Emissions and cost tradeoffs of time-matched clean electricity procurement under inter-annual weather variability -- case study of hydrogen production

TL;DR

This study evaluates how inter-annual weather variability impacts the cost and emissions of time-matched clean electricity procurement for hydrogen production, highlighting the effects of demand flexibility and policy interactions.

Contribution

It introduces a stochastic capacity expansion model to analyze the cost and emissions tradeoffs of hourly versus annual time-matching requirements under weather variability.

Findings

Hourly TMR incurs higher costs than annual TMR under weather variability.

Demand flexibility reduces the cost premium of hourly TMR.

Integrating H2 demand into RPS constraints lowers costs and emissions.

Abstract

Regulators and voluntary corporate sustainability efforts are increasingly adopting time-matching requirements (TMRs) for clean electricity procurement for large loads, such as data centers, and electricity-intensive fuel production, such as hydrogen. We use a stochastic capacity expansion model (CEM) framework to assess how inter-annual weather variability affects the cost, composition, and emissions of procurement-driven infrastructure to meet annual and hourly TMRs using the case study of a grid-connected hydrogen producer in Texas. Our approach, which relies on co-optimizing investments and hourly operations over nine weather scenarios, reveals that hourly TMR comes at a higher cost premium compared to annual TMR than previously estimated by single-scenario deterministic modeling, while emissions outcomes remain directionally consistent. Demand flexibility and partial hourly TMR (80-90%) lower the cost premium while preserving emissions benefits. We further examine how binding renewable portfolio standards (RPS) interact with TMR costs and emissions outcomes. When an RPS is applied to non-H2 electricity demand, annual TMR reduces emissions comparably to hourly TMR at a lower cost. Incorporating H2-related electricity demand directly into the RPS constraint, rather than imposing a separate TMR, achieves similar emissions outcomes at still lower cost, suggesting that TMR-based clean electricity procurement, particularly hourly matching, offers limited additional value in regions with stringent grid decarbonization policies.