In projections on the evolution of the energy mix in the long term, hydrogen is often presented

both as a source of flexibility and a factor in reducing greenhouse gas emissions. However,
these reasons are very distinct on a theoretical level, and must be distinguished in the
analysis:

On the one hand, it is a question of decarbonizing existing uses, for example for the
current uses of hydrogen in the industry but also potentially for heavy mobility (in addition to fully
electric solutions). In the medium term, to supply the existing gas network as a substitute for
fossil gas (within a certain limit).

On the other hand, hydrogen could contribute, under certain conditions, to the balance of the
electricity system by providing a solution for storage and destocking (power- to-gas-to-power
principle*).

* P2G2P consists of electrolysis to transform renewable and/or low-cost electricity into gas,
namely hydrogen (P2H) or methane (P2M), and repowering the gas to produce electricity when
needed. The latter option also requires a methanation reactor to generate methane using
hydrogen and carbon dioxide as reactants. The advantage of producing methane is that it can
be injected into the natural gas network without any limit on the percentage of product gas
volume, which should be considered in the case of P2H and hydrogen being injected to natural
gas network.

There are two main electrolyser technologies are commercialized on the market, namely
alkaline and Polymer Electrolyte Membrane (PEM) electrolyser. Alkaline electrolyser is selected
for this study because of its lower CAPEX (stack cost of 431 EUR/kW versus 917 EUR/kW for
PEM) and lower degradation rate (2 mV/h versus 5 mV/h for PEM approximately) [54].

(54) Parra D, Patel MK. Techno-economic implications of the electrolyser technology and size
for power-to-gas systems. Int J Hydrogen Energy 2016:1e14.

(Andreas Abdon, Xiaojin Zhang, David Parra, Martin K. Patel, Christian Bauer, Jörg Worlitschek,
Techno-economic and environmental assessment of stationary electricity storage technologies
for different time scales, Energy, Volume 139, 2017, Pages 1173-1187, ISSN 0360-5442,
https://doi.org/10.1016/j.energy.2017.07.097.)

2030/35: At these deadlines, the use of hydrogen as a means of storage is not necessary to
obtain a diversification of the electricity mix (reduction of the share of nuclear to 50%) and to
accommodate the volumes of renewable energies planned by the PPE.

2050: In the longer term (horizon 2050), on the other hand, scenarios based exclusively or very
mainly on renewable energies will necessarily have to rely on storage. In these cases, the
power-to-gas-to-power loop, via hydrogen, is an option to consider, despite its low energy
efficiency (between 25% and 35% according to current technologies).**

**Electrolyzers, which are responsible for water electrolysis process has a high total efficiency of
up to 80%; however, because of the need for multiple energy conversion, the efficiencies of
P2G2P installations are limited to 40% [19,20]. The vital role for these systems is buffering
electricity during overproduction. The stored energy can be fed back into the grid when the
electricity demand exceeds the production.

(19) Kotowicz, J.; Jurczyk, M. Economic analysis of an installation producing hydrogen through
water electrolysis. J. Power Technol. 2019, 99, 170–175.
(20) Kotowicz, J.; Węcel, D.; Jurczyk, M. Analysis of component operation in power to gas to
power operation. Appl. Energy 2018, 216, 45–59.

(Węcel D, Jurczyk M, Uchman W, Skorek-Osikowska A. Investigation on System for Renewable

Electricity Storage in Small Scale Integrating Photovoltaics, Batteries, and Hydrogen Generator.
Energies [Internet] 2020;13(22):6039. Available from: http://dx.doi.org/10.3390/en13226039)
At present, the hydrogen consumed in France corresponds almost exclusively to non-
energy industrial uses, mainly in the oil refining and chemical sectors.

