Grid constraints are reshaping hydrogen plant sizing

Interconnection capacity is now the first limiting factor for many hydrogen projects. Queue delays, curtailment forecasts, and capacity caps are forcing developers to size plants around grid reality instead of nameplate ambition. The result is a wave of mid-scale projects that are financially viable only when storage, offtake flexibility, and dispatch rules are aligned from day one.

Queues are shifting project economics

Interconnection timelines now add material time risk to revenue projections. A six to twelve month queue slip can compress early cash flow and inflate working capital requirements. Most LCOH models still assume steady ramp-up, which masks the true cost of delays.

Curtailed hours should be priced, not ignored

Curtailment is no longer an edge case. It should be modeled explicitly as a volume constraint and tied to revenue stacking logic. Projects that can monetize flexibility through storage or grid services are increasingly bankable in constrained zones.

Sizing for constrained nodes

A smaller, higher-utilisation asset can outperform a larger plant that sits idle during grid congestion. The winning approach is often modular capacity with storage buffers that keep the electrolyser in a healthy operating band.

Mitigation playbook

• Secure interconnection milestones early and align them with EPC payment terms.
• Use storage to shift production into higher-value hours and protect minimum offtake.
• Build dispatch rules that prioritize stack health when curtailment events spike.
• Show lenders a downside case with explicit queue delays and curtailed volumes.

Key takeaways

• Interconnection queues now define commissioning timelines for many assets.
• Curtailment assumptions must be visible in LCOH and cash flow models.
• Storage and flexible offtake are the fastest levers to preserve economics.