IDEAS home Printed from https://ideas.repec.org/a/gam/jeners/v15y2022i7p2523-d782799.html
   My bibliography  Save this article

Economic Evaluation of Implementation of Power-to-Gas: Application to the Case of Spain

Author

Listed:
  • Alberto Abánades

    (Escuela Técnica Superior de Ingenieros Industriales, Universidad Politécnica de Madrid, 28006 Madrid, Spain)

  • Jesús Frías

    (Escuela Técnica Superior de Ingenieros Industriales, Universidad Politécnica de Madrid, 28006 Madrid, Spain)

Abstract

An economic analysis of the implementation of the power-to-gas (PtG) system between 2030 and 2055 is presented at a large scale. The capacity of the PtG system is adapted to two scenarios in Spain (Bailera and Lisbona 2018), corresponding to growing scenarios of 1.73 and 1.36%/y of its electricity market. The total power capacity of the PtG system has been fixed to 12.7 and 3.84 GW, respectively, at the end of 2055. The levelized cost of storage (LCOS) of the implementation of PtG has been evaluated. Assuming uncertainties in the current cost projections for CAPEX and OPEX, LCOS estimations are between 136 and 686 EUR/MWh with a payback time of 16 years in the best scenario for a reference electricity purchase of 100 EUR/MWh and a CO 2 penalty of 100 EUR/ton. A sensitivity analysis and the viability dependence versus energy purchase and CO 2 penalty certificates is shown. This work sheds some light for the comparison of PtG implementation costs in comparison with other storage options, such as batteries, pumped-storage hydroelectricity or compressed air storage for future energy scenarios.