The hydrogen used in these processes is mainly produced from processes using fossil fuels
(95% from gas, oil and coal), which are CO2 emitters. Part of this production is "inevitable" and
inherent to the industrial activities concerned. Another share (around 40%) is produced by
dedicated methane steam reforming* units: this could be replaced by low-carbon hydrogen.
* Hydrogen produced by steam reforming is termed 'grey hydrogen' when the waste carbon
monoxide is released to the atmosphere and 'blue hydrogen' when the carbon monoxide is
(mostly) captured and stored geologically. (Wikipedia)

Priority concerns the development of electrolysis, in order to limit the use of carbon capture
and storage technologies which still present uncertainties in terms of availability, reliability and
acceptability.
…
A model in which low carbon hydrogen would be produced only during these periods would lead
to irregular hydrogen production, which raises important issues for the organization of the
downstream part of the chain (industrial integration and/or the need to developing dedicated
hydrogen storage capacities to ensure continuity in the supply of hydrogen).

the full cost of electrolysis appears to be much higher than that of steam reforming. This
explains why the hydrogen used today is of fossil origin.

With an unchanged regulatory and pricing framework, the price of carbon-free hydrogen
produced by electrolysis appears, in all three modes, to be higher than that of steam reforming,
even taking into account the significant cost reductions of electrolysers. On the other hand, by
retaining a high value for the environmental externality – for example by considering
the shadow value of carbon at the horizon of 2035 (€375/t) – electrolysis generally
appears less expensive. This shows that it is relevant, from a socioeconomic point of view, to
substitute electrolysis for steam reforming in the next fifteen years. For a low CO2 valuation
hypothesis
The development of the sector will therefore be dependent on the evolution of taxation and
public support.

These analyzes will lead to specifying the place of hydrogen in the decarbonization
scenarios of the energy system, with a view to achieving the objective of carbon
neutrality by 2050.

The current applications of hydrogen are almost exclusively industrial: it is used for the refining
of petroleum products; it is necessary, combined with nitrogen, for the production of ammonia
used in particular for the manufacture of fertilizers; in chemistry, it is involved in particular in the
manufacture of methanol; it is also used in metallurgy, glassware, etc.

The hydrogen used today is a carbonaceous solution. Although its use does not emit
greenhouse gases as such, its current production is essentially based on the transformation of
hydrocarbons (gas, coal, oil) and therefore emits CO2.

Hydrogen, as an industrial input (for refining or the production of fertilizers in particular), is a

product that is difficult to substitute: for these uses, the challenge therefore consists in
decarbonizing its production.

ArcelorMittal 2030:
In Fos-sur-Mer, ArcelorMittal will build an Electric Arc Furnace (EAF). This new unit will
complement the ladle furnace announced last March and supported by France’s recovery plan,
‘France Relance.’ Together these investments will turn Fos-sur-Mer into a reference site for the
production of low carbon, circular steel, made from recycled steel.
In Dunkirk, ArcelorMittal will build a 2.5 million tonne Direct Reduction of Iron (DRI) unit
to transform iron ore using hydrogen instead of coal. This DRI will be coupled with an innovative
technology electric furnace and completed by an additional Electric Arc Furnace (EAF). Other
investments are already under way to continue to increase the proportion of scrap steel used.
ArcelorMittal 2050:

ArcelorMittal’s French operations have already started working on a second step in their
decarbonisation programme, which will use the technologies implemented during the first step,
along with carbon capture and storage or utilisation (CCU/S) technologies, assuming the
technology sufficiently matures and regulation ensures it economic viability. This second step
will enable ArcelorMittal’s French operations to reach carbon neutrality by 2050.

The partnership between ArcelorMittal and the French government for the projects is subject to
EU approval, which is anticipated by the second quarter of this year, as well as the availability of
economically viable energy infrastructure and supply.

Direct uses:
mobility (heavy mobility), industry (steel), thermal uses (industry or building)
CO2 + Hydrogen = synthetic methane, substituting Gas.

Two of them have reached a level of maturity that makes it possible to envisage
industrial development:

steam methane reforming or coal gasification associated with a system for capturing and storing
the CO2 emitted; (blue) “the use of carbon capture and storage technologies is intended to be
prudent and reasonable compared to other scenarios. […] For example, they are not used to
capture and store emissions from the combustion of fossil fuels.” the electrolysis of water from
carbon-free sources of electricity.

