The Potential Role of Power-To-Gas in the Russian-European Energy System
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Master thesis The potential role of Power-to-Gas in the Russian-European energy system by Veronika Lenivova Presented to: Faculty of Environment and Natural Sciences Brandenburgische Technische Universität, Cottbus-Senftenberg In partial fulfilment of the requirements for the degree of Master of Science in Environmental and Resources Management supervised by Brandenburg University of Technology Oxford Institute for Energy Studies Prof. Dr.-Ing. Georg Möhlenkamp Dr. Tatiana Mitrova Nikolaos Panagiotis Sakkas Martin Lambert June 2020 Acknowledgements The pathway for the accomplishment of this master thesis was not easy and brought me through different challenges one after another. I am endlessly grateful for the people that surrounded me with support, kindness and motivation during the last six months. My deepest regards are dedicated to my supervisors. I was very lucky to work with such talented and knowledgeable people. Dr. Cinthya Guerrero, who inspired me for the topic, opened the opportunity to study in Oxford and guided in any questions that could appear. I would like to express my acknowledgements to Nikolaos Panagiotis Sakkas, Brandenburg University of Technology, who convincingly navigated and encouraged me to be professional and take the right decision even when the solution was not on the surface. Without his persistent help, the master thesis would not have been realised. I would also like to thank the experts from the Oxford Institute for Energy Studies, who were involved in the supervision of the research project: Dr. Tatiana Mitrova and Martin Lambert. Their passionate and open participation, input and insightful comments have significantly broaden my vision of the research work and help to express the main ideas as clearly as possible. I am thankful for providing the opportunity to start my research in Oxford, unforgettable experience in the research institute, meeting extraordinary OIES team and having unique access to the literature. Finally, I am endlessly thankful to my parents and to my boyfriend Tom for providing me with unfailing and loving support and continuous encouragement and belief in me throughout years of study and especially through the process of writing this thesis. This accomplishment would not have been possible without them. Sincerely, Veronika Lenivova ii Declaration of Origin I hereby certify that the master thesis on the topic, “The potential role of Power-to-Gas in the Russian-European energy system” submitted under my name is the original research work, has been written independently and represents my own visions. Wherever contributions of others are involved, every effort is made to indicate this clearly, with due reference to the literature, and acknowledgement of collaborative research and discussions. Any source of assistance or the idea from other works have been appropriately acknowledged. Additionally, I assure that the master thesis has not been a part of any examination process and has not been published. Veronika Lenivova Cottbus, 8th June 2020 iii Abstract The modern world is currently facing the energy revolution due to the decarbonisation challenges, promoted by the United Nations Framework Convention on Climate Change (UNFCCC). The well-established fossil fuel energy sources are being pushed from their leading market positions by renewable energy. European governments are some of the first to take decisive action towards decarbonisation and have already started reforming their economic sectors. New questions arising from such changes are influencing the role of Russia in supplying energy to the European market. The development of a market for renewable gas, especially renewable hydrogen in Europe, could potentially, in a long-term scenario up to 2050, be an option for Russia to help maintain demand and remain in the role as a main exporter. The focus of this master thesis is put on the assessment of the current state of readiness of Russian and European energy systems for integration of Power-to-Gas (PtG) systems and for development of a carbon-free hydrogen market. German internal green hydrogen production capacity cannot meet the approximate demand in 2030 and 2050. However, the presence of the unutilised power capacity from Russian nuclear and hydro power plants opens a new opportunity to generate economically attractive hydrogen in large volumes via electrolysis with low electricity costs and zero carbon dioxide footprint. In this thesis different supply chains for hydrogen export (Russia-Germany) are constructed and, as a result, the levelised costs of hydrogen (LCOH) are calculated and analysed. Hydrogen produced in Russia and transported to Germany via maritime shipment shows that it can already be competitive to the domestically produced green hydrogen in Germany. The main compartment of the LCOH is the electricity expenditure, which the current Russian industrial tariffs can reach up to 90% of the total costs. Further reductions of the electricity price for PtG systems are recommended in order to achieve lower results for the LCOH. The outcome of this master thesis provides an overview on the current readiness of Russian and German hydrogen infrastructure and further recommendations on how it should be adapted. Finally a 2050 roadmap for the implementation of a hydrogen market in Russia and Germany is developed. iv Table of Contents Acknowledgements .................................................................................................................... ii Declaration of Origin ................................................................................................................. iii Abstract .................................................................................................................................... iv Table of Contents ....................................................................................................................... v Table of Figures ....................................................................................................................... viii List of Tables ............................................................................................................................. xi List of Acronyms...................................................................................................................... xiii Introduction ............................................................................................................................... 1 Chapter 1. Project justification: The changes in The European Energy Policy and their possible implications for the demand of natural gas imports from Russia. .............................................. 4 1.1 The Geopolitics and Energy Transition in European Union ................................................ 4 Geo-economics of the EU and consequences of German “Energiewende” for all Member States. ........................................................................................................................................ 8 German-Russian bilateral relationships .................................................................................. 10 1.2 The European Union and the Paris Agreement ................................................................ 13 1.3 The European Energy Policy: objectives and challenges .................................................. 14 German Energy Policy. ............................................................................................................. 18 1.4 Green Hydrogen in German legislation ............................................................................ 21 Key points of Chapter 1. ......................................................................................................... 24 Chapter 2. Hydrogen’s potential role in the European Energy decarbonisation strategy. German experience. .............................................................................................................................. 25 2.1 Introduction to Hydrogen as an energy carrier. ............................................................... 25 2.2 Colours of hydrogen ......................................................................................................... 26 2.3 Power-to-gas, Power-to-X, system overview ................................................................... 31 v 2.4 Potential demand of hydrogen in Europe, Germany ....................................................... 36 Studies for the European Union on the energy markets overview in 2030, 2050 .................. 36 Studies on the German hydrogen markets, overview in 2030, 2050 ...................................... 43 2.5 Overview of green hydrogen application by sector ......................................................... 46 2.6 Potential exporters of hydrogen ...................................................................................... 50 Key points of Chapter 2. ......................................................................................................... 53 Chapter 3: Russia’s potential role in the development of the European hydrogen market ....... 54 3.1 State of the art of the Russian energy sector and market ............................................... 54 3.2 Energy strategy 2035: echoes of Western decarbonisation in Russia ............................. 57 3.3 Potential role of hydrogen market in Russia .................................................................... 61 3.4 Possible domestic green hydrogen generation methods (renewable