoir in hour k (kg)
compressor can intake per hour (kg) ½H Tk  The amount of hydrogen stored in tube storage at the
½H
TC;in
 The maximum amount of hydrogen that a tube beginning of hour k (kg)
compressor can intake per hour (kg) ½H Rk  The amount of hydrogen stored in a natural gas
S T reservoir at the beginning of hour k (kg)
½H ; H  Maximum amount of hydrogen that can be stored in ½hFC
k  The amount of hydrogen consumed by the fuel cell in
dedicated hydrogen storage and tube storage, hour k (kg)
respectively (kg) [mk] The amount of methane produced through hydrogen
½hTk ; hIk  The amount of hydrogen withdrawn from storage methanation in hour k (kg)
tubes in hour k for sale as transportation fuel and [pk] Total power consumption of an HES system in hour k
industrial gas, respectively (kg) (MW)
[lk] A customer's existing load in hour k (MW) pSC Power consumption of a storage compressor in hour
k
½pEk ; pEk  Lower and upper bound of power consumption of an k (MW)
electrolyzer in hour k, respectively (MW) pTC
k
Power consumption of a tube compressor in hour k
½pM ; pM (MW)
k k  Lower and upper bound of power consumption of a
methanation reactor in hour k, respectively (MW) ½pEk  Power consumption of an electrolyzer in hour k
½vm  Injection rate of natural gas by volume in hour k(ft3/ (MW)
k
h) ½pMk
 Power consumption of a methanation reactor in hour
k (MW)