Hydrogen: means of storage necessary to support the development of wind or solar energy,
sometimes as a means of reducing emissions from certain sectors at lower cost, and sometimes
both at the same time.

1) The first reason is to decarbonize existing uses. This objective concerns the current uses of
hydrogen in industry – for which hydrogen is not easily substitutable.

2) Considering hydrogen as a storage and destocking solution ( power-togas- to power

principle) necessary for the balance of the electrical system.

Evolution of the electricity mix used for the analysis are based on the ambitions indicated in the
draft PPE published by the Government. They include in particular:

- an acceleration in the development of renewable energies (EnR) by 2028 and assumed to

be extended over the period 2029-2035,
- the closure of coal-fired power stations in the medium term and the absence of new fossil-
fuel thermal power station projects,
- decommissioning of fourteen nuclear reactors by 2035 (including those at Fessenheim)
according to the trajectory indicated by the government,
- the development of electric mobility, to the tune of several million vehicles,
- generally stable final electricity consumption over the next few years and development of
hydrogen production by electrolysis,
- sustained development of interconnections.

RTE's study explores scenarios for the development of electrolysis according to three modes of
separate operations, detailed on the following pages:

1) Mode of operation no. 1: supply on the market during periods of renewable or nuclear
marginality;

Operating solely on the renewable production margins does not make it possible to achieve the
low-carbon hydrogen production objectives, the renewable surpluses seen from France being
well below the 30 TWh required by 2030-2035.
+ Carbon-free electricity by definition, inexpensive on the markets
- The annual operating time is low (10 to 20% of the time), especially more than the total volume
to be produced in France is high, or that periods of low prices lead to competition from other
uses in France or abroad. This leads to large electrolysis powers to produce the required
volumes, to be amortized over short periods (significant electrolyzer annuities)
- Highly variable and random production requires storage if use is constrained

2) Mode of operation no. 2: supply on the base market, excluding situations of tension;

Operation of the electrolyser continuously, except during situations of voltage on the electrical
system (peak days signaled by the capacity mechanism and/or periods of high electricity prices)

+ Long operating life (7000 to 8000 hours per year) allowing good amortization of the fixed costs
of electrolysis and good continuity of hydrogen production
- Potential impact on the european electric system's direct or indirect CO2 emissions
- Cost of electricity supply which remains high over certain periods, and sensitive to the
European market price of electricity and therefore to the evolution of fuel and CO2 prices

3) Mode of operation n°3: coupling of the electrolysers with local renewable production
(wind and/or solar). In the RTE study, this mode is tested by taking the hypothesis of self-
production from photovoltaic installations.

Operation of the electrolyser at the foot of an installation for the production of electricity from
renewable sources: to benefit from a good load factor, the electrolysis is undersized in relation
to the installed renewable production. Priority is given to the electricity supply for electrolysis,
the rest is injected into the networks to be sold on the electricity markets.

+ Controlled supply cost (fixed costs of photovoltaic panels)

+ Potentially significant electrolysis operating times (>40%)
- Location potentially remote from industries or existing gas networks • Business model
sensitive to revenues from the sale of electricity, dependent on market prices (preference
for the highest possible market prices)

These three modes constitute “framework” examples. They are not intended to predict the
operating modes that will actually develop, but to test the impacts for the electrical system of
several extreme scenarios for the development of electrolysis.

The Durance Lubéron Verdon urban community (DLVA) supports a project combining
photovoltaic production and hydrogen production and storage. This project clearly falls under
model no. 3. It presents characteristics of sunshine very favorable to solar production, and on
the other hand, hosts a gas storage site in a salt cavity near Manosque.

Electrolysis should be installed on the existing storage site, operated by the company
Géomethane. The electricity transmission network will therefore be used to transport the
electricity from the production sites to the electrolyser: it is therefore not a pure
“offgrid” self-production model.

Hidrogene use: direct injection into the public gas networks, use for mobility needs (public
transport, alternative to diesel for the Marseille- Briançon) or for industrial uses in the territory of
the Aix-Marseille metropolis (thus raising the question of the development of dedicated transport
infrastructures).

