Power-To-Gas in a Decarbonized European Energy System Based On

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WHITE PAPER POWER-TO-GAS IN A DECARBONIZED EUROPEAN ENERGY SYSTEM BASED ON RENEWABLE ENERGY SOURCES 2 Power-to-gas in a decarbonized European energy system based on renewable energy sources Power-to-gas in a decarbonized European energy system based on renewable energy sources 3

CONTENTS

EXECUTIVE SUMMARY 4 1. BACKGROUND 6 1.1 Recent developments in decarbonizing Europe’s energy system 6 1.2 The need for flexibility and storage in energy system 7 1.3 Power-to-gas as a promising solution 8

2 POWER-TO-GAS AS A PROMISING MULTI-PURPOSE TOOL 10 2.1 Power-to-gas provides flexibility to the power market 10 2.2 Power-to-gas facilitates long-term energy storage on terawatt scale 11 2.3 Power-to-gas provides sustainable feedstock for chemical and processing industries 12 2.4 Power-to-gas enables the decarbonisation of the mobility sector 13 2.5 Power-to-gas reduces the carbon footprint of the conventional gas supply and optimises infrastructure investments 15

3 THE ECONOMIC VALUE OF POWER-TO-GAS 16 3.1 Value of power-to-gas for balancing services 16 3.2 Value of power-to-gas as energy storage means 17 This White Paper is a product of DNV GL 3.3 Value of power-to-gas for chemical and processing industries 18 3.4 Value of power-to-gas for the transport sector 19 Authors: Paula Schulze (lead author), Johan Holstein, Albert van den Noort and Johan Knijp 4 TECHNICAL DEVELOPMENTS WILL IMPROVE THE BUSINESS Contact details: CASE AND ENABLE EXTENDED OPERATING ENVELOPES 20 [email protected] 4.1 Readiness of the power-to-gas technology 20

Acknowledgements: 4.2 Power-to-gas demonstrations in Europe 21 The content of this document has been developed in collaboration with members of the European Power 4.3 Accelerated developments in the field of electrolyser and methanation technology 22 To Gas Platform. We would like to thank the following people for their contributions: Thomas Young Hwan 4.4 Injection of hydrogen (H ) into gas networks 23 Westring Jensen (Energinet.DK), Carsten Vittrup (Energinet.dk), Christian Copin (GRTgaz), Jonas Klückers 2 (MicrobEnergy), Dominika Klassek and Monika Kaldonek (GAZ systems), Mathieu Zweerts (Fluxys), Eric 4.5 Methanation 24 Tamaske (ONTRAS), Esther Hardi and Jos Blom (Alliander), Stefano Bedogni (EDISON), Jan Kilgallon and Ann Marie Colbert (Gas Networks Ireland), Adriaan de Bakker (Gasunie) and Robert Judd (GERG). 5 BARRIERS 25

6 THE WAY FORWARD 26 4 Power-to-gas in a decarbonized European energy system based on renewable energy sources Power-to-gas in a decarbonized European energy system based on renewable energy sources 5

EXECUTIVE SUMMARY

The pan-European energy system is faced with the ■■It reduces the need to extend and upgrade the enormous challenge of lowering carbon emissions electricity network to transport large amounts from electricity supply to nearly zero by 2050. of locally produced energy to other locations, This goes hand in hand with the need to integrate by making use of capacity in the existing gas massive amounts of renewable energy sources (RES), networks. This energy can be stored longterm.

mainly wind and solar power. The variable nature ■■The produced hydrogen (H2) is a carbon-free of these renewable energy sources makes it fuel and feedstock that can support the increasingly difficult to match electricity decarbonization of the transport sector and production and demand. energy intensive industries. ■■Power-to-gas helps to reduce the carbon intensity Power-to-gas is a compelling concept that of the gas sector thereby ensuring its relevance for converges the existing siloed value chains of the the future energy supply. gas and electricity sector into one energy system able to meet the challenges of a mostly From a technological perspective, power-to-gas is renewables-based energy supply system. It entails ready for commercial exploitation. However, the the conversion of surplus renewable electricity into challenge is to quickly reach an industrial scale that

hydrogen (H2) via electrolysis. As hydrogen (H2) can is economically exploitable. This depends heavily on be re-electrified with high efficiency in fuel cells or the market conditions for the different applications combined cycle gas turbines, the power-to-gas of power-to-gas. For many of the above mentioned concept can be used as a tool for network balancing functionalities of power-to-gas there is currently not and energy storage in a timescale of miliseconds up yet a business case. Significant cost reductions and to and including seasons; however, when comparing efficiency improvements are required to enable its the Levelised Cost of Energy (LCoE), power-to-gas deployment on commercial scale. is more likely to be used for long-term (seasonal) storage applications. From our perspective, the transport sector is key to the commercialization of power-to-gas. If for GL © DNV Next to the provision of flexibility to the power instance the national targets of EU member states

sector, power-to-gas enables optimized for hydrogen (H2) mobility are realized by around

infrastructure investments that are necessary to 2030 and all hydrogen (H2) was to be supplied by integrate large amounts of fluctuating renewables power-to-gas installations, reductions in capital For the commercial deployment of power-to-gas to be successful, close cooperation between all into the energy system. Furthermore, it provides the expenditure (capex) costs for electrolysers will reach stakeholders will be essential. Governments and regulators play an important role in creating a

following functionalities: the required levels to allow for positive business level-playing-field for power-to-gas; among other things, this includes acknowledging (green) hydrogen (H2)

cases in the other types of applications. as a biofuel, a comparable stimulation of hydrogen (H2) mobility to electromobility, and eliminating all end user charges for the converted electricity. The gas and electricity sectors need to coordinate their network development plans with each other and end users need to adapt to the new fuel (blends).

The European Power to Gas Platform facilitates the dialogue between all these stakeholders. We provide them with a forum to gain and exchange knowledge and to explore the conditions under which power-to-gas can be successful, and provide assistance for setting up projects. Our common goal is to realize the energy transition as cost-effectively as possible. 6 Power-to-gas in a decarbonized European energy system based on renewable energy sources Power-to-gas in a decarbonized European energy system based on renewable energy sources 7