2
D. Wu, D. Wang, T. Ramachandran et al.
½pFC
k
 Power consumption of a fuel cell in hour k (MW)
[rk] Regulation capacity in hour k (MW)
½r dn
k
 Regulation down capability in hour k (MW)
rates. Because these capabilities and features are valuable to a
future decarbonized grid with high renewable penetration, HES has
attracted increasing attention in recent years [12].
While the small-scale HES technology (less than 20 MW) [13] is
well developed and commercially available, the system cost is
deemed to be high compared with other energy storage technol-
ogies. The fast development of solar and wind energy presents an
opportunity for producing hydrogen using surplus renewable
generation or low-cost electric energy while providing a broad
range of grid services. The economic fundamentals need to be
revisited for HES, considering multiple energy delivery pathways
and grid applications. As a result, many studies have been dedicated
to the technical and/or economic assessment of HES systems during
the past few years. Just to name a few, a feasibility analysis and
costs associated with carbon avoidance are presented in Ref. [14]
for a small-scale P2G plant integrated into an electrical and thermal
smart grid. In Ref. [15], the authors evaluate the economics of a
hybrid power plant consisting of an off-shore wind power farm and
a hydrogen production-storage system under different combina-
tions of the revenue streams such as electricity, transportation fuel,
and natural gas. The authors in Ref. [16] study process chains of
different P2G pathways and the selection of sub-systems for diverse
applications. The technical and economic characteristics of avail-
able technologies for electrolysis and methanation components are
compared in Ref. [17]. In Ref. [18], an inclusive list of P2G and HES
pathways and the qualitative efficiency and benefits for individual
associated technology are reviewed. An analytical framework is
developed in Ref. [19] to determine the economics of a hybrid
system combining a renewable plant with a P2G facility. The au-
thors in Ref. [20] estimate the amount of storage and fuel cell ca-
pacity required to attain high renewable penetration and provide a
preliminary economic analysis that estimates the cost of HES that
will help attain the decarbonization targets in California. In
Ref. [21], the authors propose an optimal design method for a
hybrid energy system consisting of a fuel cell as an effective ESS in
reverse osmosis desalination plant powered by photovoltaic and
compare the optimally designed system with a stand-alone diesel
generation. In Ref. [22], the authors optimize a P2G plant configu-
ration with respect to the cost and benefits using a Monte Carlo-
based simulation tool and found a potential reduction of up to
17% in synthetic natural gas production by implementing well-
balanced components and interim storage. In Ref. [23], an opera-
tional scheduling method is presented for an integrated energy
system that involves electricity, heat, and hydrogen on a repre-
sentative day. It is found that the integrated system could help
improve system operation flexibility, reduce wind curtailment, and
decrease fuel consumption and carbon emission. An advanced
modeling tool is developed in Ref. [24] to enable both optimal
sizing and proper year-through energy management of a reversible
solid oxide cell (rSOC)-based renewable microgrid, supplying
electricity and hydrogen to a residential complex and a passenger
car fleet consisting of both electric and fuel cell vehicles. In Ref. [25],
an innovative dynamic programming method is proposed for
optimal energy management of grid-connected rSOC-based
renewable microgrids and for assessing the benefits associated
with such a system. To investigate how P2G can facilitate PV inte-
gration and reduce curtailment, the authors in Ref. [26] assess the
feed-in of hydrogen into natural gas transmission pipelines and the
3
Energy 249 (2022) 123638
½r dn
k
 Regulation up capability in hour k (MW)
½pDR
k
 Power curtailed from baseline in hour k (MW)
usage of hydrogen and biogas from local fermentation plants for
methanation feeding synthetic natural gas into local distribution
grid in various scenarios.
Existing studies mainly focused on either i) the technical and
economic characteristics of individual technologies, or ii) the
assessment of an HES system considering different energy delivery
pathways in the form of gas or electricity. An HES system can also
be operated as a controllable load to generate value streams for
non-energy grid services [27]. For example, electrolysis can be
scheduled to take advantage of fluctuations in electricity prices and
to reduce power consumption during periods of high stress on the
grid. It can also provide frequency regulation and spinning reserve,
which are valuable for a grid to maintain a balance between gen-
eration and load. When combined with onsite hydrogen storage
and fuel cell or generation devices, the set of services expands,
including energy arbitrage, ancillary services, resource adequacy,
critical infrastructure upgrade deferral, peak demand management,
and demand response [6]. The economic benefits associated with
the flexibility of HES for grid applications are largely ignored in the
existing literature.
To bridge the gap, this paper presents a techno-economic
assessment framework for an HES system, considering a broad
range of grid services in addition to conventional value streams
associated with different energy products. Unlike the existing an-
alyses, where the hydrogen production corresponds to given de-
mand profiles of one or two end-products, grid services introduce
multi-dimensional freedom in decision-making and make the
dispatch and assessment problem much more complicated. To
address the challenge, this paper proposes modeling and optimi-
zation methods to capture various couplings among different en-
ergy delivery pathways and grid services, and to maximize
economic benefits considering the trade-off between different
revenue and cost streams. Present value (PV) benefits over the
economic life are compared to the life cycle costs to determine the
cost-effectiveness and returns to investors.
The rest of this paper is organized as follows. Section 2 presents
models to represent different components in HES systems and
potential grid services in a techno-economic assessment. Optimal
dispatch and benefit evaluation methods are proposed. In Section 3,
case studies are carried out using the proposed methods and
thoughtful insights are provided. Finally, Section 4 offers
concluding remarks and discusses future work.
2. Modeling and assessment methods
An HES system contains a web of potential assets that could be
used to transform electrical energy into hydrogen, and store and
utilize it for various one-way or bidirectional energy storage ap-
plications, as illustrated in Fig. 1. The HES scope considered in this
paper includes an electrolysis system, an optional buffer or long-
duration hydrogen storage, and various components associated
with three hydrogen flow pathways:
1. Bulk sale of hydrogen in the form of transportation fuel and
industrial gas,
2. Hydrogen and/or synthetic methane injection into the natural
gas network,
3. Electricity regeneration locally using a fuel cell or other power
conversion devices.
D. Wu, D. Wang, T. Ramachandran et al.
Fig. 1. An HES system that interacts with the grid while delivering energy in different forms along three pathways.
Onsite hydrogen storage, either a buffer (typically less than
2000 kg) or long-duration storage (e.g., underground pipe, lined
rock cavern, and salt cavern), helps enhance HES flexibility and
increase the capability for energy shifting and other grid services. A
compressor is required to increase the hydrogen pressure for
storage. The key components necessary for the bulk sale of
hydrogen as transportation fuel and industrial gas include tubes
and a tube compressor. In addition to directly injecting hydrogen
into gas pipelines, two other optional components are often
considered in the second pathway: a methanation reactor and
existing underground storage for gas. A fuel cell or other power
conversion devices can be used for electricity regeneration,
enabling bidirectional power flow between the HES system and the
grid. Note that onsite hydrogen storage is typically required for
bidirectional power flow.
In HES systems, hydrogen is produced via electrolysis, in which
electrical energy is used to split water molecules into hydrogen and
oxygen gas with the hydrogen then being stored. This water-
splitting process is the HES equivalent of charging a battery. With
regeneration capability, in power generation (discharge) mode, the
stored hydrogen is then sent to a fuel cell or other power conver-
sion devices to generate electricity and water, thereby reversing the
process. This paper only considers a fuel cell in the third pathway,
but other types of power conversion devices can be modeled
similarly. HES offers numerous benefits beyond the potential for
long-term, seasonal energy storage. Electrolyzers have a fast-acting
dynamic response and can be controlled as a demand-side resource
to minimize electricity purchase cost and generate value streams
from providing various grid services, such as frequency regulation,
spinning reserve, and demand response. When combined with a
fuel cell or other generation technologies, the set of use cases the
system can provide expands. Additional grid and end-user services
include resource adequacy, critical infrastructure upgrade deferral,
and demand charge reduction. This section presents HES models
used in a techno-economic assessment, including hydrogen pro-
duction, storage, three energy delivery pathways, and various grid
and end-user services. Based on these models, a mixed-integer
linear programming (MILP) formulation is proposed to determine
4
Energy 249 (2022) 123638
the optimal dispatch and define technically achievable benefits
considering physical system constraints as well as couplings and
trade-offs among various value streams.
2.1. Hydrogen production and storage
An electrolysis system uses electrical energy to split water into
hydrogen and oxygen. There are different types of electrolyzers,
such as liquid-alkaline, membrane-based, and high-temperature
technologies. This work considers the polymer electrolyte mem-
brane (PEM) electrolyzer technology, which offers several advan-
tages, including increased current density, reduced footprint, and
rapid response time, and thereby is well-suited for HES imple-
mentation for renewable integration and various grid services. A
PEM electrolysis system is composed of a number of general
hardware and software elements. The hydrogen produced in hour k
(hk) can be approximated as a linear function of power
consumption:
hk ¼ kEk pEk DT; (1)
where kEk is the ratio of hydrogen produced to electricity consumed
by the electrolyzer, pEk is the power consumption of the electrolyzer
in hour k, and DT is an hour. When the electrolyzer is in operation,
its power consumption can be controlled between the lower ðpE Þ
and upper ðpE Þ bounds:
pE bEk  pEk  pE bEk ; (2)
where bEk is a binary variable that indicates the electrolyzer on/off
status in hour k (bEk ¼ 1 for on). Typically, the lower bound is the
power consumption at the minimum loading level and the upper
bound is the rated power. These bounds can also be customized as
time-varying parameters to reflect different operating conditions
or user preferences. The produced hydrogen is either stored for
later use or directly flow through different pathways:
D. Wu, D. Wang, T. Ramachandran et al. Energy 249 (2022) 123638

