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Economic Feasibility of Pipeline and Underground Reservoir Storage Options for Power-to-Gas Load Balancing

Author

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  • Budny, Christoph

    (RWTH Aachen University)

  • Madlener, Reinhard

    (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN))

  • Hilgers, Christoph

    (Institute of Reservoir-Petrology, School of Geosciences, Energy & Mineral Resources Group, RWTH Aachen University)

Abstract

This paper investigates the economic feasibility of power-to-gas (P2G) systems and gas storage options for both H2 and renewable methane. The study is based on a techno-economic model in which the net present value (NPV) method and Monte Carlo simulation of risks and price forward curves for the electricity and the gas market are used. We study three investment cases: a Base Case where the gas is directly sold in the market, a Storage & Arbitrage Case where temporal arbitrage opportunities between the electricity and the gas market are exploited, and a Storage & Balancing Case where the balancing markets (secondary reserve market for electricity, external balancing market for natural gas) are addressed. The optimal type and size of different centralized and decentralized storage facilities are determined and compared with each other. In a detailed sensitivity and cost analysis, we identify the key factors which could potentially improve the economic viability of the technological concepts assessed. We find that the P2G system used for bridging the balancing markets for power and gas cannot be operated profitably. For both, temporal arbitrage and balancing energy, pipe storage is preferred. Relatively high feed-in tariffs (100 € MW-1 for hydrogen, 130 € MW-1 for methane) are required to render pipe storage for P2G economically viable.

Suggested Citation

  • Budny, Christoph & Madlener, Reinhard & Hilgers, Christoph, 2013. "Economic Feasibility of Pipeline and Underground Reservoir Storage Options for Power-to-Gas Load Balancing," FCN Working Papers 18/2013, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
    • Handle: RePEc:ris:fcnwpa:2013_018
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    References listed on IDEAS

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    3. Ferreira, Helder Lopes & Garde, Raquel & Fulli, Gianluca & Kling, Wil & Lopes, Joao Pecas, 2013. "Characterisation of electrical energy storage technologies," Energy, Elsevier, vol. 53(C), pages 288-298.
    4. Flinkerbusch, Kai & Heuterkes, Michael, 2010. "Cost reduction potentials in the German market for balancing power," Energy Policy, Elsevier, vol. 38(8), pages 4712-4718, August.
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    Cited by:

    1. Masoud Agabalaye-Rahvar & Amin Mansour-Saatloo & Mohammad Amin Mirzaei & Behnam Mohammadi-Ivatloo & Kazem Zare & Amjad Anvari-Moghaddam, 2020. "Robust Optimal Operation Strategy for a Hybrid Energy System Based on Gas-Fired Unit, Power-to-Gas Facility and Wind Power in Energy Markets," Energies, MDPI, vol. 13(22), pages 1-21, November.
    2. Almeida, José Ricardo Uchoa Cavalcanti & Fagundes De Almeida, Edmar Luiz & Torres, Ednildo Andrade & Freires, Francisco Gaudencio Mendonça, 2018. "Economic value of underground natural gas storage for the Brazilian power sector," Energy Policy, Elsevier, vol. 121(C), pages 488-497.

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