1.2 The need for flexibility and storage difficult to keep production and demand in balance. in the energy system As these renewable energy sources have capacity Renewable energy sources are far more dispersed factors of below 50%,4 this requires an overcapacity compared to fossil-based ones. On the one hand leading to periods in which the supply of electricity photovoltaics (PV)-based energy production will exceeds the demand (over various regions). Despite mainly occur in growing quantities in the ‘hair veins’ that, there will still be situations in which the of existing energy distribution systems, e.g. on the electricity generation cannot satisfy the demand. 1. BACKGROUND rooftops of buildings. On the other hand, large-scale This can be solved by applying energy storage to wind power generation, especially offshore, will shift consumption of the harvested energy over time. require increasing energy transmission capacity over long distances. The need for more flexibility in the power system During the 2015 United Nations Climate Change RES that are harvested in lower capacity generation will increase as well as the need for large scale Conference in Paris (COP21), delegates from 198 plants is very challenging. As European member states are investing heavily in (terawatthours) energy storage to cope with the countries adopted the collective aim to limit global renewable generation, with wind and solar being the mismatch between production and demand over warming to well below 2°C. If the 1.5°C target is to 1.1 Recent developments in decarbonizing dominant technologies, it is becoming increasingly longer periods (seasons). be achieved, greenhouse gas (GHG) emissions must Europe’s energy system be brought down to zero between 2045 and 2060. Due to lower cost prices and strong governmental If Carbon Capture and Storage (CCS) technology is support, renewable power generation has had Germany had an installed capacity of 44.5GW of wind turbines and 39.3GW of solar power at the end of not applied to achieve this, the combustion of fossil strong growth figures in recent years. In 2015, 2015. The average load profile in Germany fluctuates between 50 and 80GW on a work day and 40 and energy carriers must be completely stopped by that renewables installations accounted for a total of 22.3 60GW during weekends. When both renewable sources produce electricity at full capacity in periods of time and the energy supply must be fully based on gigawatts (GW), which was 77% of all new installed a lower load profile, there is surplus electricity generation. This situation occurred various times in 2015 renewable energy sources (RES). capacity in the EU; the share of renewable energy resulting in 4.7 terawatthours (TWh) of electricity being curtailed (93% wind and solar power). The network sources amounted to 402GW.2 It was the eighth year operators had to pay compensations in total of €315 million (m). This amount is expected to increase in the Already in October 2009, the European Council in a row in which renewables contributed more than coming years as grid extensions do not have the necessary velocity. set itself the target to reduce GHG emissions by 55% of all new installed power capacity in the EU. 80% below 1990 levels. The power sector will need Approximately 239GW can be attributed to wind to contribute higher abatements than other sectors and solar power plants. amounting to approximately 95%.1 The transition towards a decarbonized electricity supply is In the European Commission’s Reference Scenario actuated by the member states; however, such 2016, projections are given for long-term energy, a transformation of a fossil-based, centralized transport and climate trends across the EU. The and predictable electricity supply system to projections for 2050 regarding the electricity a mostly decentralized system based on variable generation from wind and solar total in 662GW; this is an increase by a factor 2.7 compared to 2015.3

TWhr Curtailment Installed capacit GW

12 GWr olar P 52 share 1 GWr 25 share ind ind onsore ind osore olar power urtailment

ydro Curtailment in Germany in relation to the installed capacity of wind and solar power. Based on data from uclear the German Federal Network Agency (Bundesnetzagentur)5 Installed capacit GW

ombustibles ter

Historic and future growth rates in installed capacity up to 2050 for wind and solar power plants; Source: DNV GL image based on EU Reference Scenario 2016

1. European Climate Foundation (2010), ROADMAP 2050: A practical guide to a prosperous, low-carbon Europe; 4. The following capacity factors can be considered for the European situation: http://www.roadmap2050.eu/attachments/files/Volume1_fullreport_PressPack.pdf offshore wind ~40%, onshore wind ~20-30% and solar ~10-15%. 2. Renewables 2016 – Global Status Report; http://www.ren21.net/wp-content/uploads/2016/10/REN21_GSR2016_FullReport_ en_11.pdf 5. EEG in Zahlen: Vergütungen, Differenzkosten und EEG-Umlage 2000 bis 2017; 3. European Commission (2016), EU Reference Scenario 2016 – Energy, transport and GHG emissions - Trends to 2050; https://www.bundesnetzagentur.de/SharedDocs/Downloads/ DE/Sachgebiete/Energie/Unternehmen_Institutionen/Erneuerbare https://ec.europa.eu/energy/sites/ener/files/documents/20160712_Summary_Ref_scenario_MAIN_RESULTS%20(2)-web.pdf Energien/ZahlenDatenInformationen/EEGinZahlen_2015_BF.pdf?__blob=publicationFile&v=2 8 Power-to-gas in a decarbonized European energy system based on renewable energy sources Power-to-gas in a decarbonized European energy system based on renewable energy sources 9

1.3 Power-to-gas is a promising solution equipment such as a water demineralization unit, a The key challenge in achieving a carbon-neutral water pump, a converter, a cooling system, a energy system is finding a solution for scalable hydrogen purifier and control systems. energy storage. While batteries, pumped-hydro, flywheels and other technologies have their merits, Through this process, electrical energy is converted

none can offer seasonal storage at a terawatthour to chemical energy in the form of hydrogen (H2).

scale. Power-to-gas is an innovative concept that The hydrogen (H2) can be either used directly as couples the electricity and gas networks allowing feedstock or fuel in the industrial or transport sector. for the flexible handling of excess and shortage of The hydrogen will be elated through the natural electricity generation. gas network via blending (and stored in gas

storages) or further converted to methane (CH4) via The power-to-gas concept is about converting a methanation process by making use of captured

electrical power into a gaseous energy carrier carbon dioxide (CO2). This may happen through,

such as hydrogen (H2) and/or methane (CH4). Its core for instance, industrial flue gas or biological carbon components is an electrolysis cell in which water sources such as biogas. Subsequently, the synthetic

molecules are split into hydrogen (H2) and oxygen methane (CH4) can be used in all natural gas end use

(O2) by applying an electric current. Next to the appliances, for instance in mobility and residential electrolysis cells, electrolyser units comprise auxiliary heating. The graph below further illustrates the different power-to-gas pathways.

ELECTRIC POWER

Electrolysis

onersion onersion

NH3 EtOH CH H MeOH DME 4 2 Power-to-liuids Power-to-gas Power-to-gas as-to-power

ransport sector emical industry rid inection esidential eating

Schematic representation of the power-to-gas concept; Source: DNV GL Shutterstock

Ramea is an island located close to the southwest coast of Newfoundland (Canada). The small community has less than 650 residents who together consume approximately 4.2GWh of electricity per year. Six wind turbines with a combined capacity of 390 killowatts (kW) used to supply the community with electricity, as well as three diesel generators with 925kW capacity each. In 2007 the Wind-Hydrogen-Diesel Energy Project was started with the objective to offset expensive diesel use (approximately one million litres a year)

by converting excess wind energy into hydrogen (H2) which is subsequently stored and reconverted back into electricity when needed. The system has beens operating since 2011 and was thoroughly tested. 2. POWER-TO-GAS Currently, the second phase of the project is being developed entailing the substitution of the hydrogen (H ) generator (internal combustion engine) with a hydrogen (H ) fuel cell. AS A PROMISING 2 2 MULTI-PURPOSE TOOL