The Zero Emission Valley program aims to develop a regional sector for carbon-free
hydrogen mobility by jointly deploying 1,000 vehicles and 20 charging stations by 2023. This
deployment corresponds to 25% of the "mobility" objectives of the national deployment plan for
hydrogen.

The hydrogen will be produced by fourteen electrolysers, supplied with electricity from
renewable sources;
* the methods of traceability of this origin and their possible implications on the operating mode
of electrolyzers are currently being analyzed (guarantees of origin, PPA, etc.).

The H2V59 project, led by the H2V company, consists of creating a hydrogen production
plant located on land belonging to the Grand Port Maritime de Dunkirk.

Hydrogen production would be ensured by two identical units including 26 electrolysers each.

Hydrogen produced has an energy purpose: it would be injected into the natural gas transport
network, mixed with methane.

* certificates of origin guaranteeing that the electricity consumed and transmitted by the public
electricity transmission network is of renewable origin

The “Solarzac” project, led by the company Arkolia Energies is

presented as an "energy business park" project, photovoltaic and agropastoral, as
part of the conversion of a vast area * private property located on the south of the Larzac
plateau.

During the prior consultation carried out under the aegis of a guarantor, the contracting authority
proposed three scenarios for the project, one of which includes coupling between photovoltaic
production and production of "green gas" (scenario no. 3). In this scenario, part of the
production (~40%) of the 320 MW of photovoltaic panels is thus used to produce hydrogen from
electrolysis on site. This hydrogen is then recombined, via a biomethanation process, with CO2
captured in the ambient air, with a view to producing methane and injecting it into the public gas
network.

If low-carbon hydrogen production is solely focused on periods of low prices (periods during
which there is unused renewable or nuclear generation), it will need to operate for a limited
number of hours. The operational mode has impacts on the sizing of electrolyzers, power
demands, and hydrogen storage needs for the year. Even by 2030-2035, there shouldn't be so
many periods in the year where no fossil power plants would be needed to ensure real-time
system balance.

This observation leads to an important result: assuming (in an extreme case) that the 630,000
tons of hydrogen are produced only during these periods, the combined power capacity of the
required electrolyzers would reach 38 GW. This, in itself, can pose a challenge, as the industrial
capacity to develop so many electrolyzers within a fifteen-year timeframe is not assured as of
today.

On the other hand, a lower target volume of hydrogen produced via this mode of operation can
be achieved with very much lower electrolysis capacities: for example, for a target volume
corresponding to one third of the objectives of the PPE ( ~200,000 t/year), an installed capacity
of electrolysers almost ten times lower than that mentioned above (~4 GW) is sufficient to cover
the need, these having a significantly higher load factor (from 1 30% order).

On the other hand, for operational modes running as base-load or with photovoltaic self-
production, the operating duration is longer and results in a much lower total electrolysis
capacity requirement, specifically 3.7 GW (mode #2, base-load without voltage situations) and 9
GW (mode #3, coupled with photovoltaic self-production).

Similarly, the possible development of stationary batteries is likely to lead to storage excess
renewable and nuclear production over these periods. In operating mode no. 1, access to an
electricity supply of renewable or nuclear origin is therefore subject to competition between
electrolyzers and other flexible means

for hydrogen production aimed at supplying an industrial process in tape, operating mode 1
(marginal renewable and nuclear) involves a significant storage requirement (several hundred
kilo tons of hydrogen) so as to (i) receive large quantities of hydrogen for short periods and (ii)
ensure seasonal or even interannual storage to guarantee a supply even during years with few
periods of low prices.

This need for storage can constitute another major difficulty for the implementation of this
operating mode (1), as it would translate into significant costs but also potential problems of
acceptability of the proximity of storage sites due in particular to the perception of risks of
industrial accidents.

For uses other than supplying an industrial process in band (for example direct injection into the
gas network), the need for continuity of hydrogen supply is not the same, but may involve other
constraints for this operating mode (for example, limit (maximum or minimum???) on the
allowable hydrogen level in the gas network at any time).

In mode 2 (base, excluding voltage situations) the need for storage is in all cases much lower
due to greater regularity in production. Storage makes it possible to ensure a constant supply
during periods of curtailment of electrolysers (high electricity prices or participation in reserve
mechanisms).

