Green hydrogen, produced by splitting water with renewable electricity, is widely seen as essential for decarbonizing industries that cannot run directly on renewables: steel, cement, shipping, and aviation. Its adoption has been held back largely by cost. At current prices, green hydrogen runs roughly 6 to 8 euros per kilogram, compared with about 1.50 to 2.50 euros for hydrogen produced from natural gas.
A team at the Leibniz University Hannover has examined one promising avenue for closing that gap: using “redispatch” electricity, surplus renewable power that grid operators would otherwise waste because transmission lines cannot carry it all to where it is needed.
The results, published in Progress in Energy and reported by Physics World, are a qualified yes. Using redispatch electricity at zero marginal cost can reduce green hydrogen production costs by 0.9 to 1.96 euros per kilogram, depending on storage configuration. That is a substantial saving, but it requires redispatch to be combined with power purchase agreements from other renewable sources. Exclusive reliance on redispatch is not cost-competitive at any price level or project size.
How Redispatch Works
Electricity grids must be balanced at all times. When wind farms in northern Germany generate more power than transmission lines can carry south to industrial centers, grid operators perform “redispatch”: they reduce renewable generation in the oversupplied region (curtailing it) and increase generation elsewhere to meet demand. Producers are compensated for the curtailed power, which is effectively wasted.
After years of debate, German transmission network operators introduced regional redispatch markets in 2024. These markets allow otherwise-curtailed renewable electricity to be sold locally instead of being discarded. Water electrolysers, which split water into hydrogen and oxygen using electricity, are eligible participants. Using this curtailed power also complies with European Union rules for green hydrogen certification.
Electrolysers are uniquely suited to this role because they do not require a continuous power supply. They can switch on and off flexibly, acting as a demand-side shock absorber for the grid: when oversupply exists, they consume it; when supply tightens, they pause. The hydrogen they produce can be stored in pressure tanks or salt caverns for later use.
The Study’s Key Numbers
Brandt, Bensmann, and Hanke-Rauschenbach modeled a green hydrogen production plant using historic German redispatch data from 2022 to 2023 across eight relief regions. They calculated the Onsite Hydrogen Supply Cost, annualized capital and operating expenses plus power costs divided by annual hydrogen output, under several scenarios.
At a redispatch price of zero euros per megawatt-hour, combined with a power purchase agreement from other renewables, the maximum cost reduction ranged from 0.84 euros per kilogram (using high-cost pressure-tank storage) to 1.84 euros per kilogram (assuming a fully flexible off-taker who could absorb hydrogen at any rate). Physics World rounds this to the 0.9 to 1.96 euro range.
The savings are highly sensitive to price. At a redispatch price of just 20 euros per megawatt-hour, the usage rate of redispatch power drops from 68 percent to 25 percent. At 100 euros per megawatt-hour, the savings are reduced by 28 to 100 percent depending on storage costs.
Inter-year variability is also significant. One relief region (T5) saw savings drop from 1.24 euros per kilogram using 2022 data to 0.62 euros per kilogram using 2023 data, a 50 percent decline driven by changing grid conditions.
A Game Changer or a Lame Duck?
The title of the research paper poses the question directly: “Negative redispatch power for green hydrogen production: game changer or lame duck?” The authors’ answer is that it depends on policy. If redispatch prices can be kept very low, the German market’s pricing floor was reduced from approximately 40 euros per megawatt-hour during the test phase to 25 euros in the operational phase, and the authors suggest further reductions toward zero would be needed, then redispatch can meaningfully reduce green hydrogen costs. If prices rise, the benefit evaporates.
Even at maximum savings, green hydrogen would still cost roughly 4 to 6 euros per kilogram, above the 2-euro threshold often cited for cost parity with grey hydrogen in sectors without carbon pricing. Policy measures such as carbon pricing or hydrogen contracts for difference would still be needed to bridge the gap.
The authors note that the approach has a built-in structural benefit that the cost figures alone do not capture: every kilogram of hydrogen produced from curtailed renewable power represents energy that would otherwise have been wasted, and it simultaneously relieves congestion on transmission infrastructure.
The study’s conclusion: redispatch can be part of the solution for green hydrogen cost reduction, but policy support to keep redispatch prices low is essential. Without it, the concept remains what its authors fear it could be, an interesting idea that never quite delivers.
Source
Brandt, J., Bensmann, A. & Hanke-Rauschenbach, R. “Negative redispatch power for green hydrogen production: game changer or lame duck? A German perspective.” Progress in Energy 8, 025006 (2026). DOI: 10.1088/2516-1083/ae6011.