The shift in the European power sector towards Up to now this service is usually provided by renewable energies calls for innovations that allow conventional power plants. However, the a decoupling of electricity production and demand. increasing penetration of renewable energy Chemical storage systems such as power-to-gas have sources and the parallel reduction of conventional the potential to become a sustainable and realistic power plants require new concepts and providers solution to this need. In addition, chemical storage for those system services. systems open new markets for surplus electricity by producing a carbon-free energy carrier and Water electrolysers are able to respond quickly to intermediate chemical product which can be applied power load changes, even on a sub-second level for outside of the power sector. In this White Paper, we some recent technologies. This makes them explore the following functionalities of power-to-gas: suitable for providing negative frequency reserves by increasing output or positive reserves by reducing Balancing function – power-to-gas enables the high output. Electricity network operators could therefore deployment of variable electricity sources use electrolysers to balance supply and demand, and hence keep electrical networks stable. Energy storage – power-to-gas facilitates long-term Ramea island with three 100 kW wind turbines in the background that form part of the power-to-gas energy storage on TWh-scale The situation is especially acute in poorly (or even installation; Source: Nalcor Energy, 20106 non-) interconnected systems with high RES Sustainable feedstock – power-to-gas supports penetration. Power-to-gas represents one potential the decarbonization of chemical and tool for managing renewable power intermittency processing industries and surplus generation in these regions. With the 2.2 Power-to-gas facilitates long-term energy In a deeply decarbonized electricity supply as help of rapid response electrolysis which is able to storage on terawatthour-scale envisioned by the EU, UGS facilities will play a crucial Sustainable fuel – power-to-gas enables the respond even on sub-second level, it captures The function of storage in the energy system is to role for granting security of supply. Introducing wind decarbonization of the transportsector renewable surplus power which otherwise would be shift energy consumption in time, ranging from and solar power into the energy system requires wasted and converts it into a storable energy carrier minute level to several months. Underground Gas additional storage to counter their variable nature.

Optimizing network investments and – hydrogen (H2) or methane (CH4) – for later use. Storages (UGS) and Pumped Hydro Energy Storage Energy storage systems can provide a certain decarbonizing the gas sector – power-to-gas (PHES) are considered important options to store flexibility of the system by shifting load in time. prevents overinvestments in the electricity network European areas with low interconnection and high energy on a large-scale and for longer periods and reduces the carbon intensity of the gas sector shares of renewables could be the early markets (weeks to seasons). A key challenge for countries with strong seasonal for the commercial deployment of power-to-gas, as energy demand patterns is how to bridge the gap 2.1 Power-to-gas provides flexibility back-up generation is often much more expensive, Existing UGS facilities in Europe store approximately between summer production and winter demand. to the power market especially when fuel oil or diesel are used. 900TWh of energy whereas PHESs feature a Moreover, a resilient energy supply requires strategic Volatility in power generation creates the need for maximum storage capacity of 70TWh (mainly located storage to meet supply disruptions and/or demand rapidly available ramp-up and -down grid resources in Norway and Turkey). The amount of energy stored peaks due to severe weather events. on both small and large scale. Electricity balancing in UGS is thus a factor 12 larger than in PHES. services such as frequency containment reserves (FCR, also known as primary frequency control) are essential for a safe operation of the power system.

6. Nalcor Energy (2010), Wind-Hydrogen-Diesel Energy Project; http://newenergy.is/gogn/eldra_efni/naha/presentations/whd_energy_project__gj_for_naha_ramea_tour__sept_8.pdf 12 Power-to-gas in a decarbonized European energy system based on renewable energy sources Power-to-gas in a decarbonized European energy system based on renewable energy sources 13

Power-to-gas could offer a means to facilitate large-scale and long-term energy storage by transforming In 2011, a unique methanol plant was commissioned in Iceland that deploys electrolysers to split water (H O) renewable electricity, when produced in excess, into a storable energy carrier – hydrogen (H ) or methane 2 2 and subsequently combines the hydrogen (H ) with carbon dioxide (CO ) to produce methanol (MeOH). As (CH ) – and by making use of the existing storage capacities of UGS facilities. 2 2 4 the first of its kind, the plant is connected to a local geothermal plant using not only the geothermal heat and power for its production process, but also the carbon dioxide-rich steam for the synthesis. The annual output

kWh Real time Intra-da Intra-week Seasonal Strategic of the methanol (MeOH) production facility is 4000 tonnes per year. The green methanol (MeOH) is amongst others blended with petrol and sold at national petrol stations in Iceland. Power-to-gas wit underground gas storage

Pumped ydro Energy torage ompressed ir Energy torage

attery

our ay ee ont ear ecade

Typical (unit) storage capacities of different network scale storage technologies and the typical time shift: Batteries feature the smallest unit capacities of a few megawatts and are typically used to shift energy consumption for a few hours. Compressed Air Energy Storage (CAES) and Pumped Hydro Energy Storage (PHES) provide unit storage capacities in the scale of a few hundreds of megawatts up to a few gigawatts and shift energy consumption in the range of hours to weeks. The largest unit storage capacity is power-to-gas with underground storage allowing for seasonal energy storage over months. Source: DNV GL

2.3 Power-to-gas provides sustainable feedstock Sustainably produced hydrogen (H2) from renewable for chemical and processing industries electricity is a carbon-free energy carrier and The process industry represents 20% of the total chemical intermediate product that can contribute George Olah carbon dioxide (CO2) to renewable methanol plant owned by Carbon Recycling Interna- European manufacturing industry in terms of to the abatement of carbon dioxide (CO2) emissions employment and turnover. More than 25% of in, for example, metal and glass manufacturing, tional (CRI) and operational since 2012; Source: CRI, 20179 Europe’s total energy consumption in 2010 is chemical industries and refineries. For instance, it

attributed to industries of which a significant can be combined with carbon dioxide (CO2) and

portion is used within the (energy intensive) nitrogen (N2) to produce a range of (sustainable) process industry.7 products such as methanol, ethylene and ammonia. 2.4 Power-to-gas enables the decarbonization As a result of these debates, the European

