ENERGY WATCH #4 - October 16, 2018
For those of you who have been following developments in power-to-gas in Europe, the new report by Martin Lambert of the Oxford Institute for Energy Studies, Power-to-gas: linking electricity and gas in a decarbonizing world?”, will probably not contain much news.
But for those of you who have not been paying much attention and who would like to catch up, it presents an excellent overview of the projects that are taking place across Europe and of their economic potential, as far as current knowledge goes (which is not that far).
As Lambert reminds us, natural gas demand will “need to decline at an accelerating rate” after 2030 “if carbon reduction targets are to be met” in Europe.
“If existing natural gas infrastructure is to avoid becoming stranded assets, plans to decarbonise the gas system need to be developed as a matter of urgency in the next three to five years, given the typical life expectancy of such assets of 20 years or more”, notes Lambert.
There are three alternatives to natural gas being developed by industry at this moment:
Large scale conversion of the gas network to hydrogen, with hydrogen production by methane reforming with carbon capture utilisation and storage (for example, the UK’s Leeds H21 project4 ).
Greater use of biogas and/or biomethane (discussed in an earlier OIES report).
Production of hydrogen or renewable methane via power-to-gas.
The new report focuses on power-to-gas (i.e. production of hydrogen or methane on the basis of renewable energy), but Lambert warns that “the commercialisation of power-to-gas technology is at a very early stage of development, with a limited number of pilot and demonstration plants in operation or under development.”
Interestingly, “while there are some small scale developments elsewhere (for example in Japan and the US), most of these developments are taking place in Europe, with Germany taking the lead within Europe.”
The report also has a useful chart with a technical overview of power-to-gas options:
There are two key questions that Lambert discusses which policymakers will have to confront.
One, if hydrogen is produced, what will it be used for? There are three possibilities:
- P2G, with standalone storage of hydrogen and subsequent generation of power from the stored hydrogen, could be considered merely as an additional tool to balance the electricity system, with no impact on the gas system. In this role, it performs a similar role to other forms of electricity storage like pumped hydro, compressed air and batteries.
- Alternatively, P2G could be viewed as an additional source of supply (of either hydrogen or methane or both) to the gas grid, competing with (or supplementing) traditional natural gas, biomethane from anaerobic digestion or synthetic natural gas from gasification of waste.
- As another alternative, P2G could be viewed as a source of hydrogen for a variety of applications, for example in transport or for industrial heat.
The second question is, if we look at use in the built environment, should we use hydrogen or should we convert hydrogen into methane? In the first case, an entirely new infrastructure will have to be built, as hydrogen can only be added to the gas grid to a very limited extent. If the hydrogen is converted into methane, this could be used without limitation in the existing gas grid. However, methanation is costly. According to Lambert, “In all case, the methanation step adds an additional €40-€5-/MWh to the cost.”
“It could be argued that conversion of the entire natural gas system to hydrogen is ultimately the ‘better’ solution, as it provides more flexibility of supply and, at the point of final consumption, use of hydrogen does not release any carbon dioxide to the atmosphere”, writes Lambert. “However, the issues around persuading consumers to change their gas-consuming equipment to hydrogen, and ensuring that the entire natural gas network can handle hydrogen safely remain significant.”
He notes that “One of the key arguments for decarbonising the gas network is to take advantage of the considerable investment in existing network infrastructure. An alternative route to decarbonise the energy system could be to convert nearly all applications (including the majority of the heat sector) to (low carbon) electricity. As well as requiring large scale change to end-user equipment, this would also require significant incremental investment in upgrading the electricity system, and it would leave the gas network largely idle.”
In other words, Lambert has no definitive answers at this stage. The only thing that is clear, he writes is that “switching from use of fossil-derived natural gas to low carbon alternatives will need some form of government support. The nature of that government support will be crucial in determining the path forward.”
So what about just giving up on power-to-gas altogether and simply focus on electrification? Wouldn’t that be much simpler and more efficient in the end?
It may be tempting, but it might not be a good idea, at least not for countries that already have a large gas infrastructure, according to Lambert. “In a 2016 report focused on the UK heat sector, KPMG concluded that, whichever route is chosen, a large investment (>£100bn) would be required to achieve 2050 decarbonisation targets, but an all electric alternative would cost more than double other alternatives which continued to use the gas network. Broadly similar conclusions were also reached by a 2018 DENA (Deutsche Energie-Agentur) study for Germany comparing all electric and technology mix scenarios.”