Hydrogen-ready Power Plants: Optimizing Pathways to a Decarbonized Energy System in Germany

The integration of hydrogen technologies is widely regarded as a transformative step in the energy transition. Recently, the German government unveiled a Power Plant Strategy to promote H2-Ready Combined-Cycle Gas Turbines (H2-CCGT), which are intended to initially run on natural gas and transition to green hydrogen by 2040 at the latest. This study assesses the role of H2-Ready power plants in a low-carbon transition and explores plausible pathways using a capacity expansion model for Germany. This topic is particularly relevant for other countries aiming to deploy a large share of renewables and considering H2-CCGT as a flexible backup solution to ensure system flexibility and achieve deep decarbonization. Our results indicate that H2-CCGT enhance system flexibility and significantly alleviate the investments need for additional flexibility and renewable generation capacity, and reduce renewable-energy curtailment by more than 35 %. Moreover, our results also demonstrate that allowing hydrogen in CCGT does not entirely reduce the need for fossil fueled power plants, as hydrogen becomes economically viable only with deep decarbonization or direct subsidies. We show that policy interventions can alter the transition pathways for achieving a decarbonized energy system. Our research challenges a prevailing narrative that financial support for hydrogen is needed to ensure a cost-efficient system decarbonization. More straightforward market-based policy instruments, such as intensified CO2 pricing, or regulatory frameworks such as earlier mandatory hydrogen shifts in H2-CCGT prove more efficient at cutting emissions and costs.