HyBex: Hydrogen market balancing

Belgium has the clear ambition to become an import and transit hub for renewable molecules and establish a robust hydrogen market. HyBex aims to model two important preconditions that are needed to reach these goals: a marketplace allowing buyers and sellers to efficiently trade hydrogen commodities and certificates; and a well-functioning balancing model to (cost)-efficiently and effectively balance the hydrogen network under all conditions.

What is balancing?

Hydrogen suppliers and offtakers on a network need to nominate a balanced portfolio of supply and demand. However, in case they deviate from their supply and demand schedules, balancing may be needed, since deviations from nominated capacity will impact the H2 linepack and pressure within the network should at all times remain within an acceptable pressure band, i.e. “balanced”.

Compared to natural gas, a hydrogen network will be more sensitive to imbalance events, due to the inherent instability of electrolysis supply, the smaller network linepack and lack of large-scale storage options in Belgium. Just like in the power network, where ancillary balancing services counter the intermittent supply of renewables and storage options are limited, a balancing mechanism for hydrogen needs to be investigated.

From imbalances to solutions

Imbalance events can occur due to several causes: deviations from planned production and consumption profiles, unplanned producer/offtaker outages, grid incidents, electrolysers reacting to power market price signals… This will cause the linepack to decrease in case there is no reaction from the market or the Hydrogen Network Operator (HNO).

Ammonia cracker outage impact on the HyBex project

HyBex identified several types of solutions to tackle these incidents: market flexibility response, storage (linepack, geological storage, neighbouring countries), market rules (eg. regulations at interconnection points) and a balancing market with ancillary services.

With the Hinicio proprietary simulation tool ANDREA, the most important solutions were simulated to assess their efficiency in tackling imbalances. Imbalance events were simulated in 4000 different situations, all varying according to several parameters, i.e. network conditions and deployment, types of imbalance events and types of balancing solutions.

Valuable conclusions and key insights were gleaned from these simulations:

First, the system is able to withstand, to some extent, some level of imbalance induced by electrolysers reacting to power market signals.
Next, disruptive imbalance events, such as an unexpected outage of a large consumer or producer, has a major impact on the system linepack and could jeopardize the security of supply. Therefore, short-term reactions, fast data provision and low-granularity monitoring are needed to enable solutions to be found quickly.
Finally, a flexibility response from market players can help balance the network in an effective way, provided that the response is available, proportional to the imbalance and can be activated on time. To trigger this flexibility, players would need financial incentives and a dedicated remuneration mechanism should be set up. Much as these flexible helpers would be incentivized, imbalance causers could be penalized outside a certain linepack pressure safety range.

Evolving towards a hydrogen balancing model

These conclusions provide valuable information for Fluxys, as appointed HNO for Belgium, to develop and evolve towards a balancing model for hydrogen in Belgium. The results of the simulation model will help Fluxys in writing a Code of Conduct integrating balancing principles, which will be consulted with the market and submitted to the CREG. Fluxys can thereafter set up the necessary tools and systems for a balancing market, choosing building stones adapted to the needs of a nascent hydrogen market, and evolving in line with growing market maturity. This balancing market can subsequently be integrated in the HyBex hydrogen trading exchange.

Webinar on HyBex: Hydrogen market balancing

On June 19^th 2024 a HyBex webinar was organized to discuss the first results of the balancing market simulations (work package 2). The webinar slides can be found here below.