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

FCN Working Paper No. 18/2013

29 Pages Posted: 28 Jun 2015

See all articles by Christoph Budny

Christoph Budny

RWTH Aachen University

Reinhard Madlener

RWTH Aachen University

Christoph Hilgers

Institute of Reservoir-Petrology

Date Written: December 2013

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.

Keywords: Underground reservoir storage, Power-to-gas (P2G), Load balancing, Synthetic natural gas (SNG)

Suggested Citation

Budny, Christoph and Madlener, Reinhard and Hilgers, Christoph, Economic Feasibility of Pipeline and Underground Reservoir Storage Options for Power-to-Gas Load Balancing (December 2013). FCN Working Paper No. 18/2013 . Available at SSRN: https://ssrn.com/abstract=2623575 or http://dx.doi.org/10.2139/ssrn.2623575

Christoph Budny

RWTH Aachen University ( email )

Templergraben 55
52056 Aachen, 52056
Germany

Reinhard Madlener (Contact Author)

RWTH Aachen University ( email )

School of Business and Economics / E.ON ERC
Mathieustraße 10
Aachen, 52074
Germany
+49 241 80 49 820 (Phone)
+49 241 80 49 829 (Fax)

HOME PAGE: http://www.eonerc.rwth-aachen.de/fcn

Christoph Hilgers

Institute of Reservoir-Petrology ( email )

Templergraben 55
52056 Aachen, 52056
Germany

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