Renewable hydrogen: The system-wide impact of PPAs and additionality requirements for selected European countries

Novel electricity (attribute) purchase conditions were introduced for the production of renewable hydrogen in the EU and clean hydrogen in the US. This paper uses energy system modelling to analyse the one-at-a-time impact of such conditions for a system-wide network of seven European countries, including the electricity and heat sector. We compare the resulting cost-optimal energy systems for 2030 with a counterfactual scenario without electricity (attribute) purchase conditions—analysing the additionality of the interventions. The study investigates a wide range of possible purchase conditions, such as annual and hourly matching through power purchase agreements (PPAs) with local renewable energy sources (RESs) versus purchasing renewable energy certificates (RECs) from new sources and from existing RESs through virtual PPAs. We analyse the impact on additional renewable energy source (RES), carbon emissions, and system costs. In general, we find significant effects of carbon leakage that lead to increased emissions in the heat sector and neighbouring countries due to electricity trade and counterbalancing, which in some cases reverses the intended policy effects. However, we also find positive spillover effects due to the use of additional RES for power-to-heat. In general, these effects result in relatively small system-wide emissions impacts and additional costs (between 1.3–2 € per kg H2) compared to a counterfactual without added hydrogen demand. We conclude that granting regulatory exemptions based solely on local grid conditions can have adverse effects—a systems-based approach is needed.