Shared Renewable Allocation and Hydrogen Flexibility in Local Energy Markets: A Market Design Perspective

Abstract

The integration of green hydrogen in local energy markets is often analyzed from a technical flexibility perspective, while the effect of market design rules remains less explored. This paper proposes a coordinated local electricity-hydrogen market framework in which hydrogen participation is regulated by explicit renewable access mechanisms. A mixed-integer linear programming model is developed to co-optimize electricity trading, battery operation, wind allocation and hydrogen production under centralized coordination. Six regulatory cases are examined including hydrogen supply options and access of local wind. Results are obtained for representative seasonal weeks for Norwegian energy community. Electrolyzer, when connected as rigid load, increases grid dependence, but also improves system cost when price-based participation is activated. Direct renewable access reduces grid imports, enhances wind allocation and introduces competition with households for energy distribution and system cost optimization. Furthermore, findings show that (i) hydrogen integration in local energy systems is essentially a market design problem and (ii) renewable access rules critically determine system behaviour, flexibility interactions and seasonal performance.