4. M ethodology Each scenario analysis consists of three steps: (1) overall renewable hydrogen potentials are calculated for each country (based on renewable, freshwater, and land availability; infrastructure potential; and competing demand for renewable electricity); (2) each country’s production cost curves are computed (based on local renewable electricity and electrolyzers costs); and (3) renewable hydrogen trades are optimized to evaluate overall supply costs and investment requirements.
4.1. Resource Potential Assessment Following the methodology developed by Pflugmann and De Blasio (2020),46 the first step assesses whether renewable hydrogen production potentials for the scenario countries could meet overall EU demand. The analysis considers available renewable energy and freshwater resources, infrastructure potential, and competing demand for renewable electricity. Available renewable energy resources in each country are calculated based on peer-reviewed databases of renewable electricity potentials.47,48 Land availability for renewables is derived by deducting protected natural areas and built urban environments for overall surface area. In addition, remote and uneconomic resources are excluded, which aligns with recent literature (See Appendix - Table 5).49 The equivalent of each country’s current primary energy consumption is assumed to be used in other sectors or remain underdeveloped to account for competing renewable electricity demand.50 The resulting renewable energy potentials are then utilized to calculate renewable hydrogen production potentials—assuming an electrolysis efficiency of 74%, as projected by the International Energy Agency (IEA).51 46 Pflugmann and De Blasio (2020) Geopolitical and Market Implications of Renewable Hydrogen. 47 Eurek et al. (2017) “An Improved Global Wind Resource Estimate for Integrated Assessment Models,” Energy Economics, 64(February), pp. 552–567. https://doi.org/10.1016/j.eneco.2016.11.015 48 Pietzcker et al. (2014) “Using the Sun to Decarbonize the Power Sector: The Economic Potential of Photovoltaics and Concentrating Solar Power,” Applied Energy, 135(December), pp. 704-720. https://doi. org/10.1016/j.apenergy.2014.08.011 49 Kakoulaki et al. (2021). 50 Primary energy data from BP (2020) “Statistical Review of World Energy,” accessed 1 December 2020. https://www.bp.com/en/global/corporate/energy-economics/statistical-review-of-world-energy.html 51 IEA (2019) The Future of Hydrogen.
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