Market Survey for Underground Hydrogen Storage in France

Underground hydrogen storage will play a key role in accelerating the energy transition to a hydrogen ecosystem and market, as it will allow a steady and constant supply of renewable and low carbon hydrogen for users who need visibility and certainty of supply over time ( as hydrogen production would be based  partly on intermittent renewable energies).
In addition, for the electricity system, hydrogen storage, combined with electrolysis production, should facilitate the transition to renewable and low-carbon electricity production. It will bring flexibility to an increasingly renewable-based power generation, reduce the strain on the power grid and optimize the use of the cheapest energy in a competitive market.
The main uses of underground hydrogen storage for potential customers are linked to the five core value dimensions, first developed in an Artelys study for the GIE in 2022, and summarized in the diagram below.

Reference: 2024 04_Artelys Frontier study, UHS target

• System value: by providing flexibility, UHS optimises the setup of the energy system as a whole, which leads to lower capital and operational expenditures across energy sectors (i.e. both electricity and gas/hydrogen) hence a cheaper supply for European consumers.
• Arbitrage value: by storing energy over time, UHS allows to use the cheapest energy sources available across time for all energy vectors. This smooth price volatility and also reduces average price levels, to the benefit of consumers.  
• Environmental value: by enabling the optimal use of renewable energy sources, UHS also enhances the environmental sustainability of the European energy system and accelerates the decarbonization of the sector. UHS limits the curtailment of RES generation and increases the total volume of renewable hydrogen available to the market at all times.  
• Insurance value: By providing storage capacity, UHS enhances the security of European energy supply and ensures that there is sufficient supply to match demand at all times.
• Kick start value: UHS enables the production of hydrogen whenever cheap renewable electricity is available, and this improves the viability of electrolyser business cases. In addition, UHS also supports the roll-out of other renewable energy sources by being able to absorb otherwise curtailed electricity generation transformed into hydrogen, which improves the economic viability of RES generation assets overall.

to enable industrial scale-up

With the ambition of being a European leader in underground hydrogen storage, Storengy will develop an industrial-scale underground storage program in salt caverns, particularly in France, in the Centre-East, North-East of France, and in the South-East of France (through Géomethane, a 50% Storengy joint venture). Commissioning are planned from 2030 onwards.

In order to validate the technologies before scaling-up to industrial facilities, Storengy is a member and leader of two major European pilot projects: the HyPSTER project (bringing together 10 European companies) in Etrez, and the FrHyGe project (bringing together 17 European companies). 

• HyPSTER (Hydrogen Pilot Storage for large Ecosystem Replication): The objective of this project is to store 3 tons of hydrogen in a salt cavern, in order to study the reaction of hydrogen and its behaviour according to the different pressures to which it is subjected. The testing period will spread over 2025 first semester. 

  Link to project website: HyPSTER | 1st demonstrator for H2 green storage

• FrHyGe (France Hydrogen Germany):  The main goal is  to cycle 100 tons of hydrogen 100 times in a salt cavern. The  ambition is to build a demonstrator into the caverns currently in brine of the Geomethane storage facility, operated by Storengy, in Manosque. The objective is therefore to learn about hydrogen management from a technical perspective but also to deepen knowledge of the European hydrogen market. FrHyGe will therefore enrich the lessons learned from the Hypster project. The demonstrator is scheduled to be commissioned in 2027. 

  Link to project website: FrHyGe | France Hydrogen Germany | FrHyGe is dedicated to validating large-scale underground hydrogen storage in salt caverns.

Combined with transport infrastructure, storage will play a key role in the functioning of the future hydrogen market.

Hydrogen will be injected into the grid at the various production points, and hydrogen will be taken out of the grid at the various consumption points. 

The network must be permanently balanced, i.e. the quantities of hydrogen entering the network must be equal to the quantities of hydrogen leaving the network.

Storage is the ideal flexibility tool to ensure the grid balancing that will be imposed by transmission network operators.

Hydrogen production may be constant or, on the contrary, be subject, for example, to a seasonal trend, a day/night effect, to occasional cuts linked to electricity prices or scheduled or unscheduled maintenance.

In the same way, consumption can be constant, or variable over time depending on different factors.

First, it is possible to estimate the need for balancing by storage as follows:

This need is sized at the most relevant time step (t) (hourly or daily depending on the constraints defined by the transport networks) and at the level of all the hydrogen assets in the portfolio (to benefit from an expansion effect). If this value is positive, then hydrogen is injected into the storage from the grid. Otherwise, hydrogen is taken from the storage facility to be injected into the grid.

