  Green hydrogen production by electrolysis is considered essential for global
climate ambitions, however development of the industry is lagging behind
expectations due to the perceived financial risk for individual projects. For
new bilateral Hydrogen Purchase Agreements (HPA's), green hydrogen project
proponents will seek to manage operating cost risks using investment in
flexible assets, and energy hedging - two sets of decisions that are usually
considered separately, but are co-optimised in this study to form a
comprehensive asset sizing and procurement strategy. A 2-stage market-focused
stochastic program is developed to model a hydrogen producer supplying an
industrial customer, including hydrogen storage, and energy hedging using Power
Purchase Agreements (PPA's) and power futures. The effects of uncertainty in
renewable production, market prices, and hydrogen demand are studied. Several
planning methods are tested on the model, benchmarking stochastic methods
against simpler methods that are common in literature and in industry. Finally,
the model is applied to several regulatory contexts discernible in the European
green hydrogen classification rules (Renewable Fuel of Non-Biological Origin,
RFNBO). The results show that in less complex cases, simple rule-based hedging
methods can be effective, while in cases with demand uncertainty stochastic
models are advantageous. The results also suggest that new green hydrogen
subsidies are likely to stimulate demand for technologically and geographically
diverse PPA portfolios.