However, production of hydrogen (H2) by electrolysis of the transport sector Commission’s vision for a climate and energy To be able to reach the EU’s long-term climate is generally still more costly than production from EU legislation requires the GHG intensity of vehicle framework beyond 2020 does not, until now, objective of achieving economy-wide emission natural gas. fuels to be cut by 6% and to deliver 10% per cent include any new targets for renewable energy or reductions of 80% by 2050, the (process) industry of the energy in transport from renewable sources GHG intensity of fuels used in the transport sector. is expected to become more sustainable and to One of the challenges of industrial decarbonization by 2020.10,11 Both requirements promote the use of However, as part of the European "Clean Energy for reduce its carbon footprint. This requires a radical is the commercial availability of low-carbon process biofuels. Although the Renewable Energy Directive All Europeans" package, the Commission set out the improvement in efficiency for both energy and technologies (such as large-scale electrolysis). (RED) set out sustainability criteria for all biofuels target of achieving a 70% reduction in GHG feedstock use, and deep decarbonization to These new process technologies will need to be produced or consumed in the EU to ensure a emissions by 2050. If biofuels are no longer going sustain the chemical industries’ licence to operate market-ready by 2030 to allow for deployment sustainable and environmentally friendly production to form a strong pillar of a low-carbon future for in a low-carbon economy. across the EU by 2050.8 manner, policy debates have intensified over the last transport, other renewable energy carriers need to years about whether biofuels deliver sufficient GHG play a more prominent role. Next to electromobility,

savings to justify substantive support. In particular, green hydrogen (H2) can fulfil that role. the potential negative impacts related to Indirect Land Use Change (ILUC) and increasing food prices are subject to concerns.

9. Source: www.carbonrecycling.is 7. Eurostat; http://epp.eurostat.ec.europa.eu/portal/page/portal/eurostat/home/ 10. Fuel Quality Directive 2009/30/EC 8. SPIRE 2030 Initiative; www.spire2030.eu/uploads/Modules/Publications/spire-roadmap_december_2013_pbp.pdf 11. Renewable Energy Directive 2009/28/EC 14 Power-to-gas in a decarbonized European energy system based on renewable energy sources Power-to-gas in a decarbonized European energy system based on renewable energy sources 15

Similarly, in the maritime sector a window of opportunity is opening for power-to-gas. Marine shipping is In September 2016, the first hydrogen fuelled increasingly pushed towards lower emissions of harmful pollutants; especially since the implementation of airplane, known as HY4, was tested. The plane was stricter regulations (Revision of Annex VI to the International Convention for the Prevention of Pollution from developed in a collaboration between Pipistrel, the Ships, in force since July 2010). The restrictions with respect to allowed sulphur emission levels increasingly fuel cell specialist Hydrogenics, the University of limit the use of fuel oil and require for a shift towards cleaner fuels. Next to liquefied natural gas (LNG), electric Ulm and the German Aerospace Center DLR. propulsion powered by fuel cells has gained the most attention. Power generation via fuel cells on-board ships not only decreases the emission of harmful pollutants, but also increases the efficiency of the facility. Four low temperature PEM fuel cells generate electricity, giving it a cruising speed of 165km/ A Norwegian project is aimed at demonstrating hr and a range of up to 1,500km. It can carry four passengers (including the pilots). the feasibility of using hydrogen (H2) fuel cells for marine application. A car ferry will be equipped with an electric motor powered by 200kW PEM fuel cells HY4 passenger plane with PEM fuel cells, Source: Each fuselage contains a 9kg hydrogen (H2) storage in combination with 100 kW batteries. German Aerospace Centre (DLR)16 tank that feeds the fuel cell modules.

The 150 kg hydrogen (H2) per day will be supplied by a power-to-gas facility using electricity from the 2.5 Power-to-gas optimizes infrastructure ■■Another study financed by the Hydrogen Fuel Cell Norwegian grid (97% renewable). Expected fuel investments and decarbonizes the gas sector Joint Undertaking and elaborated by a consortium costs are between €2.8-4.5 /kg H2. For comparison: Next to grid-balancing services and large-scale of 32 industry stakeholders and research institutes conventionally produced hydrogen via steam energy storage, power-to-gas can offer an additional analysed that, even in a highly interconnected 12 methane reformation costs 1.5-2.5 €/kg H2. Car ferry MF Ole Bull is a test platform for fuel cells benefit to the power sector. By coupling the gas and European energy system with high RES penetration for marine propulsion; Source: Desoda, 200913 electricity sector and making use of the transmission in 2050, there is a potential of hundreds of GWs capacity of exisiting gas networks, power-to-gas of electrolyser capacity to deal with the excess potentially reduces the need for extending and renewable electricity.18 In Iceland’s capital Reykjavik, three fuel cell buses upgrading electricity networks, allowing for a began operating in autumn 2003 supplied with cost-optimal energy supply infrastructure. As several The power-to-gas concept also offers new hydrogen (H2) produced via electrolysis. The studies have showed, power-to-gas offers significant opportunities for the conventional European gas electricity consumed in the electrolysers comes cost benefits on a system level, compared to sector which is increasingly under pressure due to from geothermal (20%) and hydropower (80%). ’electricity network only‘ solutions: the transition towards a renewables-based energy Nowadays, the refuelling station not only serves supply. On the one hand, the substitution of existing buses but also two dozen of hydrogen-powered ■■The European Power to Gas Platform showed in a heating systems with more energy efficient passenger cars. recently published report that, in specific situations, technologies, as well as the trend towards power-to-gas has the potential to optimize a set low-carbon heat supply (e.g. with solar thermal of network extensions that were proposed by or geothermal heat sources), reduces the sales the European research project, e-Highway2050. prospects of natural gas in the residential market. Hydrogen fuelled bus of the ECTOS project in By substituting parts of the planned extension On the other hand, increasing shares of renewable Reykjavik (Iceland); Source: ECTOS, 201014 capacities between the Netherlands and Norway, electricity have led to depressed power spot prices the simulations showed a cost decrease of more so that even highly efficient gas-fired power plants than a billion euro annually. struggle to compete with wind and solar power In the first quarter of 2017, the French company plants. Thus, gas supply to the power sector is Alstom tested the world’s first low-floor ■■A study of FENES for Greenpeace Energy in 2015 declining as well. Power-to-gas can help the gas hydrogen-fuelled train which is expected to estimated the system cost benefits of using sector decarbonize its commodity and sustain the operate regularly in Lower Saxony (Germany) power-to-gas in Germany in 2050. A 100% continued use of the gas infrastructure even in a at the beginning of 2018. renewables-based energy system with low-carbon energy supply. power-to-gas would cost €12-18 billion per year The Coradia iLint can reach speeds of up to less compared to an energy system without 140km/h. For the purpose of the tests, a mobile power-to-gas.17 filling station has been erected supplying hydrogen

(H2) that is a by-product of an industrial process. In the long term, Alstom aims to support the hydrogen

(H2)- production with wind energy. Alstrom’s zero-emissions hydrogen train Coradia iLint on test drive; Source: Alstrom15

