Technoeconomic evaluation of power-to-gas: modelling the costs, carbon effects, and future applications
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Date
2019
Authors
McDonagh, Shane
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Publisher
University College Cork
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Abstract
Power-to-Gas (PtG) splits water into hydrogen and oxygen using electricity. As the hydrogen can be used directly or combined with carbon dioxide to produce methane, it has been mooted as a versatile renewable fuel especially suited to reducing transport emissions. PtG’s ability to flexibly consume electricity means that it can alleviate some of the issues associated with increasing amounts of variable renewable electricity (VRE) like wind, providing storage and ancillary services to the electricity grid. The sustainability of PtG (both hydrogen and methane) was examined in terms of cost and emissions using various methods and for a range of scenarios. Cash flow models were used to calculate the levelised costs, and sensitivity analysis was performed on these. Electricity market models were used to optimise the cost of the electricity consumed, and also to control the carbon intensity of the gas produced, while wind speed data and simulations of the electricity system produced results on directly pairing PtG with VRE. Each chapter also includes analysis of PtG regarding potential barriers to its implementation and niche applications, suitable to all energy stakeholders. Should zero cost electricity be available throughout the year it would result in a levelised cost of €55/MWh (55c/L diesel equivalent) for PtG (methane). However, in reality it is not viable to base PtG on otherwise curtailed or difficult to manage (zero cost) electricity alone, the resource is too small even at high VRE penetration; it is preferential to increase the run hours of gas production to a level that amortises the capital expenditure by bidding for electricity in the wholesale market. Results show that by optimising electricity consumption large savings in levelised costs can be achieved, but they are still dominated by electricity purchase (56%), followed by total capital expenditure (33%). The base levelised costs for PtG (methane) were found to be €124/MWh in 2020 which may fall to €93MWh in 2040, valorising the oxygen or grid services could reduce these by €19 and €37/MWh respectively. The majority of the life cycle emissions from PtG are due to the source of electricity, but by operating at times of low-cost or high forecast wind power, these can be reduced. Cleaner hydrogen production (up to a 56% reduction in carbon intensity) at a lower cost (up to 57% less) can be achieved when compared to hydrogen associated with the grid average. Synergistic effects that increased with VRE penetration were noted, meaning that ignoring emissions and instead minimising levelised costs using these controls still reduced the carbon intensity of the hydrogen produced by 5-25% for the bid price control and by 14-38% for the wind forecast control. Direct connection to an offshore wind farm was also considered though results suggest that curtailment abatement alone will not drive investment in PtG; high hydrogen values are a necessity. To justify converting all electricity to hydrogen, a developer would have to anticipate 8.5% curtailment and be able to receive €114/MWh of hydrogen, or 25% curtailment and €101/MWh. Hybrid systems are preferable and increase project value when hydrogen is sold for €106/MWh or more, otherwise selling electricity alone is more profitable. The strategies and configurations tested in this thesis allow for hydrogen/methane to be produced from electricity without exacerbating the mismatch of supply and demand. PtG has significant potential as a future source of low carbon transport fuel, especially in the haulage sector. However, in order to be competitive PtG systems must also valorise the ancillary services they provide and focus on optimising the consumption of electricity, as capital cost reductions alone are unlikely to sufficiently reduce levelised costs. The system wide benefits of PtG make it highly suitable for incentivisation especially in light of increased VRE penetration and ambitious renewable transport energy targets.
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Keywords
Hydrogen , Modelling , Energy storage , Methane , Financial analysis , Carbon dioxide , Power to gas , Electrofuel , Curtailment , Sustainability , Electricity , Renewable energy , Electricity , Renewable gas
Citation
McDonagh, S. 2019. Technoeconomic evaluation of power-to-gas: modelling the costs, carbon effects, and future applications. PhD Thesis, University College Cork.