Negative redispatch power for green hydrogen production: Game changer or lame duck? A German perspective

Abstract: Following years of controversial discussions about the risks of market-based redispatch, the German transmission network operators finally installed regional redispatch markets by the end of 2024. Since water electrolysers are eligible market participants, the otherwise downwards redispatched renewable energy can be used for green hydrogen production in compliance with European law. To show how different price levels in regional redispatch markets affect green hydrogen production cost and thus the incentive for electrolyser market participation, we use historic redispatch time series and evaluate various power purchase scenarios. Our results show that low price levels can lead to notable production cost reductions, potentially counteracting uncertainties in redispatch power availability and thus incentivising system-beneficial electrolyser siting. In contrast, the possibility of high price levels can nullify an increase in the competitiveness of German and European green hydrogen through production cost reductions and discourage market participation.