16. Source: http://www.dlr.de/dlr/en/desktopdefault.aspx/tabid-10081/151_read-19469/#/gallery/24480 12. CRM Prototech (2017) Technology update hydrogen-driven vessels; https://maritimecleantech.no/wp-content/uploads/2016/11/ Technology-update-on-hydrogen-driven-vessels-MCT-Haugesund-22.02.2017-v3.pdf 17. Sterner, M.; Thema, M.; Eckert, F.; Lenck, T.; Götz, P. (2015): Bedeutung und Notwendigkeit von Windgas für die Energiewende in Deutschland, Forschungsstelle Energienetze und Energiespeicher (FENES) OTH Regensburg, Energy Brainpool, Studie im Auftrag von 13. Source: https://commons.wikimedia.org/wiki/File:MF_Ole_Bull.jpg Greenpeace Energy. https://www.greenpeace-energy.de/fileadmin/docs/pressematerial/2015_FENES_EBP_GPE_Windgas-Studie.pdf 14. Source: http://www.transport-research.info/sites/default/files/project/ documents/20060727_144147_64112 _ECTOS_Final_Report.pdf 18. FCH JU (2015), Commercialisation of energy storage in Europe; 15. Source: http://www.alstom.com/press-centre/2017/03/alstoms-hydrogen-train-coradia-ilint-first-successful-run-at-80-kmh/ http://www.fch.europa.eu/sites/default/files/CommercializationofEnergyStorageFinal_3.pdf 16 Power-to-gas in a decarbonized European energy system based on renewable energy sources Power-to-gas in a decarbonized European energy system based on renewable energy sources 17

3.2 Value of power-to-gas as a means Compressed Air Energy Storage (CAES) and of energy storage batteries which all not only feature much higher The energy storage functionality of power-to-gas round-trip efficiencies, but also much lower LCoE can be applied at different scales varying from than power-to-gas. Nevertheless, the most small-scale applications that balance the output of a cost-effective technology for long-term energy single wind turbine to large-scale storage on system storage resulted to be hydrogen production via level. Power-to-gas is also very flexible with respect PtG, storage it in a salt cavern and re-electrification 3. THE ECONOMIC VALUE to the duration of an energy storage cycle; because by combustion in a turbine with a LCoE in the order of its technical ability to respond quickly to load of EUR 140/MWh (this case calculates with a cycle changes it can even be used for short (charge and duration of more than 2,000 hours). For comparison, OF POWER-TO-GAS discharge) cycles of less than one hour. However, in PHES has a LCoE of > €400/MWh for the same order to determine the value of the power-to-gas cycle duration.20 concept for the power sector, one has to consider the (existing and potential) competitors for the The comparably lower costs for long-term storage The previous chapter introduced the services of available in the synchronous area of Continental services that power-to-gas can provide. A good of energy via power-to-gas in comparison to its power-to-gas. In this chapter we want to give an Europe. This category typically includes operating means for comparing the different energy storage competitors is also confirmed by a recent LCoE overview of the economic potential that reserves with an activation time of up to 30 seconds. technologies is the widely recognized Levelized Cost analysis carried out by DNV GL; for storage cycles of power-to-gas offers to the different sectors. In many FCR is mainly provided by conventional power plants of Energy (LCoE) methodolody. It is an economic two weeks and more, power-to-gas proved to be the cases it is not a straight-forward task to quantify the with inertia in their rotating equipment (such as assessment of the average total cost to build and most cost effective technology (see also figure below). economic potential; nevertheless, the following generators). In 2013, Germany started to tender for operate an asset that generates (or in this case sections give an indication of the range of order. FCR and, over the last three years, Switzerland, the stores) energy divided by the total energy output The potential of power-to-gas as energy storage Netherlands, Austria, Denmark and France have over its lifetime. means is also recognized in a recently published 3.1 Value of power-to-gas for balancing services joined in. Meanwhile, approximately half of the FCR working document of the European Commission Network balancing services are valued at a capacity in Europe is tendered with the effect that A study published by McKinsey and The Hydrogen stating that: “the cost of large-scale long-term storage transmission, and increasingly at a distribution level. prices, and therefore balancing costs for the Fuel Cell Joint Undertaking showed that if of hydrogen (and related chemicals) is already very Approximately 3,000 MW of Frequency transmission system operators, have decreased power-to-gas was to be installed for short-term low, especially in underground caverns, making it the Containment Reserve (FCR) capacity is currently significantly (see also figure below). storage with a (charging and discharging) cycle most cost-efficient technology for long-term storage. duration between 1-8 hours, it would have to This longer storage timeframe reflects also the compete with Pumped Hydro Energy Storage (PHES), potential for cost-efficient sectorial integration.”21 MWh

Development of prices for Frequency Containment Reserve (in €/MWh) in Germany; Source: TenneT based on regelleistung.net, 201719 Indicative comparison of LCoE for Li-Ion batteries, CAES, PHES and power-to-gas with underground hydrogen storage and re-electrification in a gas turbine taking into account different energy to power ratios (Installed With increasing shares of renewables, the share of conventional power plants will decrease and with it the capacity (kWh) divided by rated power (kW). The LCoE analysis did not consider the cost of charging the available FCR capacity. Rapid response electrolysers could take over a part of this service, providing network storage systems; Source: DNV GL on the basis of data from Zakeri et al., 201522 and WEC, 201623 stability and maintaining a competitive FCR market in the future. 20. FCH JU & McKinsey (2015), Commercialisation of energy storage in Europe; http://www.fch.europa.eu/publications/commercialisation-energy-storage-europe 21. Sterner, M.; Thema, M.; Eckert, F.; Lenck, T.; Götz, P. (2015): Bedeutung und Notwendigkeit von Windgas für die Energiewende in Deutschland, Forschungsstelle Energienetze und Energiespeicher (FENES) OTH Regensburg, Energy Brainpool, Studie im Auftrag von Greenpeace Energy, Regensburg/Hamburg/Berlin. 22. Zakeri et al (2015), Electrical energy storage systems A comparative life cycle cost analysis (2015), 19. TenneT 2017, Market Review 2016, Renewable and Sustainable Energy Reviews 42 (2015) pp 569–596 https://www.tennet.eu/fileadmin/user_upload/Company/Publications/Technical_Publications/ Dutch/2016_Market_Review_TenneT.pdf 23. World Energy Council (2016), World Energy Resources - E-storage: Shifting from cost to value Wind and solar applications 18 Power-to-gas in a decarbonized European energy system based on renewable energy sources Power-to-gas in a decarbonized European energy system based on renewable energy sources 19

3.3 Value of power-to-gas for chemical and The costs for hydrogen (H2) delivery via tube trailers processing industries to small industries is already comparable to the costs

According to a power-to-gas potential study of hydrogen (H2) from power-to-gas installations. carried out in 2016, the supply of large industries In the medium- (2030) and long-term (2050), green

with hydrogen (H2) from power-to-gas installations hydrogen (H2) from onsite electrolysis will become

currently costs approximately twice as much competitive to delivered hydrogen (H2). For large compared to the conventional (steam methane scale applications, opportunities to generate

reforming, SMR) production process. The price cheaper green hydrogen (H2) from electrolysis will spread will decrease in the long term if carbon emerge before 2050, taking advantage of the

dioxide (CO2) allowances rise in price and lowest electricity prices. This, however, excludes power-to-gas capex decreases.24 base load operation.