Over a period of one year, the stock in the storage must always remain positive (or zero) and, at least in terms of its design principle, the quantity injected must be equal to the quantity withdrawn.

The table below illustrates the storage requirements according to 2 distinct consumption and production profiles (with inventory levels represented in green on the y-axis at each time step):

NB: the production and consumption profiles are fictitious but are based on "typical" production profiles with renewable energies as well as consumption profiles of industrials. 

A storage capacity is defined by the following characteristics: 

• VU (in ^Mm3): represents the maximum useful volume required. That is to say, the volume of storage necessary to ensure the proper functioning of an asset (or a set of assets) in view of its consumption profile and the production profile of the supplier(s).
• C_maxinj (GWh/d): corresponds to the maximum injection capacity of the storage. This corresponds to the volume that can be injected over a defined time step.
• C_maxsout (GWh/d): corresponds to the maximum storage withdrawal capacity. This corresponds to the volume that can be drawn over a defined time step.

• Storage Duration: corresponds to the capacity of the storage to inject and withdraw quickly. It is calculated using the ratio: VU/C_max

  The lower it is, the faster the storage should be.

In the case of Production 1 & Consumption 1 (top left), the storage requirement is low in terms of useful volume, but very high with respect to injection and withdrawal capacities, with a duration (=ratio of useful volume / maximum capacity) of the order of 3 to 4.

In the other 3 cases, the storage requirement is greater in terms of useful volume but lower with respect to injection/withdrawal capacities. (Few injection/withdrawal switches required).

In the case of Production 2 & Consumption 1 (bottom left), storage makes it possible to fully compensate for the interruption of production due to the intermittent production of renewable electricity.

In the case of natural gas, storage companies usually offer standard products to their customers, the combination of which makes it possible to meet different needs. 

In the context of hydrogen storage, Storengy is considering products that are relatively similar to those offered for methane storage as the infrastructures required are identical.

It is important to size the storage according to the current needs of the portfolio to be balanced in order to reduce its cost. Indeed, subscribing, when it is not necessary, to a storage of low duration (i.e. high injection/withdrawal capacity per unit volume), to a storage whose performance must be maintained throughout cycling, or to a storage capable of reversing its direction of operation (injection vs. withdrawal) could be unnecessarily costly.

The following products could constitute a proposal for hydrogen storage offers from Storengy.

Seaonal storage with peak  capacity (€)

Inexpensive, this storage makes it possible to meet a need for flexibility, mainly seasonal (slow injection with a duration of 162 days), while having rapid withdrawal with a duration of 24 days capacities to meet peak demand. 

Fast Storage (€€€)

This rapid storage makes it possible to meet a very high flexibility demand, thanks to high and balanced injection (with a duration of 50 days) and fast withdrawal ( with a duration of 52 days) capacities.

Ultra-fast storage (€€€€€)

This ultra-fast storage makes it possible to meet an extremely high flexibility, thanks to very high and balanced injection (with a duration of 5 days) and ultrafast withdrawal (with a duration of 5 days too) capacities. 

A combination of different products can meet various needs. For optimization purposes, it is important to take into account the entire range of performance of the products to meet projected use scenarios: for example, peak storage is able to provide ultra-fast flexibility on a very small part of its volume, flexible peak storage on a larger part of its volume,  etc.

Hydrogen has been the subject of a lot of work at European level, which has made it possible to clarify the regulatory framework within the "Hydrogen and decarbonised gases package”, known as the 4th gas package, adopted in 2024 by the European Parliament and the Council. 

The 4th gas package provides for storage infrastructures to be regulated with an obligation of access to third parties from 1 January 2033. The specific model for regulating storage in France has not yet been defined.

Specifications in terms of hydrogen quality will apply, upstream of the underground hydrogen storage, to hydrogen production to be injected into the transport and storage infrastructures, as well as downstream, to deliveries to end consumers. 

A minimum purity rate of 98% in moles will be achieved, with a treatment of impurities in the hydrogen stream at the outlet of the underground storage (H2O, CO2, CO, O2, hydrocarbons, sulphur compounds, inert substances, etc...), to meet the standards currently being defined.

The higher the required purity, the more expensive the transport and storage components will be. Therefore, it is necessary to find a balance to optimize the required purity and the cost of the end product.