  Hydrogen can contribute substantially to the reduction of carbon emissions in
industry and transportation. However, the production of hydrogen through
electrolysis creates interdependencies between hydrogen supply chains and
electricity systems. Therefore, as governments worldwide are planning
considerable financial subsidies and new regulation to promote hydrogen
infrastructure investments in the next years, energy policy research is needed
to guide such policies with holistic analyses. In this study, we link a
electrolytic hydrogen supply chain model with an electricity system dispatch
model, for a cross-sectoral case study of Germany in 2030. We find that
hydrogen infrastructure investments and their effects on the electricity system
are strongly influenced by electricity prices. Given current uniform prices,
hydrogen production increases congestion costs in the electricity grid by 17%.
In contrast, passing spatially resolved electricity price signals leads to
electrolyzers being placed at low-cost grid nodes and further away from
consumption centers. This causes lower end-use costs for hydrogen. Moreover,
congestion management costs decrease substantially, by up to 20% compared to
the benchmark case without hydrogen. These savings could be transferred into
according subsidies for hydrogen production. Thus, our study demonstrates the
benefits of differentiating economic signals for hydrogen production based on
spatial criteria.