POTENTIAL IMPACT OF POWER-TO-GAS FOR EUROPEAN INDUSTRY

25 The CertifHy project elaborated and published a market outlook for (green) hydrogen (H2) in Europe.

The expectations are that industrial hydrogen (H2) demand will increase from 6.8Mtons in 2010 to approximately 7.1Mtons in 2030. This case study investigates the market and potential impact

that power-to-gas would have if it was used to substitute conventional hydrogen (H2) in energy-intensive industries.

Replacement of all of Europe’s conventionally produced hydrogen (H2) (i.e. from natural gas via steam reforming) through electrolysis in 2030 entails a conversion of 315TWh of (renewable) electricity.

Assuming a conversion efficiency of 75% from natural gas to hydrogen (H2), this would reduce natural gas consumption by the industry by an amount as large as 32 billion m³ (300TWh) per year. This is equivalent

to an emission reduction of 55Mton carbon dioxide (CO2) per year.

To fully supply the energy-intensive industry with hydrogen (H2) from power-to-gas plants, the corresponding installed capacity of electrolysers depends on the average full load hours per year. As power-to-gas plants are most likely to be operated in demand response regimes to harness excess electricity from renewable energy sources, the capacity factor is assumed to be 30%. This requires three times the installed capacity of electrolysers, amounting to approximately 120GWel. The same capapcity Shutterstock

of solar and wind power plants would be required to feed these electrolysers. To put these numbers into perspective, wind and solar power plants are expected grow from 110GW in 2015 to >250GW in 2030. ©

When considering the enormous capacities of electrolysers that are required to supply the industry’s 3.4 Value of power-to-gas for the transport sector The transport sector represents the most promising hydrogen (H2) needs, power-to-gas installations may only cover a fraction of it by 2030. However, there is a huge market potential for their high value green product and can contribute significantly to the An additional market that could evolve for application for the use of green hydrogen (H2) at the sustainability of this sector. green hydrogen (H2) in the next decade is the moment and could be the first target for large scale transport sector; projections based on current deployment of the technology. The cost of hydrogen

hydrogen-mobility programs of various European (H2) produced from electricity is already comparable countries result in a maximum of 0.5Mton with other green fuel options; current levelised costs 26 hydrogen (H2) demand in 2030. When supplying of €8-10/kgH2 of distributed hydrogen (H2) already

all that hydrogen (H2) with power-to-gas installations, compete with compressed biogas (bioCNG) on a an installed electrolyser capacity of 8.5GWel would fuel cost per kilometre basis.27 To become compet-

be required (at a capacity factor of 30%). When itive with fossil fuels such as petrol, hydrogen (H2) applying a very conservative learning rate of 5% produced via power-to-gas will have to be delivered (solar PV panels had a learning rate of 20-25%), this at a levelised cost of €3-4/kg. quantity has the potential to lower electrolyser capex costs by more than two thirds until 2030.

24. Thomas D. (Hydrogenics), Mertens D. (Colruyt), Meeus M. (Sustesco), Van der Laak W., Francois I. (WaterstofNet): Power-to-Gas Roadmap 26. CertifHy (2015), Market outlook for Green Hydrogen; for Flanders; Brussels, October 2016 http://www.certifhy.eu/images/3__Certifhy_Market_outlook_presentation-Daniel_Fraile_Final.compressed.pdf 25. CertifHy (2015), Market outlook for Green Hydrogen; 27. ENEA Consulting (2016), THE POTENTIAL OF POWER-TO-GAS - Technology review and economic potential assessment; http://www.certifhy.eu/images/3__Certifhy_Market_outlook_presentation-Daniel_Fraile_Final.compressed.pdf http://www.enea-consulting.com/wp-content/uploads/2016/01/ENEA-Consulting-The-potential-of-power-to-gas.pdf 20 Power-to-gas in a decarbonized European energy system based on renewable energy sources Power-to-gas in a decarbonized European energy system based on renewable energy sources 21

The integration of new technological concepts 4.2 Power-to-gas demonstrations in Europe such as power-to-gas is accompanied with Since 2012 there has been a steep increase in the uncertainties for project developers, technology number of demonstration plants, with Germany as a suppliers, vendors, operators and end users. leading nation in Europe. In the first quarter of 2017 The demonstration, qualification and verification a total number of 70 power-to-gas projects were of integrated power-to-gas systems in real-life realised or under way in Europe, all having a strong environments is required to accelerate technology research or demonstration character. The large 4. TECHNICAL adoption and market penetration. number of research and application projects helps the new technologies to outgrow laboratory conditions DEVELOPMENTS WILL and brings them closer to commercial deployment.

Proects Countr By Q1 of 2017, the (realised) installed capacity of  ungary  witzerland electrolysers totalled approximately 30MW. The vast IMPROVE THE BUSINESS  ustria majority is located in Germany, followed by Spain  rance  ermany and the United Kingdom.  taly  elgium CASE AND ENABLE More than 60% of the power-to-gas projects have  orway hydrogen (H2) as final product, 23% methane (CH4)  nited and 15% both hydrogen (H2) and methane (CH4). EXTENDED OPERATING ingdom Only one project produces methanol (CH OH). ENVELOPES 3  enmar

The power-to-gas value chain consists of different 4.1 Readiness of power-to-gas technology  eterlands (technical) components featuring different levels of As can be seen in the figure below, crucial  pain technological readiness. The following paragraphs components of the power-to-gas value chain such highlight the state of the art and developments for as Proton Exchange Membrane (PEM) electrolysers, Overview of pilot projects in Europe (per Q1-2017) the crucial components of the power-to-gas value fuel cells, methanation, hydrogen (H2) injection to

chain, including hydrogen (H2) production via natural gas networks and storage in underground electrolysis to processing via methanation to gas storages are still in the piloting or

hydrogen (H2) injection into the natural gas grid. demonstration stage. Operational

Estonia ydrogen etane production atia enmar ituania storage nited ydrogen etane ingdom uel cells large scale ig temp elarus PE electrolysis applicationaccommodation reland Planned uel cells mobility low temp eterlands ermany Poland processing ydrogen emical metanation wit laline electrolysis raine etane inection natural gas grid elguim zec ep loaia iological metanation wit ydrogen etane ompressors reuelling ustria oldoa compressors underground storage rance ungary Project ﬁnished omania iueaction cryogenic storage team water electrolysis E taly roatia etane compressors reuelling compressors erbia ulgaria ydrogen team water electrolysis PE Portugal Unknown pain reece ydrogen arious use o in reﬁneries inrastructure etane Capital requirement & investment risk requirement Capital ommercial-scale process proed ommercial-scale process proed widely aboratory wor enc scale Pilot scale substancial optimization potential deployed limited optimization potential Power-to-gas (demonstration) projects in Europe; Source: European Power to Gas Platform website28

Research Development Demonstration Deployment Mature technology In most of the projects the produced gas finds its destination in the natural gas network (33%). The transport Technology maturity sector and power generation as end users are targeted in 25% of the projects. One single project delivers Readiness of power-to-gas technology; Source: DNV GL 2016 gas to an industrial user.

