Combining Wind Energy with Power-to-Gas. A Case Study on Profitability and Economic Viability

Master's Thesis , 2015 , 117 Pages , Grade: 1.3

Energy Sciences

The thesis’s central part is a case study that investigates the economic viability of a hybrid PtG system, comprising a 32 MW wind park, and either an electrolyzer system, or a methanation
plant. A long-term market perspective was taken, thereby assuming an elimination of wind feed-in tariffs and increasing wind curtailment levels. The hybrid plant’s economics were contrasted to those of the stand-alone wind park. The power-to-gas plants are supposed to generate revenue by either performing cross-commodity arbitrage, or converting excess wind energy. The underlying Excel model is based on historical data and maximizes the hybrid system’s revenue attainable on the market, given certain technological constraints. The project’s profitability was assessed by choosing a discounted cash flow approach. Different gas grid constraints, curtailment levels, plant sizes, technologies, as well as different cost prognoses were contrasted.
Even under optimal conditions for the hybrid system, both plant setups (electrolyzer and methanation) cannot be operated profitable. The revenues generated on the market are far too low to cover the annual total costs, which are mainly driven by high investment costs. Only if current gas prices increase significantly (about 150% - 190%), hybrid systems comprising a 1 MW electrolyzer would attain a slightly positive annual profit under optimal conditions. The case study is embedded in an all-encompassing review on relevant factors, which are crucial to set up such an analysis. These factors comprise the current and future market environment, the
technological principles and costs, energy storage and power-to-gas business models, as well as insights in the methodological approach of storage valuation.

Inhaltsverzeichnis (Table of Contents)

• 1 Introduction
• 2 Energy market environment and developments
• 3 Review of power-to-gas technology
  • 3.1 Power-to-hydrogen
    • 3.1.1 Working principle of different electrolysis cell technologies
    • 3.1.2 Comparison of the AEL and PEMEL technology
  • 3.2 Power-to-methane
    • 3.2.1 Working principle of the chemical methanation
    • 3.2.2 Working principles of biological methanation
    • 3.2.3 Comparison of chemical methanation plant designs
    • 3.2.4 Overview of different methanation plant concepts
    • 3.2.5 CO2 sources
    • 3.2.6 Overview of different CO2 sources for methanation
  • 3.3 Power-to-gas facilities
    • 3.3.1 Gas grid connected electrolyzer system
    • 3.3.2 Gas grid connected methanation plant
    • 3.3.3 Comparison of overall process efficiencies
  • 3.4 Gas grid and power-to-gas related regulations
• 4 Literature review on applications of energy storage and power-to-gas
  • 4.1 An overview of energy storage applications
  • 4.2 Power-to-gas specific applications and business models
  • 4.3 Power-to-gas and wind energy
• 5 Literature review on economical assessment of energy storage
  • 5.1 An overview of energy storage valuation
  • 5.2 Methods and results on the economic viability of hybrid systems
    • 5.2.1 General overview of relevant literature on hybrid systems
    • 5.2.2 Detailed presentation of three pivotal studies on hybrid systems
  • 5.3 Review on the economic assessment of power-to-gas
• 6 A case study on the economic viability of wind energy and power-to-gas
  • 6.1 General description of the applied model
    • 6.1.1 The case study's framework and data
    • 6.1.2 Economic valuation method and assessment criteria
    • 6.1.3 Reference cases
    • 6.1.4 Working principle of the Excel model
  • 6.2 Assessment of the economic viability of a wind-power-to-hydrogen plant
    • 6.2.1 Results scenario I – transport grid with very high continuous gas flow
    • 6.2.2 Results scenario II – supra regional grid with seasonal gas flow
    • 6.2.3 Results scenario III – regional grid with seasonal gas flow
    • 6.2.4 Sensitivity analysis
  • 6.3 Assessment of the economic viability of a wind-to-methane plant
    • 6.3.1 Results of the methanation plant
    • 6.3.2 Qualitative assessment of additional income streams
• 7 Conclusion
  • 7.1 Overview of case study's results
  • 7.2 Comparison to other studies
  • 7.3 Implications and outlook
  • 7.4 Overall summary

Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)

This master's thesis investigates the economic viability of combining wind energy with power-to-gas (PtG) technology. The primary goal is to assess the profitability of a hybrid PtG system compared to a stand-alone wind park, considering long-term market perspectives. The research focuses on two PtG plant setups: an electrolyzer system and a methanation plant. Key themes explored in the thesis include:

• Economic viability of PtG systems in the context of wind energy integration
• Impact of different gas grid constraints, curtailment levels, and plant sizes on profitability
• Analysis of various PtG technologies and their cost implications
• Assessment of revenue generation through cross-commodity arbitrage and excess wind energy conversion
• Evaluation of the role of gas prices and market dynamics in the economic feasibility of PtG systems

Zusammenfassung der Kapitel (Chapter Summaries)

• Chapter 1: Introduces the thesis's topic and outlines the research objectives. It highlights the growing demand for renewable energy sources and the challenges associated with integrating variable wind energy into the grid.
• Chapter 2: Provides an overview of the current energy market environment and key developments, focusing on the increasing penetration of renewable energy sources and the need for flexible and efficient energy storage solutions.
• Chapter 3: Delves into the technical aspects of PtG technology, exploring the working principles, efficiencies, and cost considerations of different electrolysis and methanation processes. It also examines the integration of PtG systems with the gas grid and relevant regulations.
• Chapter 4: Reviews the literature on applications of energy storage and PtG, highlighting existing business models and their potential for integrating renewable energy sources. It specifically examines the role of PtG in wind energy utilization.
• Chapter 5: Explores the economic assessment of energy storage, focusing on methods and results of previous studies on the viability of hybrid systems incorporating PtG. It provides a comprehensive review of literature on the economic evaluation of PtG technology.
• Chapter 6: Presents a case study that analyzes the economic viability of a hybrid PtG system comprising a wind park and either an electrolyzer or a methanation plant. The study employs a discounted cash flow approach to assess profitability under different scenarios and sensitivities.

Schlüsselwörter (Keywords)

The core concepts and focus topics of this master's thesis include wind energy, power-to-gas (PtG), economic viability, profitability, electrolysis, methanation, gas grid integration, energy storage, market dynamics, discounted cash flow analysis, and cross-commodity arbitrage. The research investigates the potential of integrating PtG technology with wind energy to enhance grid stability and optimize resource utilization, while considering factors such as technology costs, market regulations, and financial feasibility.

• College: Technical University of Munich (Chair for Controlling)
• Course: Technology and Management
• Grade: 1.3
• Author: Katja Rösch (Author)
• Publication Year: 2015
• Pages: 117
• Catalog Number: V303861
• ISBN (eBook): 9783668026681
• ISBN (Book): 9783668026698
• Language: English
• Tags: Power-to-Gas, Hybrid System, Wind Energy, Energy Storage