The role of power-to-gas in the future energy system: how much is needed and who wants to invest?1 ESRI Research Bulletin January 2020/o1

Lynch, Muireann and Devine, Mel and Bertsch, Valentin (2020) The role of power-to-gas in the future energy system: how much is needed and who wants to invest?1 ESRI Research Bulletin January 2020/o1. UNSPECIFIED.

PDF - Published Version Download (1067Kb)

Abstract

Increased levels of variable renewable power generation, such as wind and photovoltaic solar, have led to an increased requirement for flexible resources on the power system that can respond quickly to changes in renewable supply. Much of the focus in recent years has been on accommodating shortages of renewable power, by finding sources of generation that can flexibly supply electricity, and by reducing demand. However, as the penetration of renewable power increases worldwide, there are an increasing number of hours of excess renewable supply, where the electricity generation exceeds demand. One potential use for such excess supply is power-to-gas. Power-to-gas units use electricity to produce a gas such as hydrogen or methane. In the case of hydrogen, electricity is used to split water into hydrogen gas and oxygen. The hydrogen produced has many applications in industry or can be injected directly into the gas grid and used to produce heat in homes and businesses, blended with natural gas. If the hydrogen is produced by renewable electricity that would otherwise be curtailed (or wasted), the hydrogen can be considered carbon-free gas. This work considered the incentives to invest in a power-to-gas plant on a future energy system based on the Irish electricity system with high levels of wind penetration. A mathematical model was used to determine the optimal amount of investment in power-to-gas under various levels of wind. The literature to date investigates the profitability of power-to-gas units without determining the optimal level of investment in same. In contrast, our research determines the profit-maximising investment in power-to-gas itself as an outcome of the market modelling. It was assumed that hydrogen produced is sold as gas in the gas grid. We consider various electricity generation firms with different portfolios of coal, gas and wind generation. We also assume that wind generation attracts a subsidy in the form of a price premium added on to the market price.

Actions (login required)