ERIKSSON

How could future markets for green hydrogen and its derivatives such as ammonia and methanol develop?
Which market prices, trade flows, and transport infrastructure emerge?
And what role does the market power of individual exporting countries play in this?

EWI examines these questions with its global market model ERIKSSON, which simulates global markets for green hydrogen and its derivatives such as ammonia and methanol. The model’s results are worldwide trade flows, market prices, and profitable transport infrastructure such as pipelines and import/export terminals.

Figure 1: (A) Trade balances by country and (B) market prices (annual average) in model regions

ERIKSSON for Consulting and Research

The results of ERIKSSON help to understand the market characteristics of future hydrogen markets and to support market participants in their strategic positioning. This makes it possible to assess infrastructure investments, for example in terminals, as well as to gauge trade partnerships over the long term and identify interesting partners.

ERIKSSON in Practice:

Market dynamics: analyze long-term market development and estimate market prices
Market power analysis: examine the influence of market power and identify critical dependencies
Infrastructure assessment: assess the economic viability of pipelines or terminals
Partnership assessment: audit trade partnerships and identify interesting trade partners

ERIKSSON in Detail

ERIKSSON is a global multi-commodity market model for green hydrogen and its derivatives that takes strategic behavior into account. The model simulates the global markets as Cournot competition between exporting countries. In total, nine types of actors seek to optimize their profits: hydrogen producers, electricity producers, traders, pipeline operators, ship operators, export and import terminal operators, converters, and storage operators. ERIKSSON finds a market equilibrium between the interests of all actors; global trade is modeled as a spot market at monthly temporal resolution. The simulation of several commodity markets makes it possible to examine interactions between these markets.

Schematic Representation of the Model

Figure 2: Inputs, outputs, and schematic representation of ERIKSSON

ERIKSSON represents the world spatially through nodes and edges. Demand and production nodes represent locations with demand and renewable energy potential, port nodes stand for locations with port infrastructure, and ship nodes form a network of important sea routes. Edges represent the transport connections between the nodes: pipelines between demand and production nodes as well as port nodes, and sea routes between port and ship nodes. The spatial resolution is largely at the country level, with large countries such as Russia, China, the USA, Canada, Brazil, India, Australia, and Mexico being divided into several regions. In terms of time, ERIKSSON simulates the markets at monthly resolution.