28. European Power to Gas Platform website: http://www.europeanpowertogas.com/demonstrations 22 Power-to-gas in a decarbonized European energy system based on renewable energy sources Power-to-gas in a decarbonized European energy system based on renewable energy sources 23

4.3 Accelerated developments in the field of therefore to be adapted making them suitable Technology development priorities vary among the 4.4 Injection of hydrogen (H2) into gas networks electrolyser and methanation technology for stop-start, efficient part-load and dynamic different electrolyser types. Generally, they respond The existing natural gas pipeline system provides There are three types of electrolysis technologies operation. For alkaline electrolyser technology, to the need to reduce cost while maintaining or an infrastructure that could potentially be used

that are predominantly considered for application the modifications have been demonstrated and improving performance. Based on stakeholder for transporting hydrogen (H2) in the form of a in power-to-gas plants. Two of them are validated in field tests already. opinions, the system sizes and efficiencies will hydrogen-natural gas blend. Natural gas pipelines commercially available, namely alkaline electrolysers increase significantly (3% improvement for alkaline are widespread and highly interconnected (liquid electrolyte) and Proton Exchange Membrane The PEM technology used to be applied in and 8% for PEM). The system costs of alkaline throughout Europe offering a means for safe (PEM) electrolysers. The third one, solid oxide small-scales in niche markets. Units of larger scale electrolysers are expected to decrease by 30% and and large-capacity transmission. electrolysis has been proven on a laboratory scale (max. 2 MWel) have recently been released and for PEM electrolysers by 50% until 2030;30 if all

but it is anticipated to become commercially are currently under demonstration. Although the predicted hydrogen (H2) demand in the mobility Because the physical and chemical properties of

available by 2020. investment costs are still higher compared to sector by that time would be supplied by hydrogen (H2) are different from natural gas, the

alkaline electrolysers, PEM electrolysers have a electrolysers, this cost reduction would permissible hydrogen (H2) fraction is limited to Until recently electrolysis (mostly alkaline electrolysis) better long-term perspective due to higher already be achieved. ensure the safety, operatability and quality of the has generally been applied for continuous industrial compactness, efficiencies and expected cost gas system. Pipelines used in the natural gas grid processes such as the production of fine chemicals reductions than alkaline technology. Solid oxide electrolysis still needs to be proven on have not been designed to withstand the specific

or vehicle fuel and can be characterized as mature. a commercial scale however. Next to improvements properties of hydrogen (H2) such as higher Both these applications, however, did not require Solid oxide electrolysers operate at significantly with respect to lifetime lower degradation rates, also permeation and corrosion. Research studies have the electrolysis process to be very flexible for its higher temperatures than alkaline, PEM and AEM a minimum operational flexibility is required. suggested that volume fractions of up to 20% could application in terms of ramping up or down. With electrolysers, typically at 500-850°C. This reduces the be tolerated without much modifications of the the increasing penetration of variable renewable electrical input required for the electrolysis reaction. infrastructure. However, end use appliances for

energy resources the need for demand-response High temperature resistant ceramic materials are natural gas often show lower hydrogen (H2) operational regimes evolved. The units had used as electrolyte and electrode materials. tolerances, which is why most European standards are below 5%. Research and analysis is in progress by various entities to determine appropriate blending limits. There are several projects in Europe demonstrating that hydrogen-natural gas blends can be safely transported and used by end user appliances. Some of these projects are: - GRHYD is demonstrating hydrogen-natural gas blends of 6-20% H2 in refuelling station and a fleet of around 50 buses. In addition, a residential area of around 200 homes will be supplied with a hydrogen-natural gas blend with a variable H2 content of <20%. - HYDEPLOY will demonstrate that a hydrogen-natural gas blend of 10%-20% can be safely transported Sstem costs kWe Sstem by Keele University's private gas network and used by the consumers. LHV) (%, Electrical efﬁciency - H21 LEEDS City Gate aims at determining the feasibility of converting the existing natural gas network supplying the city of Leeds to 100% hydrogen (H2). - JUPITER 1000 will inject up to 5% hydrogen (H2) into the transmission gas grid in France - HYREADY is developing guidelines and recommended practices for network operators to prepare

E ystem costs PE ystem costs their assets for H2injection in their natural gas networks. AEL, Electrical efﬁciency (%, LHV) PEM, Electrical efﬁciency (%, LHV)

Expected development of capex and efficiencies of alkaline and PEM electrolysers based on stakeholder consultation; Source: E4Tech & Element Energy, 201429

29. E4tech & Element Energy Ltd (2014), Study on development of water electrolysis in the EU, for the Fuel Cells and Hydrogen Joint Undertaking; http://www.fch.europa.eu/sites/default/files/study%20electrolyser_0-Logos_0_0.pdf 30. 0.5 Mton hydrogen demand predicted by CertifHy (2015), Market outlook for Green Hydrogen; Cost reduction from €1,570 €/kW to €707 €/kW at a 5% cost decrease with each doubling of the installed capacity 24 Power-to-gas in a decarbonized European energy system based on renewable energy sources Power-to-gas in a decarbonized European energy system based on renewable energy sources 25

4.5 Methanation As an alternative to chemical methanation, biological

Methanation refers to the synthesis of methane methanation converts hydrogen (H2) together with

