Grid-Supportive Electrolysis in Distribution Grids: A Techno-Economic Analysis for Austrian Case Studies

In light of the strong expansion of renewables, electrolysis may act as an alternative to conventional grid enforcement to overcome grid constraints in a timely and effective manner, as it creates additional flexible load and thus enables renewable production peaks to be absorbed. This paper examines whether hydrogen electrolysis can serve as a cost-effective alternative to conventional grid reinforcement in Austrian electricity distribution networks. It goes beyond the current state of the art by using three real-world case studies in Styria, using an integrated techno-economic framework combining distribution-grid simulations, market optimisation, PEM electrolysis modelling and cost–benefit analysis to compare the grid-supportive electrolysis against conventional grid enforcement. The results demonstrate that grid-supportive electrolysis can become competitive under suitable hydrogen market conditions. When operated in grid-supportive mode only, the capacity factor for the electrolysis lies below 5%. Economic viability emerges only when electrolysers are allowed to combine grid-supportive operation with market-driven hydrogen production. Thereby, the hydrogen price proves to be the key determinant: a hydrogen price above approximately 6 EUR/kg incentivises market-based operation and naturally resolves grid congestion without further intervention by the DSO. In some locations, smaller electrolysers (around 20–60% of the theoretically required size) deliver the best economic performance, recovering most curtailed renewable energy while limiting investment costs compared to conventional grid extension.