For mode 3 (coupling with photovoltaic selfproduction), production is also more regular than
for mode n°1 (marginal renewable and nuclear). Nevertheless, the difference in production
between day and night, as well as between summer and winter, supposes a significant storage
requirement to ensure supply in bands.

By positioning the consumption of electrolysers during periods when renewable and nuclear
production cannot find outlets, the production of hydrogen only marginally influences the
balance of electricity exchanges (it occurs at a time when a part of the carbon-free electricity
was very abundant and could be lost

in the basic and self production operating modes, the consumption of electrolysers is in direct
competition with other consumption in neighboring countries, which tends to reduce exports. u
The adaptation of the electricity production fleet by increasing the installed capacities of wind
and photovoltaic production, or by maintaining the capacity of nuclear production makes it
possible to compensate for the reduction in exports (offpeak base modes and PV self-
production) or increase them (marginal low-carbon mode).

Grid improvements: The purpose of these studies was also to verify the possibility that the
judicious location of new facilities could relieve the network and make it possible to postpone or
even call into question the need to strengthen structural elements. (but need infrastructure for
the electrolysers)

This involves using existing gas infrastructures to transport decarbonated hydrogen over long
distances, or building new infrastructures dedicated to hydrogen.

For a given electricity fleet, exporting electricity, within the limits of network capacity,
nevertheless reduces CO2 emissions more than producing low-carbon hydrogen

This result is explained by the still high carbon content of the electricity mixes of most European
countries, as long as they have recourse to significant production of fossil origin, even gas.

The analysis of the carbon footprint of the switch to electrolysis for the production of
part of the hydrogen used for industry in France cannot be reduced to a national
analysis.

This result can be explained by the persistent carbon content in the electricity mixes of most
European countries, as long as they rely heavily on fossil-based production, even if it's natural
gas. This remains the case for many European countries by the horizon of 2035, even when
considering their ambitions for evolving the electricity mix as outlined in their Integrated National
Energy and Climate Plans (PNIEC).
RTE had concluded in May 2019 that, all else being equal, it was more advantageous to
decarbonize mobility than to export electricity produced in France to other countries. This is
because the efficiency of electric vehicles is much higher than that of internal combustion
vehicles (3 to 4 times more efficient), and avoiding the combustion of oil represents significant
emission reductions. The reduction in CO2 emissions is, in this case, greater when exporting
electricity, up to the capacity of the grid, than producing low-carbon hydrogen. It's even greater
than avoiding the operation of a gas-fired power plant and roughly equivalent to avoiding the
operation of a coal-fired power plant.

These characteristics do not apply to the transition from steam methane reforming to water
electrolysis for hydrogen production:

* The efficiency of water electrolysis is of a similar order of magnitude to that of steam methane
reforming (around 70%).
* Electricity production from natural gas has an efficiency of around 55% for a Combined Cycle
Gas Turbine (CCGT), while steam methane reforming directly uses natural gas. Therefore, from
an energy perspective, it is more interesting to avoid the operation of a gas power plant than a
steam methane reforming facility.

This marginal analysis takes into account the European nature of the electrical system.
However, it is inherently partial because it operates on the periphery of a fixed system and does
not account for changes in the situation between two given years. A comprehensive analysis
requires integrating the evolution of the production fleet over the entire period.

> Whatever the operating mode, the development of electrolysis makes it possible to avoid the
emissions associated with the conventional production method (steam reforming), without a
significant increase in CO2 emissions from the French electricity mix.

> adapting the carbon-free electricity mix makes it possible to at least neutralize the effect that
the increase in French consumption could have had on the balance of electricity exports and
therefore on CO2 emissions related to fossil electricity production in other European countries.

Steam reforning H2
Elctrolisys H2: local sites

Imports/export (hydrogen)

Electrolysers: Polymer Electrolyte Membrane (PEM), Alkaline electrolyser, etc?

Energy source:

Materials intensity from renewable sources:

Energy traceability:

Infrastructure:

Uses: