Universidad Pontificia Comillas. Madrid (España)
11 de septiembre de 2026
Resumen:
Society is moving towards a decarbonized economy in which the electricity sector has a key role. Electrification is expanding across transport, industry and services, increasing electricity demand and intensifying the integration of renewable energy sources. In parallel, hydrogen is gaining relevance as an energy carrier capable of decarbonizing sectors where direct electrification is not possible. In this sense, there is a strong linkage between electricity and hydrogen: electricity prices determine the production cost of electrolytic hydrogen, while electrolyzers represent an additional demand on the electricity system, influencing its operation. Understanding how these interdependencies affect each market is essential for assessing hydrogen deployment and policy design.
For this reason, models able to represent both markets and their interactions are required. This thesis contributes to this need by developing a model that represents the two markets simultaneously and captures their main interdependencies: the cost of electrolytic hydrogen production depends endogenously on electricity prices, and in turn, electrolytic hydrogen production represents additional demand in the power sector. The modelling approach is based on imperfect competition using a Cournot oligopoly, where firms act strategically in both markets, competing in term of quantities to maximize profits while considering competitors’ behavior. The equilibrium conditions are reformulated as an equivalent optimization problem, which reduces computation time. To the best of the author’s knowledge, this approach has not been previously applied to interconnected commodity markets. Additionally, a perfect competition counterpart based on social welfare maximization is proposed to provide a benchmark for comparison against the Cournot model. Moreover, the formulation provides a solid foundation to evaluate these markets under different scenarios.
Building upon this model, the thesis examines three main aspects in the electricity and hydrogen markets: (i) the influence of market competition, (ii) the role of long-term contracts, (iii) the impact of regulatory requirements for green hydrogen and different support mechanisms for hydrogen production.
The analysis of competition shows a conflict between the electricity and hydrogen sectors depending on market structure. Under perfect competition, renewable energy is used best, and electricity prices drop. However, this efficiency penalizes the hydrogen sector: less electrolytic hydrogen is produced, forcing a greater reliance on polluting gray hydrogen and causing total emissions to rise.
In contrast, under an oligopoly, market agents aim to maximize their individual profits through strategic bidding behavior. By doing so, they strategically raise electricity prices to increase revenues, while accounting for the impact of higher prices on their own electrolytic hydrogen production costs. This behavior, which is captured by a Cournot equilibrium model, can lead to market inefficiencies. For instance, positive electricity prices may arise even when there is renewable energy available in the system.
The study of long-term contracts (PPAs and HPAs) reveals a synergy between the electricity and hydrogen sectors. These agreements reduce price volatility, stabilize incomes, and allow optimal utilization of renewable resources and electrolyzers, resulting in lower wholesale prices for both electricity and hydrogen. However, the analysis highlights a critical trade-off: increasing PPAs reduce wholesale prices and emissions, but increasing HPAs can raise total emissions due to increased reliance on gray hydrogen when electrolyzer capacity is limited. This underscores the need for policymakers to monitor contract volumes to secure economic benefits without compromising decarbonization goals.
The regulatory assessment focusing on additionality requirements for green hydrogen shows that if renewable capacity targets in National Energy and Climate Plans are achieved, strict additionality rules may not be necessary. The analysis of support mechanisms considers different regulatory instruments designed to mitigate volume and price risks in hydrogen production. Results indicate that none of the mechanisms examined benefit all stakeholders simultaneously. However, they all increase green hydrogen production and lower hydrogen prices, although they fail to reduce gray hydrogen production.
Beyond the applied results, this thesis contributes methodologically by demonstrating the flexibility and analytical strength of solving equilibrium problems through equivalent optimization formulations. This approach has proven suitable for large-scale problems and can be adapted to different case studies.
Overall, the thesis contributes to the understanding of how electricity and hydrogen markets interact under different scenarios. It provides results on the effects of competition, contracts and support mechanisms, offering valuable information for policymakers, regulators, consumers, producers and system operators.
Resumen divulgativo:
Esta tesis analiza los mercados de electricidad e hidrógeno reformulando el equilibrio como un problema de optimización. Evalúa el impacto de la competencia, contratos, normativa y mecanismos de apoyo en su despacho y operación, aportando información sobre cómo interactúan estos mercados.
Descriptores: Investigación Operativa, Teoría de Juegos, Ingeniería y Tecnología Eléctricas, Monopolio y Competencia
Palabras clave: Interconnected energy markets, Electricity market, Hydrogen market, Green hydrogen, Cournot model, Nash equilibrium, Imperfect competition, Long-term contracts, Support mechanisms, Subsidies, Decarbonization.
Cita:
L.A. Herrero, "Modelling the Medium-Term Equilibrium Interactions of Wholesale Electricity and Hydrogen Markets", Tesis Doctoral, Universidad Pontificia Comillas, Madrid, España, 2026.