Suggested Citation

  • Alberto Abánades & Jesús Frías, 2022. "Economic Evaluation of Implementation of Power-to-Gas: Application to the Case of Spain," Energies, MDPI, vol. 15(7), pages 1-13, March.
    • Handle: RePEc:gam:jeners:v:15:y:2022:i:7:p:2523-:d:782799
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/1996-1073/15/7/2523/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/1996-1073/15/7/2523/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Blanco, Herib & Faaij, André, 2018. "A review at the role of storage in energy systems with a focus on Power to Gas and long-term storage," Renewable and Sustainable Energy Reviews, Elsevier, vol. 81(P1), pages 1049-1086.
    2. Peng, Donna & Poudineh, Rahmatallah, 2019. "Electricity market design under increasing renewable energy penetration: Misalignments observed in the European Union," Utilities Policy, Elsevier, vol. 61(C).
    3. Bean, Patrick & Blazquez, Jorge & Nezamuddin, Nora, 2017. "Assessing the cost of renewable energy policy options – A Spanish wind case study," Renewable Energy, Elsevier, vol. 103(C), pages 180-186.
    4. Estefania Vega Puga & Gkiokchan Moumin & Nicole Carina Neumann & Martin Roeb & Armin Ardone & Christian Sattler, 2022. "Holistic View on Synthetic Natural Gas Production: A Technical, Economic and Environmental Analysis," Energies, MDPI, vol. 15(5), pages 1-27, February.
    5. Zakeri, Behnam & Syri, Sanna, 2015. "Electrical energy storage systems: A comparative life cycle cost analysis," Renewable and Sustainable Energy Reviews, Elsevier, vol. 42(C), pages 569-596.
    6. Ibrahim, H. & Ilinca, A. & Perron, J., 2008. "Energy storage systems--Characteristics and comparisons," Renewable and Sustainable Energy Reviews, Elsevier, vol. 12(5), pages 1221-1250, June.
    7. Ehteshami, Seyyed Mohsen Mousavi & Chan, S.H., 2014. "The role of hydrogen and fuel cells to store renewable energy in the future energy network – potentials and challenges," Energy Policy, Elsevier, vol. 73(C), pages 103-109.
    8. Luca Petricca & Per Ohlckers & Xuyuan Chen, 2013. "The Future of Energy Storage Systems," Chapters, in: Ahmed F. Zobaa (ed.), Energy Storage - Technologies and Applications, IntechOpen.
    9. Tan, Qinliang & Ding, Yihong & Ye, Qi & Mei, Shufan & Zhang, Yimei & Wei, Yongmei, 2019. "Optimization and evaluation of a dispatch model for an integrated wind-photovoltaic-thermal power system based on dynamic carbon emissions trading," Applied Energy, Elsevier, vol. 253(C), pages 1-1.
    10. Thema, M. & Bauer, F. & Sterner, M., 2019. "Power-to-Gas: Electrolysis and methanation status review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 112(C), pages 775-787.
    11. Böhm, Hans & Zauner, Andreas & Rosenfeld, Daniel C. & Tichler, Robert, 2020. "Projecting cost development for future large-scale power-to-gas implementations by scaling effects," Applied Energy, Elsevier, vol. 264(C).
    12. Brandstätt, Christine & Brunekreeft, Gert & Jahnke, Katy, 2011. "How to deal with negative power price spikes?--Flexible voluntary curtailment agreements for large-scale integration of wind," Energy Policy, Elsevier, vol. 39(6), pages 3732-3740, June.
    13. Tran, Thomas T.D. & Smith, Amanda D., 2018. "Incorporating performance-based global sensitivity and uncertainty analysis into LCOE calculations for emerging renewable energy technologies," Applied Energy, Elsevier, vol. 216(C), pages 157-171.
    14. Blazquez, Jorge & Fuentes, Rolando & Manzano, Baltasar, 2020. "On some economic principles of the energy transition," Energy Policy, Elsevier, vol. 147(C).
    15. Henok Ayele Behabtu & Maarten Messagie & Thierry Coosemans & Maitane Berecibar & Kinde Anlay Fante & Abraham Alem Kebede & Joeri Van Mierlo, 2020. "A Review of Energy Storage Technologies’ Application Potentials in Renewable Energy Sources Grid Integration," Sustainability, MDPI, vol. 12(24), pages 1-20, December.
    16. Lisbona, Pilar & Frate, Guido Francesco & Bailera, Manuel & Desideri, Umberto, 2018. "Power-to-Gas: Analysis of potential decarbonization of Spanish electrical system in long-term prospective," Energy, Elsevier, vol. 159(C), pages 656-668.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ikäheimo, Jussi & Weiss, Robert & Kiviluoma, Juha & Pursiheimo, Esa & Lindroos, Tomi J., 2022. "Impact of power-to-gas on the cost and design of the future low-carbon urban energy system," Applied Energy, Elsevier, vol. 305(C).
    2. Bucksteeg, Michael & Mikurda, Jennifer & Weber, Christoph, 2023. "Integration of power-to-gas into electricity markets during the ramp-up phase—Assessing the role of carbon pricing," Energy Economics, Elsevier, vol. 124(C).