megawatt-scale electrolyzers. Liquid tankers and tube trailers are

hk ¼ hSC;in
k
þ hP;in
k
; (3) deployed in regions where demand is at a smaller scale or
emerging. In this work, it is assumed that the hydrogen is sent
where hSC;in
k
is the amount of hydrogen intake by the compressor through a compressor into tubes for delivery. The highly pressur-
ized storage tubes are designed for the transport of hydrogen
for the hydrogen storage and hP;in is the amount of hydrogen that is
k destined for vehicle refueling stations and industrial users.
directly used along different pathways in hour k. Similar to the buffer or long-duration storage, a compressor is
A compressor is used to pressurize the produced hydrogen for needed to inject hydrogen into tubes prior to transport. The oper-
storage. The amount of hydrogen intake in hour k can be charac- ation of the tube compressor is modeled as
terized as a function of power consumption by the storage
compressor ðpSC Þ, as expressed in (4): ¼ kTC
hTC;in k pk DT;
TC
k k
(10)

hSC;in
k
¼ kSC
k pk DT;
SC
(4) TC;in
0  hTC;in
k
H ; (11)
where kSC
k
is the ratio of hydrogen intake to electricity consumption

by the compressor, where the isentropic efficiency, losses, and hTC;out
k
¼ 1  sTC
hTC;in
k
; (12)
motor efficiency are all incorporated. The compressor has a limited
capability to process hydrogen per unit time, as expressed in (5):
where kTC
k
is the ratio of hydrogen intake to electricity consumption

0  hSC;in H
SC;in
; (5) by the tube compressor, hTC;out
k
is the amount of hydrogen output of
k
SC;in
the tube compressor in hour k, H the maximum amount of
where H
SC;in
the maximum amount of hydrogen that the storage hydrogen that the tube compressor can intake per hour, and sTC is
compressor can intake per hour. There is also hydrogen loss in the the loss factor.
compression process as captured in (6): A tube trailer either directly fills its payload from the
compressor or exchanges empty on-board tubes for filled ones. The


hSC;out ¼ 1  sSC hSC;in ; (6) extra onsite tubes enable the system to buffer the infrequent arrival
k k
of tube trailer trucks. The dynamics of the amount of hydrogen in
tubes can be expressed as
where hSC;out
k
is the amount of hydrogen output of the compressor
in hour k and sSC is the loss factor. The dynamics of the hydrogen HTkþ1 ¼ HTk þ hTC;out  hTk  hIk ; (13)
k
storage are
where H Tk is the amount of hydrogen stored in tubes at the begin-
H Skþ1 ¼ HSk þ hSC;out  hS;out ; (7)
k k ning of hour k, and hTk and hIk are the amounts of hydrogen extracted
from tubes in hour k for transportation fuel and industrial gas,
where HSk is the amount of hydrogen stored in the storage and hS;out
k respectively. The stored must be within the storage capacity of the
is the amount of hydrogen withdrawn from the storage. The T
onsite tubes H :
amount of stored hydrogen in the hydrogen storage must stay
S
within its capacity H : T
0  HTk  H : (14)
S
0  H Sk  H : (8) The revenue from bulk hydrogen sales is
X

Both the hydrogen withdrawn from the storage ðhS;out
k
Þ and the PTI ¼ mTk hTk þ mIk hIk ; (15)
produced hydrogen by the electrolyzer ðhP;in
k
Þ are allocated into k

different pathways:
where mTk and mIk are sales prices of hydrogen as transportation fuel
and industrial gas, respectively.
hS;out þ hP;in ¼ hTC;in þ hPk þ hRI k þ hk þ
M
hFC
k ; (9)
k k
|fflfflk{zfflffl} |fflfflfflfflfflfflfflfflfflfflffl{zfflfflfflfflfflfflfflfflfflffl
ffl} |{z}
pathway 1 pathway 2 pathway 3

2.3. Pathway 2: hydrogen and synthetic methane injection into gas

where hTC;in
k
is the hydrogen intake by the tube compressor for bulk
sale, hPk is the hydrogen injected into pipelines, hRI
k is the hydrogen
injected into an existing gas reservoir, hM
k is the hydrogen used for
methanation, and hFC
k is the hydrogen consumed by a fuel cell.
2.2. Pathway 1: bulk hydrogen sale
In the first pathway, the final end-use of hydrogen is trans-
portation fuel and industrial gas. Hydrogen can be transported from
the point of production to the point of use via pipeline and by road
in cryogenic liquid tanker trucks or gaseous tube trailers. Pipelines
are deployed in regions with substantial demand (hundreds of tons
per day) and often are not accessible for hydrogen produced by
5
networks
In the second pathway, the final end-use of hydrogen is un-
compressed fuel injected into natural gas distribution networks,
given that the pressure exiting the electrolyzer is within the
acceptable range of distribution pipelines. The leakage of hydrogen
is not a concern in this case due to lower pressures. The amount of
hydrogen directly injected into pipelines in hour k ðhPk Þ is limited by
.
hPk r  avm
k DT; (16)
where rk is the density of hydrogen at the injection pressure and
temperature in hour k, a is the maximum admixture rate by vol-
ume, and vm
k
is the injection rate of natural gas by volume in hour k,
D. Wu, D. Wang, T. Ramachandran et al. Energy 249 (2022) 123638

which is dominated by non-HES natural gas. The allowable

admixture rate varies by country and place. HRkþ1 ¼ H Rk þ hRI RO
k  hk ; (22)
Two other options are often considered in this pathway:
methanation of hydrogen and underground cavern storage for where H Rkþ1 is the hydrogen stored in the reservoir at the
natural gas. They may be selected independently or together to beginning of hour k and hRO
k is the hydrogen extracted from the
help alleviate volumetric admixture constraints on pipeline reservoir. The amount of stored hydrogen must be non-
injection. negative:

 For methanation, the amount of hydrogen intake in hour k can be HRk  0: (23)
expressed as a function of the power consumption by a metha-
nation reactor ðpM Þ: Because methanation introduces extra energy losses, injecting
k
synthetic methane into a natural gas reservoir is not as cost-
effective as direct injection of hydrogen into the reservoir.
k ¼ k pk DT;
hM M M
(17) Therefore, synthetic methane is only produced for direct injec-
tion into pipelines to alleviate a volumetric admixture
where k is the ratio of electricity consumption to hydrogen
M
constraint.
converted for methanation. Similarly as the electrolyzer, the
power consumption of the reactor can be controlled within a
The total revenue from sales of all hydrogen and synthetic
range:
methane in pathway 2 (PNP) can be calculated as
X h i
pM bM  p M
k k
M M
k  pk bk ; (18) PNP ¼ mNP nh ðhPk þ hRO
k Þ þ n mk ;
m
(24)
k
k
where bMk is a binary variable that indicates the on/off status of
the reactor in hour k. The methanation system efficiency is where mNP
k
is the sale price ($/MMBtu) of gases in hour k, and nh
constrained by the Sabatier reaction [28], where four molecules and nm denote the heating value (MMBtu/kg) of hydrogen and
of hydrogen and one of carbon dioxide produce one molecule of methane, respectively. Note that heating value (either higher or
methane and two of water, i.e., 5.5 kg carbon dioxide and 1 kg lower) used for nh and nm should be consistent with the one used to
hydrogen produce 2 kg methane and 4.5 kg water. The amount define natural gas prices.
of methane produced (mk) and carbon dioxide (ck) by mass
required can be expressed using (19a) and (19b), respectively: 2.4. Pathway 3: local electricity regeneration

In the third pathway, the energy stored in hydrogen is converted

mk ¼ 2 hM
k ; (19a)
back to electricity using a fuel cell. The power generated by the fuel
cell is fed back to the grid or consumed by the local load. The fuel
ck ¼ 5:5 hM cell power output in hour k(hk) can be approximated as a linear
k : (19b)
function of hydrogen consumption:
c
The corresponding cost of carbon dioxide (C ) is .
k ¼ k hk DT;
FC FC
X pFC (25)
Cc ¼ mck ck ; (20)
k where kFC is the ratio of electricity produced to hydrogen consumed
by the fuel cell. When the fuel cell is in operation, its power gen-
where mck is the price of carbon dioxide. Besides the cost of
eration can be controlled between the lower ðpFC Þ and upper ðpFC Þ
carbon dioxide purchase, there is a variable O&M cost of mM
VOM bounds:
associated with every operation hour of the methanation
reactor. The total annual variable operation and maintenance
pFC bFC FC FC FC
k  pk  bk p ; (26)
(O&M) cost of the methanation reactor is

X M
VOM ¼ mVOM
CM M
bk : (21)
k
 Underground cavern storage affords the user large-scale, sea-
sonal storage to hedge against natural gas price spikes. Hydrogen
and methane can be injected into the cavern and mixed with the
base natural gas. The existing natural gas cavern is not a part of an
HES project and therefore its cost is excluded from the economic
assessment. The ratio of injected hydrogen to the base natural gas
in the cavern is so small that the resulting mixture is effectively
natural gas. As the gas is injected into the cavern, the pressure of
the gas increases due to the existence of base gas. Thus, all the
injected gas is considered working gas. This pressurization via
injection allows for extraction at a later time for injection into the
natural gas pipelines. In practice, the amounts of hydrogen pro-
duced by an HES system are ignorable compared to the base gas
in a reservoir. Therefore, only the amount of hydrogen in a
reservoir is are modeled in for the purpose of HES assessment:
6
where bFCk is a binary variable that indicates the on/off status of the
fuel cell in hour k. In the following subsection, the revenue asso-
ciated with this pathway is calculated together with other HES
components that interact with the grid.
2.5. Interaction with the grid
The operation of an HES system is flexible. An electrolyzer can
be operated as a controllable load to reduce electricity cost and
provide services such as frequency regulation, spinning reserve,
and demand response by deviating from the baseline operating
point as instructed by the grid. With an onsite storage and regen-
eration capability, a fuel cell or other power conversion devices can
help increase the capability of an HES system to provide frequency
regulation and demand response. In addition, with the capability to
feed back to the grid, several other grid and end-user services can
be provided, including resource adequacy, critical infrastructure
upgrade deferral, and demand charge reduction. This subsection
D. Wu, D. Wang, T. Ramachandran et al. Energy 249 (2022) 123638

describes and models various cost and revenue streams for an HES balance generation and load. The regulation capacity is limited by
system when interacting with the grid. the capability to deviate from the scheduled power to increase
(regulation up) and decrease (regulation down) power output,
2.5.1. Electricity cost and energy arbitrage which depend on the on/off status, the scheduled power, and
Depending on the deploying scenario of an HES system, it may maximum and minimum power of the electrolyzer and fuel cell, as
be subject to either wholesale energy costs or a behind-the-meter expressed in (30):
(BTM) tariff. When deployed by a utility, an HES system affects the
utility's net load and operational costs, which may include elec- r up
k
 ðpEk  pEk bEk Þ þ ðpFC bFC FC
k  pk Þ ; (30a)
tricity generation or purchase cost. When deployed by an end-user
that faces BTM tariffs, an HES system affects the energy charge, E E FC FC
r dn E FC
k  pk bk  pk þ ðpk  pk bk Þ : (30b)
which is calculated based on the amount of energy consumed and
the time when it is consumed. The total power consumption of an
Some regions split regulation into an up service and a down ser-
HES system can be expressed as
vice; others treat it as a controllable range. This paper considers the
latter, where the regulation capacity is constrained in (31a):
pk ¼ pEk þ pSC TC M FC
k þ pk þ pk  pk : (27)
up
rk  r k ; (31a)
In general, the electricity cost of an HES system can be expressed as
X
C EE ¼ mEE
k pk DT; (28) rk  r dn
k : (31b)
k
The corresponding revenue (PAS) can be calculated as
where mEE represents either wholesale energy prices or BTM energy
k X
charge rates. Note that the power consumption can be negative PAS ¼ mRk rk ; (32)
when the fuel cell is operated to produce electricity. The revenue is k
represented by the negative energy cost.
where mRk is the regulation price in hour k. In the cases with separate
2.5.2. Demand charge reduction regulation up and down services, the revenue can be directly
An end-user such as a large commercial or industrial customer expressed as a function of r up
k
and r dn
k
using the corresponding up
generally needs to pay a demand charge, which is based on the end- and down prices, without the need of the constraint in (31).
user's highest power consumption during a billing period (typically
a month). An HES system with regeneration capability can be used
2.5.4. Demand response
to reduce an end-user's peak demand and thereby reduce demand
An end-user HES system could participate in demand response
charge. The corresponding benefits can be expressed as
programs offered by utilities to compensate commercial and in-
X h i dustrial customers for curtailing their energy during peak hours. A
PDCR ¼ mDC
j maxk2N DC ðlk þ pk Þ  maxk2N DC ðlk Þ ; (29) participating HES system would be compensated based on the
j j
j
average power curtailed during demand response events within a
predefined time period such as monthly or seasonally, as expressed
where mDC
j is the demand charge rate, lk is the customer's existing in (33):
load, and N j is a set of hours in the jth charge period. Note that in 0 1
the case where an HES is deployed by distribution utility that pays ,
XB X C
transmission charge based on its peak load, the expression in (29) PDR ¼ @mDR
j pDR
k jN j jA; (33)
can also be used to determine the transmission charge reduction j k2N j
DR

benefits with mDC j denoting the transmission charge rate.

where mDR
j is the demand response compensation rate, N DR
j is a set
2.5.3. Ancillary services that contains all hours of demand response events within time
Traditionally, generators have been used to provide ancillary period j, and pDR is the power curtailed in hour k. The power
k
services, including frequency regulation and spinning, non- curtailment is calculated as the reduction of power consumption
spinning, and replacement reserves. While an HES system is relative to a baseline, which is the average load of relevant hours
capable of providing all ancillary services, these services compete within a number of previous days:
with each other for limited HES flexibility. This paper considers
,
using an HES system for frequency regulation, which has been X
identified as one of the best “values” from energy storage for pDR
k ¼ pi jN k j  pk ; (34)
increasing grid stability because of the high cost of regulation ser- i2N k
vices [6,29]. Regulation is the use of online generation, storage, or
load that is equipped with automatic generation control and that where N k is a set that contains all relevant hours that are used to
can change output quickly to track the moment-to-moment fluc- calculate the baseline of hour k.
tuations in customer loads and to correct for the unintended fluc-
tuations in generation. Regulation helps to maintain system 2.5.5. Capacity value
frequency, manage differences between actual and scheduled po- The value of peaking capacity of an HES system with regenera-
wer flows between balancing areas, and match generation to load tion capability is derived based on its contribution to resource
within a balancing area. The operation of PEM electrolyzer and fuel adequacy and system reliability. In the case of capacity markets,
cell is flexible. For example, a PEM electrolyzer can decrease or capacity payment is received by participants for offering supply
increase its power consumption quickly, making it capable of capacity based on an annual or monthly rate, varying from one
providing regulation services that are required to continuously market to another. Capacity charge is paid by load serving entities
7
D. Wu, D. Wang, T. Ramachandran et al.
based on their coincident demand during system peak hours. An
HES system may increase or reduce the capacity payment
depending on whether it introduces additional load or lowers the
existing load during system peak hours. The HES load is much
smaller than the entire power system load, and does not affect
when peak hours will occur. In addition, system capacity hours only
account for a very small portion of a year in most situations.
Therefore, the capacity benefits are very loosely coupled with other
value streams. To maximize the economic benefits of an HES sys-
tem, the fuel cell is operated at the rated power during system peak
hours, and the corresponding economic benefits can be calculated
independently with the optimization as
PCap ¼ mCap pFC ; (35)
where mCap is the annual capacity payment rate or its equivalent.
2.5.6. Transmission and distribution upgrade deferral
An HES system can be operated to reduce the peak load on a
specific portion of the transmission and/or distribution (T&D)
system, and thereby help defer specific projects and T&D system
upgrades that otherwise would be needed earlier to meet the
growing demands. Depending on the circumstances, the benefits
can be quite significant, especially if the upgrade that is deferred is
expensive. In most situations, an HES is only used for this purpose
for a very small portion of a year when the load exceeds the T&D
equipment's capacity. The same HES can be used to generate other
value streams in the remaining time. Because of this loose coupling,
the T&D deferral value for an HES system can be determined
independently of other value streams using the following steps.
1. Based on the existing load profile and load growth rate, the peak
demand for future years is calculated and compared with the
existing infrastructure capacity to determine the year when T&D
investment needs to be made.
2. The HES is used to reduce peak demand. Annual peak minimi-
zation problems are formulated and solved repeatedly to
determine the year when the T&D upgrade must be made.
3. Based on the upgrade cost and the years when T&D investment
needs to be made with and without the HES system, present-
value costs are calculated and T&D deferral benefits are
estimated.
4. To receive the T&D deferral benefits, the HES is required to
discharge a certain amount of power in some hours determined
in Step 2. Constraint (36) is generated and used to formulate the
optimal dispatch problem later:
pk  pTDD
k ; ck2N TDD ; (36)
where pTDD denotes the amount of discharge power needed to
k
support T&D deferral and N TDD is the set of hours for which such
support is needed.
2.6. Optimal dispatch and benefit evaluation
The economic benefits of an HES system depend on how it is
operated. The power consumption and loading levels of different
components in an HES system affect hydrogen production,
compression, and hydrogen usage in different pathways and the
corresponding value streams. The cost of the electric energy and
benefits from different grid services also depend on HES hourly
loading levels and the physical capabilities. Optimal dispatch is
generally required to evaluate the potential benefits and ensure no
double-counting, considering the following:
 Economic and technical characteristics of individual components
8
Energy 249 (2022) 123638
 Modeling of each pathway and the coupling between different
pathways
 Rules, requirements, and valuation of different grid services, and
competition among them for the limited capacity of electrolyzer,
fuel cell, and storage
 Coupling between grid services and hydrogen production/
pathway flows
 Temporal interdependency
 Diversified system operating conditions
Based on the models presented earlier, an optimal dispatch
formulation is proposed:


P:max PTI þ PNP þ PDCR þ PAS þ PDR þ PCap C EE C M
VOM ;
x
s:t:ð1Þð36Þ
where x denotes the vector of decision variables, including those
associated with i) hydrogen production and storage, ii) the alloca-
tion of hydrogen among three pathways, ii) loading level of HES
components, iii) capacity of various grid services, and iv) costs and
revenues. The key economic factors that affect the operation of an
HES plant include:
 The sale prices of hydrogen and natural gas
 The prices and/or charge rates of energy and power
 The prices of grid services
The key technical factors include the availability, capacity, and ef-
ficiency of individual components in an HES system. The objective
function and constraints in P are all linear except (29). Optimization
tricks presented in Ref. [30] can be applied to generate an equiva-
lent MILP problem that can be solved using many existing solvers.
Once the optimal dispatch problem is solved, the annual benefits
can be determined. Together with the T&D upgrade deferral anal-
ysis, the PV benefits from the stacked value streams can be calcu-
lated for a given discount factor over an economic analysis time
horizon. The PV cost including both installed and O&M costs can be
calculated similarly.
3. Case studies
An HES system can be deployed by a vertically integrated utility,
a third-party investor, a distribution utility, or a large industrial or
commercial customer. While the system configurations, use cases,
and potential applications may vary by deployment scenario, the
proposed framework and methods can be adapted and used to
evaluate financial feasibility and support decision-making in
various scenarios. In this work, many case studies have been carried
out to examine the effectiveness of proposed method and under-
stand the impacts of system configuration, energy delivery path-
ways, and grid services on cost-effectiveness. Five representative
case studies are selected to present in this paper, as summarized in
Table 1.
 Case 1 is the most fundamental, where only bulk sale of
hydrogen as transportation fuel and industrial gas is considered.
 Case 2 is the same as Case 1 except the electrolyzer is also used
for frequency regulation and demand response.
 In Case 3, injection of hydrogen into the gas network is enabled.
 In Cases 4 and 5, we employ an underground salt cavern (USC)
for long-duration hydrogen storage and a fuel cell for regener-
ation, which open up opportunities for additional grid services
including capacity and demand charge reduction. The two cases
are only different in terms of electrolyzer size, which is used to
demonstrate how system design may affect net benefits.
D. Wu, D. Wang, T. Ramachandran et al. Energy 249 (2022) 123638

Table 1 Table 3
Case study summary. Fuel cell parameters.

Case Electrolyzer Pathway(s) Storage Fuel Cell Grid Services Parameter Value

1 5 MW 1 e e e Installed Cost ($/kW) 1300

2 5 MW 1 e e Reg, DR Fixed Annual O&M Cost (% of Installed Cost) 3.3
3 5 MW 1, 2 e e Reg, DR Electrical Efficiency at Rated Power (% HHV) 50.7
4 10 MW 1, 2, 3 USC (25 t) 5 MW Reg, DR, Cap, DCR Minimum Loading Level (%) 10
5 5 MW 1, 2, 3 USC (25 t) 5 MW Reg, DR, Cap, DCR Lifetime (hours) 40,000

Reg ¼ Frequency regulation.

DR ¼ Demand response.
Cap ¼ Capacity value.
DCR ¼ Demand charge reduction.
3.1. Assumptions and inputs
For the bulk hydrogen sale in pathway 1, it is assumed that the
weekly hydrogen demand for both transportation fuel and indus-
trial gas is 1000 kg, with the price at $7/kg and $2/kg, respectively.
Transporting compressed gaseous hydrogen in tube trailers for bulk
hydrogen sale is an attractive economic option [31]. A scenario is
considered where hydrogen buyers place extra onsite tubes to
buffer the infrequent arrival of tube trailer trucks. The tubes are
picked up at the beginning of each week.
When injecting hydrogen into the gas network in pathway 2, the
maximum admixture rates for directly injection into pipelines vary
by country. It is less than 1% in many places in the U.S. Two other
frequently considered options are methanation of hydrogen and
mixing hydrogen with base gas in an underground cavern for
natural gas. Cases 3e5 assume that there is an existing reservoir for
gas storage. Historical prices in $/MMBTU based on higher heating
value (HHV) and injection rates of natural gas for a utility in the
northeast region of the U.S [32] were obtained and used to estimate
the value of using hydrogen to replace natural gas.
The electrolyzer parameters used in this paper are adopted from
Refs. [20,33], as listed in Table 2. In particular, the lower bound of
power consumption is captured by the minimum loading level as a
percentage of the rated capacity. The installed cost can be readily
estimated based on the size of electrolyzer. Annual fixed O&M cost
is expressed as a percentage of the installed cost.
Fuel cell and USC storage are considered in the last two cases.
The assumed fuel cell parameters are adopted from Refs. [20,34,35],
as listed in Table 3. In particular, the electrical efficiency is based on
HHV. The expected lifetime is assumed to be 40,000 h, which is
evenly distributed over a 20-year analysis time window to generate
a constraint on annual operating hours. The USC storage capacity is
assumed to be 25 metric tons and the corresponding investment
cost is $508,000 according to Ref. [36].
Hydrogen is produced at relatively low pressures and must be
compressed for storage. Most compressors used today for gaseous
hydrogen compression are either positive displacement compres-
sors or centrifugal compressors. The parameters for the storage and
tube compressors are listed in Table 4, where a diaphragm
compressor (a type of positive displacement compressor) is used
for tube trailer loading, while the USC storage compressor is cen-
trifugal. The specific energy is the ratio between electric power
consumption and the amount of processed hydrogen. The hydrogen
loss in the compression process is assumed to be 0.5%. The
compressor size depends on not only the electrolyzer size, but also
the hydrogen allocation among different pathways. The grid ser-
vices also affect how much hydrogen will need to be compressed
for storage. In this paper, the compressors are sized according to the
maximum hydrogen production rate and the same sizes are used in
different cases for simplicity. While smaller compressors help
improve the net benefits in some cases, the main findings and
conclusions remain the same because the compressor cost is small
compared to other cost components.
The assumptions and inputs for grid services are described as
follows.
 The ISO-NE day-ahead energy and regulation prices in
2016e2018 were obtained and used to estimate the benefits for
energy arbitrage and frequency regulation. It was found that
prices in different years do not significantly affect the results
and findings. Therefore, only the results with prices in 2018 are
presented to conserve space.
 An HES can participate in demand response programs where its
electricity consumption or generation is controlled during peak
periods in response to time-based rates or other forms of
financial incentive. In this work, it is assumed that the HES
participates in a program where the demand response is
compensated based on the nominated power each month. The
demand response capability can be estimated as the maximum
power output (or minimum power consumption) relative to a
baseline, which is the average monthly power consumption. The
demand response compensation rate is assumed to be $20/kW-
month.
 For the economic benefits associated with capacity, it is
assumed that the HES system is used to reduce the demand of a
distribution utility during system peak hours and thereby
reduce capacity payments. The capacity charge rate is assumed
to be $9.55/kW-month.
 An HES can be used to reduce charges that are based on a utility
or end-user's peak demand. In this work, a transmission charge
rate of $7.6/kW-month is assumed. The load profile of a utility in
the northeast region of the U.S [32] is used.
 The benefits from T&D upgrade deferral vary significantly from
one system to another, depending on whether the existing ca-
pacity is sufficient compared with the projected load and the
associated cost if an upgrade is needed. This use case is excluded
Table 4
Compressor parameters.

Table 2 Parameter Value

Electrolyzer parameters. Storage Compressor Rated Power (kW) 570
Tube Compressor Rated Power (kW) 267
Parameter Value
Specific Energy (kWh/kg) 3
Electricity Consumption Rate (kWh/kg) 56 Losses (% of hydrogen) 0.5
Minimum Loading Level (%) 20 Storage Compressor Installed Cost ($000) 918
Installed Cost ($/kW) 1120 Tube Compressor Installed Cost ($000) 1363
Fixed O&M Cost (% of Installed Cost) 4 Fixed Annual O&M Cost (% of Capital Cost) 4

9
D. Wu, D. Wang, T. Ramachandran et al. Energy 249 (2022) 123638

from this paper as it is hard to draw general conclusions of HES

economic performance from this use case.

The real discount rate is assumed to be 8% with a financial analysis

horizon of 20 years.

3.2. Results

Based on the proposed framework and methods, we have

developed an assessment tool named Hydrogen Energy Storage
Assessment Tool (HESET) hosted on ESET [37], which is a publicly Fig. 3. Annual hydrogen production and allocation by end use. Gas network injection
accessible web-based platform, consisting of a suite of applications is only considered in Cases 3e5 and electricity regeneration is only considered in Cases
that enable utilities, regulators, vendors, and researchers to model, 4 and 5.

optimize, and evaluate various energy storage systems for stacked

value streams. Case studies presented in this paper were performed
cost. The system is not cost-effective with a BCR of 0.4. The
using HESET. For each case, technically achievable annual benefits
electrolyzer is operated for only about 1100 h a year. About 94
were first estimated using the proposed optimal dispatch method,
metric tons of hydrogen are produced annually, where 52 tons
considering the couplings and trade-offs among various value
are sold as transportation fuel and 42 tons are sold as industrial
streams. PV cost and benefits as well as net benefits were then
gas. While transportation fuel sale is capped at the maximum
calculated to assess the overall cost-effectiveness of different cases.
demand, the sale as industrial gas is less than the maximum
The economic results are summarized in Fig. 2, with various cost
demand. This is because further increasing hydrogen production
components and value streams detailed. As can be seen, the net
would require the system to operate during hours with higher
benefits are negative in the first two cases, close to zero in the third
electricity prices that are not cost-effective for hydrogen sale at
case, and positive in the last two cases. In addition, value streams
$2/kg.
from bundling grid services are critical for an HES project to be
 In Case 2, the electrolyzer is operated as a controllable load for
financially viable. In particular, with one-way storage capability in
frequency regulation and demand response. Compared with
Cases 2 and 3, grid services account for 40% and 57% of the total
Case 1, the PV cost slightly increases to $11 million due to
benefits, respectively. With bidirectional storage capability in Cases
additional hydrogen production, but the PV benefits increase by
4 and 5, 76% of the total benefits come from grid services. The
more than 70% because of the two grid services, resulting in a
benefit-cost ratio (BCR) increases from 0.4 in Case 1 without grid
BCR of 0.7, which is still not cost-effective, but is much better
services to 0.7e1 in Cases 2 and 3 with grid services from one-way
than Case 1. The electrolyzer is operated for about 2600 h
HES systems and to 1.28e1.52 in Cases 4e5 with grid services from
annually, producing 104 tons of hydrogen with both the trans-
bidirectional HES systems.
portation fuel and industrial gas capped at the maximum de-
The hydrogen production and allocation are presented in Fig. 3.
mand. While producing hydrogen for industrial gas itself is not
As can be seen, the hydrogen production in the first two cases is
cost-effective during some hours, it helps increase the electro-
very limited because the weekly demand of hydrogen as trans-
lyzer loading level and thereby increase demand response and
portation fuel and industrial gas is capped at 1000 kg. Hydrogen
regulation capability and benefits.
injection into the gas network and regeneration in the other cases
 In Case 3, hydrogen injection into the gas network in pathway 2
significantly increase the hydrogen consumption.
is also enabled. Both electrolyzer operating hours and hydrogen
Additional information, observations, and insights are provided
production increase significantly, to 7467 h and 504 tons,
for each case as follows.
respectively. The PV cost and benefits increase to $18.3 million
 In Case 1, the PV cost is $10.93 million, while the PV benefits are
and $19 million, respectively. The net benefits are slightly pos-
$4.37 million, with 81% of hydrogen revenue from trans-
itive, with a BCR around one. In particular, demand response and
portation fuel and 19% from industrial gas. The electrolyzer
frequency regulation account for about 40% and 20% of the total
installed and O&M cost account for more than 85% of the total

