42
4 Scientific Literature Review for Establishing the Status …
could mature, and the costs could decrease significantly, like what happened for
the wind and solar PV technologies.
In liberalized electricity markets, four main policy instruments have supported
the development of renewable energy projects:
• A price for the electricity production regardless of the market price such as the
feed-in tariffs.
• A fixed amount on top of the electricity market price such as a feed in premium
or as a production tax credit.
• A grant for the initial investment, a tax credit, or an accelerated depreciation
scheme.
• Renewable portfolio standards acting as a mandate to increase the renewable
electricity production.
These policy instruments have been highly effective at decreasing the cost of
renewable energy to a point that the LCOE of a large-scale renewable energy
plant is lower than gas or nuclear (Joos and Staffell 2018). Policies supporting the
development of renewable energy generation have an indirect positive effect on
the renewable hydrogen business case as the renewable electricity prices decrease.
However, due to an almost zero marginal costs of renewables, the intermittent
nature of renewables and the interplay between the price volatility and renewable
technologies, the policies that have been successful to support the development
of renewable energy will become less successful as the share of renewable in
the energy mix increases. As the prices of the electricity market decreases, the
investors will not invest in a renewable energy project without enough guarantees
on returns (Blazquez et al. 2018).
4.5.2 The Recommendations for Policy Development
The policy instruments that have been used to develop the global renewable
energy generation capacity can also be utilized to develop the renewable hydrogen production through water electrolysis. Moreover, specific policy instruments
for renewable hydrogen can be considered.
The creation of a so-called “green” hydrogen market would result in a premium
for the selling price of hydrogen produced from renewable sources (van Leeuwen
and Mulder 2018). This would imply the creation of certification system for the
hydrogen produced from renewable energy.
4 Scientific Literature Review for Establishing the Status …
could mature, and the costs could decrease significantly, like what happened for
the wind and solar PV technologies.
In liberalized electricity markets, four main policy instruments have supported
the development of renewable energy projects:
• A price for the electricity production regardless of the market price such as the
feed-in tariffs.
• A fixed amount on top of the electricity market price such as a feed in premium
or as a production tax credit.
• A grant for the initial investment, a tax credit, or an accelerated depreciation
scheme.
• Renewable portfolio standards acting as a mandate to increase the renewable
electricity production.
These policy instruments have been highly effective at decreasing the cost of
renewable energy to a point that the LCOE of a large-scale renewable energy
plant is lower than gas or nuclear (Joos and Staffell 2018). Policies supporting the
development of renewable energy generation have an indirect positive effect on
the renewable hydrogen business case as the renewable electricity prices decrease.
However, due to an almost zero marginal costs of renewables, the intermittent
nature of renewables and the interplay between the price volatility and renewable
technologies, the policies that have been successful to support the development
of renewable energy will become less successful as the share of renewable in
the energy mix increases. As the prices of the electricity market decreases, the
investors will not invest in a renewable energy project without enough guarantees
on returns (Blazquez et al. 2018).
4.5.2 The Recommendations for Policy Development
The policy instruments that have been used to develop the global renewable
energy generation capacity can also be utilized to develop the renewable hydrogen production through water electrolysis. Moreover, specific policy instruments
for renewable hydrogen can be considered.
The creation of a so-called “green” hydrogen market would result in a premium
for the selling price of hydrogen produced from renewable sources (van Leeuwen
and Mulder 2018). This would imply the creation of certification system for the
hydrogen produced from renewable energy.