    3. Máté Zavarkó & Attila R. Imre & Gábor Pörzse & Zoltán Csedő, 2021. "Past, Present and Near Future: An Overview of Closed, Running and Planned Biomethanation Facilities in Europe," Energies, MDPI, vol. 14(18), pages 1-27, September.
    4. Burton, N.A. & Padilla, R.V. & Rose, A. & Habibullah, H., 2021. "Increasing the efficiency of hydrogen production from solar powered water electrolysis," Renewable and Sustainable Energy Reviews, Elsevier, vol. 135(C).
    5. Kolb, Sebastian & Plankenbühler, Thomas & Frank, Jonas & Dettelbacher, Johannes & Ludwig, Ralf & Karl, Jürgen & Dillig, Marius, 2021. "Scenarios for the integration of renewable gases into the German natural gas market – A simulation-based optimisation approach," Renewable and Sustainable Energy Reviews, Elsevier, vol. 139(C).
    6. David Borge-Diez & Enrique Rosales-Asensio & Emin Açıkkalp & Daniel Alonso-Martínez, 2023. "Analysis of Power to Gas Technologies for Energy Intensive Industries in European Union," Energies, MDPI, vol. 16(1), pages 1-22, January.
    7. Jülch, Verena, 2016. "Comparison of electricity storage options using levelized cost of storage (LCOS) method," Applied Energy, Elsevier, vol. 183(C), pages 1594-1606.
    8. Gallo, A.B. & Simões-Moreira, J.R. & Costa, H.K.M. & Santos, M.M. & Moutinho dos Santos, E., 2016. "Energy storage in the energy transition context: A technology review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 65(C), pages 800-822.
    9. Lena Maria Ringsgwandl & Johannes Schaffert & Nils Brücken & Rolf Albus & Klaus Görner, 2022. "Current Legislative Framework for Green Hydrogen Production by Electrolysis Plants in Germany," Energies, MDPI, vol. 15(5), pages 1-16, February.
    10. Li, Sheying & Cai, Yang-Hui & Schäfer, Andrea I. & Richards, Bryce S., 2019. "Renewable energy powered membrane technology: A review of the reliability of photovoltaic-powered membrane system components for brackish water desalination," Applied Energy, Elsevier, vol. 253(C), pages 1-1.
    11. Limpens, Gauthier & Jeanmart, Hervé, 2018. "Electricity storage needs for the energy transition: An EROI based analysis illustrated by the case of Belgium," Energy, Elsevier, vol. 152(C), pages 960-973.
    12. Zhang, Ziyu & Ding, Tao & Zhou, Quan & Sun, Yuge & Qu, Ming & Zeng, Ziyu & Ju, Yuntao & Li, Li & Wang, Kang & Chi, Fangde, 2021. "A review of technologies and applications on versatile energy storage systems," Renewable and Sustainable Energy Reviews, Elsevier, vol. 148(C).
    13. Lechón, Yolanda & Lago, Carmen & Herrera, Israel & Gamarra, Ana Rosa & Pérula, Alberto, 2023. "Carbon benefits of different energy storage alternative end uses. Application to the Spanish case," Renewable and Sustainable Energy Reviews, Elsevier, vol. 171(C).
    14. Martin, Nigel & Rice, John, 2021. "Power outages, climate events and renewable energy: Reviewing energy storage policy and regulatory options for Australia," Renewable and Sustainable Energy Reviews, Elsevier, vol. 137(C).
    15. Ansorena Ruiz, R. & de Vilder, L.H. & Prasasti, E.B. & Aouad, M. & De Luca, A. & Geisseler, B. & Terheiden, K. & Scanu, S. & Miccoli, A. & Roeber, V. & Marence, M. & Moll, R. & Bricker, J.D. & Goseber, 2022. "Low-head pumped hydro storage: A review on civil structure designs, legal and environmental aspects to make its realization feasible in seawater," Renewable and Sustainable Energy Reviews, Elsevier, vol. 160(C).
    16. Perera, A.T.D. & Soga, Kenichi & Xu, Yujie & Nico, Peter S. & Hong, Tianzhen, 2023. "Enhancing flexibility for climate change using seasonal energy storage (aquifer thermal energy storage) in distributed energy systems," Applied Energy, Elsevier, vol. 340(C).
    17. Averfalk, Helge & Ingvarsson, Paul & Persson, Urban & Gong, Mei & Werner, Sven, 2017. "Large heat pumps in Swedish district heating systems," Renewable and Sustainable Energy Reviews, Elsevier, vol. 79(C), pages 1275-1284.
    18. Emmanouil, Stergios & Nikolopoulos, Efthymios I. & François, Baptiste & Brown, Casey & Anagnostou, Emmanouil N., 2021. "Evaluating existing water supply reservoirs as small-scale pumped hydroelectric storage options – A case study in Connecticut," Energy, Elsevier, vol. 226(C).
    19. Zafirakis, Dimitrios & Chalvatzis, Konstantinos J. & Baiocchi, Giovanni & Daskalakis, George, 2013. "Modeling of financial incentives for investments in energy storage systems that promote the large-scale integration of wind energy," Applied Energy, Elsevier, vol. 105(C), pages 138-154.
    20. Rishabh Agarwal, 2022. "Economic Analysis of Renewable Power-to-Gas in Norway," Sustainability, MDPI, vol. 14(24), pages 1-15, December.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jeners:v:15:y:2022:i:7:p:2523-:d:782799. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.