Fig. 2. Present value costs, benefits, and net benefits. Costs and benefits are itemized as stacked bars on the first row in each case to highlight the contribution from different cost
and value streams. Total net benefits are plotted as a narrow bar in black on the second row to show the cost-effectiveness.

10
D. Wu, D. Wang, T. Ramachandran et al. Energy 249 (2022) 123638

benefits, respectively. Hydrogen injection into the natural gas

network accounts for 80% of the produced hydrogen but less
than 20% of the benefits. While the injection into the gas
network itself is generally not cost-effective, it can help increase
the electrolyzer loading level, and thereby the demand response
and regulation capabilities.
 In Case 4, a 10 MW electrolyzer is paired with a 25-ton USC
storage and 5 MW fuel cell. The regeneration capability not only
increases the capacity for demand response and frequency
regulation, but also enables additional value streams from ca-
pacity payment reduction and transmission charge reduction.
The electrolyzer is operated for about 7600 h with 997 tons of
hydrogen produced annually. The fuel cell is operated for 2000 h
to ensure the total operation hours over 20 years are within the
lifetime of 40,000 h. The PV cost and benefits are $47 and $60
million, respectively, resulting in a BCR of 1.28. The cost-
Fig. 4. An example of 5-day HES system hourly operation in Case 5. Top: Electricity and
effectiveness is significantly improved compared with the first regulation prices. Bottom: The electrolyzer and fuel cell power along with the amount
three cases, mainly because the storage and fuel cell signifi- of hydrogen in storage.
cantly increase HES flexibility.
 Case 5 is the same as Case 4 except the electrolyzer size is
reduced from 10 to 5 MW. The PV cost decreases by about 35% applications such as: i) optimal configuration and component
while the benefits only decrease by 23%. As a result, the BCR sizing of an HES system for different use cases and applications, ii)
improves to 1.52. The electrolyzer is operated for about 7920 h regional economic assessment of HES, and iii) policy and incentive
with 550 tons of hydrogen produced annually. Consequently, a design to promote HES deployment. In addition, as a key long-
larger portion (38% in contrast with 25% in Case 4) of the duration storage technology, a look-ahead window beyond a day
hydrogen is used for electricity regeneration. Using hydrogen for is typically needed to optimally schedule and dispatch an HES
electricity regeneration locally is generally more cost-effective system and thereby fully harvest the potential benefits. Forecasting
than injection into the natural gas network. load and prices beyond a day is challenging and introduces addi-
tional uncertainties. Incorporating operational uncertainties into
As an example, the optimal operation of the HES system HES optimal dispatch and economic assessment is another inter-
together with the energy and regulation prices in a 5-day period are esting research direction.
plotted in Fig. 4. As can been seen, hydrogen is produced and stored
when the energy price is relatively low on January 27e29. The Credit author statement
stored hydrogen is withdrawn and used later for electricity gen-
eration using the fuel cell when electricity prices are high. One Di Wu: Conceptualization, Methodology, Software, Validation,
interesting observation is that the electrolyzer and fuel cell are Formal analysis, Writing - Original Draft. Dexin Wang: Methodol-
operated simultaneously during some hours when regulation pri- ogy, Software, Validation, Formal analysis, Writing - Original Draft.
ces are high. The additional benefits from frequency regulation are Thiagarajan Ramachandran: Methodology, Software, Writing - Re-
large enough to overcome the cost associated with the losses for view & Editing. Jamie Holladay: Methodology, Writing - Review &
keeping both the electrolyzer and fuel cell operating. Editing.

Declaration of competing interest

4. Conclusions
This paper presented a techno-economic assessment framework
for HES considering three common energy delivery pathways and
various grid services. Models and optimal dispatch are developed to
define the technically achievable benefits considering the opera-
tional capability, flexibility, and constraints associated with the HES
system and different use cases. Comprehensive analyses were
performed to demonstrate the effectiveness of the proposed
method and identify key factors that affect the cost-effectiveness. It
was found that an HES system may not be cost-effective when only
considering energy applications. Value streams from bundling grid
services account for up to 76% of the total benefits. Advanced
modeling and dispatch methods to maximize stacked value
streams are critical for an HES project to be financially viable. Case
study results also showed that onsite storage and fuel cells can
significantly increase the system flexibility and benefits from
different grid services. In addition, the system needs to be properly
sized to achieve the best economic performance.
This work can become the starting point for HES system design
and valuation toward multiple energy delivery pathways and grid
The authors declare that they have no known competing
financial interests or personal relationships that could have
appeared to influence the work reported in this paper.
Acknowledgment
The authors gratefully acknowledge research support from
Sunita Satyapal and Neha Rustagi at the U.S. Department of Ener-
gy's (DOE) Hydrogen and Fuel Cell Technologies Office and Imre
Gyuk at the DOE Office of Electricity. Pacific Northwest National
Laboratory is operated for the DOE by Battelle Memorial Institute
under Contract DE-AC05-76RL01830.
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