Renewable, synthetic energy carriers are one of the central pillars of an integrated energy transition, alongside the direct use of renewable power and temporary storage of this power in batteries. These energy sources make it possible to seasonally store excess solar and wind energy and subsequently use it in many different ways for sector coupling, be it for heat supply, transportation or industry. The key technology for this is power-to-gas (PtG), which involves using energy for electrolysis to break down water into oxygen and hydrogen. Additional synthesis processes can then be used to convert the hydrogen gas into methane – a gaseous energy source – convert it into liquid fuels or even convert it back into electrical energy. How exactly power-to-X technologies can help drive the energy transition is a topic of debate.
Increased efficiency is imperative
In its pilot study entitled “Integrated Energy Transition,” the German Energy Agency (dena) advocates for greater use of synthetic renewable energy carriers in all areas of application where cutting emissions by using renewable electricity directly is either impossible or very difficult. It recommends that Germany install electrolyzers with capacities of at least 15 GW by 2030 and over 60 GW by 2050. There are several hurdles to overcome along the way. According to data provided by the German Federal Ministry for the Environment, the current technology leads to conversion losses of 40 to 60% when using green power to produce liquid fuels, methane or hydrogen. As well as their relatively low efficiency compared with direct electricity use, the cost of producing synthetic renewable energy carriers, which is currently still quite high, is the main obstacle preventing their widespread use.
Experts foresee a stark reduction in costs
In Germany, there are currently only around 30 pilot projects with a combined installed electrolysis capacity of approximately 25 MW. Yet the authors of various possible scenarios are optimistic that the number will grow and costs will sink. According to the German natural gas initiative Zukunft ERDGAS, a third of all surveyed experts expect to see a cost reduction of up to 50% by the year 2030. Another third even foresee a decrease of up to 70%. Experts see the greatest potential for savings in electrolysis and methanation. With methanation, the survey respondents estimate a cost advantage of at least 30% on average. This would continue the positive trend of the last few years. According to information from the World Energy Council, the costs for 1 kW of installed electrolysis capacity have fallen from €1,500 to below €1,000 since 2013. Some experts foresee another 50% drop in electrolysis costs to below €500/kW within just two years’ time.
Investors still holding back
The decreases in cost should primarily enable industrial serial production of electrolyzers, as well as steadily improving the technology’s efficiency. “One core issue is certainly the need to scale up,” says dena’s division director Hannes Seidl. “Since we are still primarily talking about small individual projects, unfortunately, systems are expensive.” To reduce the cost of investing, a large-scale market launch is needed – with more installations and, in particular, larger ones. However, investors such as large banks or investment funds are still holding back when it comes to power-to-gas. They have their doubts about its economic viability, which is dependent on conditions in the energy industry. Investments in Germany have been hampered by a number of obstacles. One problem is that electrolyzers are classified as end users of green power and subject to all of the corresponding taxes and levies. Another problem is the lack of an effective system of carbon pricing. Additionally, there is neither a quota system nor a calculated market launch program in place.
Grid operators launching projects
Nevertheless, other projects are being put into effect in the industry. The well-known electricity and gas grid operators Amprion and Open Grid Europe announced last year that they are looking to invest €150 million in a 50 to 100 MW power-to-gas plant. The intention is for it to use both energy supply grids, paving the way for a hybrid infrastructure as sector coupling advances. A consortium of grid operators including Gasunie, Tennet and Thyssengas is also seeking to drive forward the storage of renewable energies in gas grids. They are planning a 100 MW power-to-gas plant in East Frisia. This investment is meant to help relieve and stabilize the electricity grids as well as cutting the costs of grid expansion.
Interested at hydrogen, fuel cells and Power-to-Gas at ees Europe? Take a look here!
Related conference sessions:
Strategic partners: Eurogas Europe and Hydrogen Europe
ees Forum program overview:
Expert talks about Power-to-Gas, hydrogen and fuel cells Friday, May 17, 10 am - 1 pm
detailed program available by end of March
exhibition segment hydrogen, fuel cells & power-to-gas: hall C2