Oxygen production via electrolysis: A model-based assessment of its impact on a climate-neutral German energy system
Luka Bornemann, Jelto Lange, Martin Kaltschmitt
Abstract
The integration of “green” hydrogen into the energy supply represents a key strategy for the defossilization of energy systems. However, its economic viability remains constrained by the currently high production costs. A possible strategy to enhance the economic feasibility of hydrogen-based energy systems is the system-integrated utilization of oxygen, a by-product of electrolysis. This study examines the potential of integrating electrolysis-derived oxygen into various industrial applications using an energy system optimization model of Germany. The analysis focuses on identifying the cost-saving potential, the resulting impact on the hydrogen and oxygen supply chains, and suitable industrial sites for oxygen utilization. The findings reveal that integrating electrolysis-derived oxygen into industrial processes offers substantial cost-saving opportunities while influencing the optimal configuration of hydrogen supply chains and infrastructure. Incorporating electrolysis-derived oxygen into existing industrial processes can reduce total system costs by up to 0 . 2 % without significantly changing hydrogen infrastructure design or the average levelized costs of hydrogen. Further savings are achievable by introducing new applications such as oxy-fuel combustion and wastewater treatment. In this case, system costs can decrease by up to 1 . 3 %, and average levelized costs of hydrogen can fall by 7 %. These changes also shift optimal electrolyzer siting toward industrial locations with high oxygen demand. The high-value chemical industry, in particular, can cover nearly its entire newly created oxygen demand through electrolysis. The results highlight the systemic value of integrating electrolysis-derived oxygen and underscore the importance of including oxygen utilization in early hydrogen infrastructure planning.