(CH4) by hydrogenation of carbon monoxide and is carbon dioxide (CO2) to methane (CH4) using basically a process to synthetically produce natural methanogenic microorganisms operating as

gas. The carbon dioxide (CO2) required for bio-catalysts. The reaction occurs under anaerobic methanation can either be obtained from biogenic conditions in an aqueous solution, at atmospheric carbon sources as for instance biogas, or captured pressure or under pressure, between 20 and 70°C. carbon dioxide (CO ) from industrial processes (e.g. Biological methanation has the potential to reduce 2 5. BARRIERS production of steel, cement and lime). The produced costs thanks to a simpler reactor design and gas can thus be integrated into the natural gas convenient pressure and temperature conditions. infrastructure without restrictions. The concept is currently demonstrated in Denmark in a power-to-gas plant featuring a 1MWel electrolyser. To fully utilize the potential of power-to-gas, large-scale technology implementation should be accelerated Methanation itself is a mature technology that is The stability, response time and ramp-up and down so the costs are driven down. To achieve this, several barriers need to be overcome. The table below presents already being widely applied in industrial processes of the process is thoroughly tested. the challenges that were identified and gives suggestions how these could be tackled. such as ammonia synthesis. In order to be suitable for power-to-gas applications, methanation units Methanation is an additional conversion step in the CHALLENGES REUIRED ACTION needed to be down scaled and adapted to power-to-gas process and thus means a further loss intermittent operational regimes; that is why of efficiency. However, methanation can be a solution Technolog - PE electrolysers need to become uicly - ontinued tecnological deelopment or aailable on multi- scale electrolysers methanation is currently also tested in various in situations where H2neither can be used on or close power-to-gas demonstration plants. to the production site nor be injected into the gas - ncrease epected lietime o cell stacs o - etting up pilot proects targeting te network. Besides, the biological methanation electrolysers uncertainties about storage and end use Catalytic methanation is a thermochemical process; process can be applied as an upgrading process applications o ydrogen-natural gas - olid oide electrolysers need to be blends the reaction takes place by use of a catalyst. Nickel is where the carbon dioxide (CO2) in the raw biogas is proen on commercial scale often chosen as a catalyst because of the favourable directly used as a carbon source. A combined - ncertainties about riss and impact o costs relative to other more precious metals. The deployment of power-to-gas installations and ydrogen-natural gas blends on end use process takes place at two temperature ranges: low anaerobic digestion is especially interesting for euipment and underground gas storages temperature methanation in the range of 200–550°C wastewater treatment plants; not only can the biogas need to be taen away and high temperature methanation between output be increased by converting the carbon Economics - or te application as large-scale energy - ontinued etension o renewable 550–750°C. Cost figures available on capex show dioxide (CO2) in the biogas into methane (CH4), but storage te renewables sare is not ig generation capacity ollowing te E

high spreads between €400-1,500/kWCH4 due to also the oxygen (O2) produced in the electrolyser enough yet to guarantee sufﬁcient annual renewables targets or and the lack of units under commercial operation so far. can be applied in the treatment processes of the operational ours - Establising a competitie maret or carbon When the market for small-scale methanation wastewater. In this way, synergies can be - ig cape tis does not allow or positie dioide allowances tat stimulates develops, it is expected that these units can be developed and the efficiency of the overall business cases yet inestments in low-carbon tecnologies

purchased for €300–500/kWCH4. process can be increased. - e prices o carbon dioide - ocussing on proects were business case emission allowances are too low is near to positie

Regulation - ydrogen and metane - ecognize ydrogen rom renewable produced rom renewable electricity electricity as renewable uel wic is are not yet recognized by te European accountable or te biouel uota and ommission as biouel and tereore establish a certiﬁcation scheme for ‘green’

are not accountable or reacing te ydrogen renewables target in te mobility sector - ontinued policy o renewable uel - n seeral countries power-to-gas is treated uotum or mobility sector ater as power end use wic entails tat taes and ees need to be paid by te plant - llow load sedding as balancing serice operators or purcasing electricity wic would create an additional income or te operators o electrolysers reducing

- urrently tere is no reen ydrogen ydrogen production costs Certiﬁcation scheme in place. - ot all European countries allow load sedding as balancing serice Collaoration - Power-to-gas must be considered as - onsideration o te power-to-gas concept complementary option to electricity as complementary option to electricity networ etensions is reuires or a networ etensions close collaboration o te electricity and gas sector wic does not come naturally 26 Power-to-gas in a decarbonized European energy system based on renewable energy sources Power-to-gas in a decarbonized European energy system based on renewable energy sources 27

6. THE WAY FORWARD

Power-to-gas is an innovative concept that will With time, the share of variable renewable electricity converge the existing siloed value chains of the sources in the energy mix will progress towards the gas and electricity sector into one energy system EU sustainability targets calling for large volume and which is able to meet the challenges of a mostly long-term energy storage options to mitigate their renewables-based energy supply system. fluctuations. Currently, there is no energy storage technology that can compete capacity and cost wise In principle, power-to-gas is technologically already with power-to-gas when it comes to storing energy in an advanced stage, with single components and over longer periods. Other factors that improve the their interplay currently being refined and optimized business case for the power-to-gas concept are: to prepare for the market launch. The challenge is to quickly reach an industrial scale of the ■■increasing necessity for deep decarbonization in technology that is economically exploitable. This is the mobility sector and energy-intensive industries a typical chicken-and-egg problem as industrial scale ■■optimized infrastructure investments achieved by technology is only installed when low equipment coupling the electricity and gas networks

costs allow for a positive business case and low ■■higher price of carbon dioxide (CO2) equipment costs in turn are only achieved with emission allowances. mass production. For successful commercial deployment of There are some solutions to this dilemma. power-to-gas, a close cooperation between all To begin with, power-to-gas needs to be installed stakeholders is essential. Governments and in cases where it is already (near to) profitable. regulators play an important role in creating a level These cases are: playing field for power-to-gas; among other things,

this includes acknowledging (green) hydrogen (H2)

■■islands and poorly connected regions with as biofuel, comparable stimulation of hydrogen (H2) high variable RES shares and expensive mobility as with electromobility, and eliminating all back-up systems end user charges for the consumed electricity. The ■■regions with high/excess cheap (renewable) gas and electricity sector need to coordinate their electricity production that can be converted network developments with each other and end

into hydrogen (H2) for use in the mobility sector users need to adapt to the new fuel (blends).

■■small-scale industry applications for hydrogen (H2) supply (instead of tube trailer delivery). ■■The European Power to Gas Platform facilitates the dialogue between all these stakeholders. We The successful exploitation of power-to-gas in those provide them with a forum to gain and exchange cases together with continuous cost reductions and knowledge and explore the conditions under efficiency improvements would enable the industrial which power-to-gas can be successful and help to scale development of the technology. set up projects. Our common goal is to realize the energy transition as cost-effectively as possible. From our perspective, the transport sector is key to the commercialization of power-to-gas. If the

national targets for hydrogen (H2) mobility for 2030 are realized, capex cost reductions for electrolysers will reach the required levels to allow for positive business cases in other types of applications. © DNV GL © DNV DNV GL AS The European Power to Gas Platform is a joint body, based on an NO-1322 Høvik, Norway integrated network of stakeholders, which aims to explore the Tel: +47 67 57 99 00 viability of power-to-gas in Europe. www.dnvgl.com Learn more at: www.europeanpowertogas.com Design: 17052_JSW Cover photo: © DNV GL