When Batteries Meet Hydrogen: Dual-Storage Investments for Load-Shifting Purposes

Power systems account for nearly 40% of global emissions. As the world tries to reduce emissions by increasing renewable penetration, storage technologies are playing an increasingly important role in matching variable renewable supply with demand. Batteries have become the dominant investment choice for short-term storage operations but are too expensive for long-term storage, which is why alternative technologies, like hydrogen or compressed-air storage, are being experimented with. In our model, a utility can invest in up to two distinct storage technologies - an energy-limited, high-efficiency technology like batteries, and a power-limited, low-efficiency technology like hydrogen - to serve demand while minimizing costs. We introduce the concept of conflict states - times when there is not enough excess solar energy to fully utilize both technologies, and one must take priority - and study the impact of operational priority on renewable penetration. When storage capacities are given, prioritizing batteries maximizes renewable penetration, due to hydrogen's lower efficiency. However, when priority is set before storage capacities are chosen, e.g. by a regulator, the result is reversed, and prioritizing hydrogen maximizes renewable penetration under certain conditions. We then calibrate our model with real-world data and show that, against common beliefs, hydrogen can be profitably used not just for seasonal but also for diurnal storage; that prioritizing hydrogen during its early adoption may increase demand met through storage by up to 19%; and that combining both technologies can substantially reduce costs and achieve renewable penetration levels that would be unattainable with only one storage technology.