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Power-to-gas in electricity markets dominated by renewables

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  • van Leeuwen, Charlotte
  • Mulder, Machiel

Abstract

This paper analyses the feasibility of power-to-gas in electricity markets dominated by renewables. The business case of a power-to-gas plant that is producing hydrogen is evaluated by determining the willingness to pay for electricity and by comparing this to the level and volatility of electricity prices in a number of European day-ahead markets. The short-term willingness to pay for electricity depends on the marginal costs and revenues of the plant while the long-term willingness to pay for electricity also takes into account investment and yearly fixed operational costs and therefore depends on the expected number of operating hours. The latter ultimately determines whether or not large-scale investments in the power-to-gas technology will take place.

Suggested Citation

  • van Leeuwen, Charlotte & Mulder, Machiel, 2018. "Power-to-gas in electricity markets dominated by renewables," Applied Energy, Elsevier, vol. 232(C), pages 258-272.
    • Handle: RePEc:eee:appene:v:232:y:2018:i:c:p:258-272
    DOI: 10.1016/j.apenergy.2018.09.217
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