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.
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 Comparison of chemical methanation plant designs
3.2.3 Working principles of biological methanation
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
Objectives and Topics
The thesis aims to investigate the economic viability of a hybrid power-to-gas (PtG) system—consisting of a 32 MW wind park and an electrolyzer or methanation plant—from an investor’s perspective, assessing whether the investment is adequately remunerated under market conditions without feed-in tariffs.
- Analysis of the PtG technological principles and current development status.
- Investigation of cross-commodity arbitrage and conversion of excess wind energy as revenue streams.
- Application of a deterministic Excel model using historical data to maximize annual revenue.
- Evaluation of different gas grid constraints, curtailment levels, and technological configurations.
- Economic assessment using a discounted cash flow/annuity approach.
Excerpt from the Book
3.1.1 Working principle of different electrolysis cell technologies
The fundamental basis of the PtG concept is water electrolysis, which is described by the following basic endothermic chemical reaction:
H2O(l) + electrical energy → H2(g) + O2(g) ΔH = +571,8 kJ/mol
Currently, three types of water electrolysis exist. The alkaline water electrolysis (AEL) and the proton exchange membrane electrolysis (PEMEL) are commercially available, and are therefore included in the analysis of this study. The high-temperature water electrolysis (HTEL) is a young technology that might provide a promising alternative in future. Therefore, its basic working principle is briefly described, too. The basic functioning of AEL and PEMEL, as described in the following, is complemented by a detailed comparison in section 3.1.2. Thereby, technical aspects of the two technologies are compared, and dis-/advantages concerning a combination with wind energy are contrasted.
Summary of Chapters
1 Introduction: Provides the context of rising renewable energy shares in Germany and introduces power-to-gas as a promising technology for energy storage and value enhancement of wind production.
2 Energy market environment and developments: Examines current German climate goals and the challenges of integrating volatile renewable energy sources, focusing on grid curtailment and market support schemes.
3 Review of power-to-gas technology: Details the technical principles of hydrogen production via electrolysis and methane production via methanation, including a comparison of reactor designs and CO2 sources.
4 Literature review on applications of energy storage and power-to-gas: Identifies business models for energy storage and specifically for PtG, establishing a foundation for the valuation methodology applied later.
5 Literature review on economical assessment of energy storage: Reviews existing research on the economic viability of hybrid energy storage systems and discusses methodologies used for valuation.
6 A case study on the economic viability of wind energy and power-to-gas: Presents the primary model and assessment of the economic performance of wind-hydrogen and wind-methane plants under various scenarios and constraints.
7 Conclusion: Summarizes the key findings of the case study, noting that under current conditions, PtG plants do not achieve profitability, and discusses policy implications and potential for future research.
Keywords
Power-to-Gas, Wind Energy, Economic Viability, Electrolysis, Methanation, Energy Storage, Market Integration, Curtailment, Cross-commodity Arbitrage, Investment Appraisal, Annuity Method, Hybrid Systems, Hydrogen, Methane, Germany.
Frequently Asked Questions
What is the core focus of this master’s thesis?
The thesis focuses on the economic viability and profitability of a hybrid system that combines a 32 MW wind park with a power-to-gas plant, specifically evaluating whether such an investment can be profitable for an investor under market conditions without feed-in tariffs.
What are the primary technical fields covered?
The work covers electrolysis technologies (AEL and PEMEL), various methanation plant designs (chemical and biological), energy market environment, and regulations regarding gas grid injection in Germany.
What is the central research question?
The central question is whether investing in a power-to-gas plant connected to a wind park is adequately remunerated from an investor’s point of view, given the need for managing intermittent wind power and potential revenue streams.
Which scientific method is employed?
The research employs an 'engineering model' approach, using a deterministic Excel-based model fed by historical 2013 data to maximize annual revenues from cross-commodity arbitrage and excess wind energy utilization, evaluated via a discounted cash flow/annuity method.
What does the main body of the work address?
The main body provides a comprehensive technological review, a literature review on existing economic assessments, and a detailed case study that contrasts different plant configurations, grid scenarios, and curtailment levels.
Which keywords characterize this publication?
Key terms include Power-to-Gas, Wind Energy, Economic Viability, Electrolysis, Methanation, and Market Integration.
What is the conclusion regarding the profitability of the analyzed systems?
The conclusion states that none of the analyzed hybrid system variants can be operated profitably under the current or near-future framework. The high investment costs are currently not covered by the revenues generated from arbitrage or excess energy conversion.
Under what conditions could a PtG system potentially become profitable?
Profitability could only be achieved under ideal conditions, specifically if gas prices were to increase significantly (by 150% to 190%) in combination with high curtailment levels and optimistic future capital expenditure projections.
- Quote paper
- Katja Rösch (Author), 2015, Combining Wind Energy with Power-to-Gas. A Case Study on Profitability and Economic Viability, Munich, GRIN Verlag, https://www.grin.com/document/303861
