Modeling future hydrogen supply chains in the western United States under uncertainties: an optimization-based approach focusing on California as a hydrogen hub

Abstract

With a vibrant economy and regulatory drivers to decarbonize, California could be a major hydrogen demand center, but uncertainties in hydrogen demand, supply, and government policy can influence infrastructure deployment. We employ a least-cost infrastructure planning framework to analyze the impacts of these uncertainties for future hydrogen supply chains. Falling electricity prices and electrolyzer capital expenditures would encourage investments in renewable hydrogen in all regions, more so outside California. Fossil-based hydrogen investments in California could continue well beyond 2030, but some of it could be disincentivized with additional renewable hydrogen mandates. Investments in building dedicated hydrogen pipelines require high degrees of demand certainty, which could be spurred by farsighted policy incentives. A complete reliance on an increasingly renewables-based electricity grid for hydrogen production can be expensive for California, unless grid-connected electrolyzers are further incentivized through favorable rate structures. Long-term investment strategies substantially reduce system costs in all our scenarios.