Hydrogen Market Module - NEMS Documentation
August 2025
Introduction
The Hydrogen Market Module (HMM) is the component of the National Energy Modeling System (NEMS) that represents hydrogen market production, prices, inter-regional transmission, and storage in the United States. We developed the NEMS, an energy-economic modeling system, as the third in a series of computer-based energy-economy modeling systems. EIA and its predecessor, the Federal Energy Administration, have used NEMS to analyze and project U.S. domestic markets to provide 25-to30-year projections and to analyze a broad range of energy issues at both national and regional levels. Although the NEMS was first used in 1992, the model is updated each year; updates in individual modules range from simple historical data updates to completely replacing submodules. The HMM is an entirely new model that we incorporated in the NEMS for the Annual Energy Outlook 2025 (AEO2025) to fully represent current laws and regulations. Prior to AEO2025, hydrogen representation in NEMS was spread out across multiple modules and only represented implicitly as an intermediate product.
Documentation purpose and scope
This report provides a reference document for model analysts, and the public that defines the objectives of HMM, in the NEMS. This report also fulfills EIA’s legal obligation to provide adequate documentation in support of our models under Public Law 93-275, Federal Energy Administration Act of 1974, Section 57(B)(1) (as amended by Public Law 94-385, Energy Conservation and Production Act).
In this report, we:
- Describe HMM’s design and model formulation
- Provide details on the methodology employed
- Detail the model inputs, outputs, and key assumptions
Model Summary
The HMM models the hydrogen market in the NEMS. The model code is written in Advanced Integrated Multidimensional Modeling Software (AIMMS) and is a linear program that minimizes the total cost of producing hydrogen to meet hydrogen demand minus costs of transportation. The HMM determines hydrogen production, flows, and storage decisions for each of the four seasons in a given model year. The HMM projects:
- Hydrogen production by technology pathway
- The price of hydrogen, including delivered prices to end users in the industrial, transportation, and electric power sectors
- Volume of CO2 captured during hydrogen production associated with carbon capture technology
- The cost of capturing CO2 during hydrogen production associated with carbon capture technology
- Consumption of electricity and natural gas for hydrogen production
Although most projections in the HMM are made seasonally, HMM results are generally passed to other NEMS modules as annual totals or quantity-weighted annual average prices because most other NEMS modules operate on an annual basis.