Economic Analysis of Renewable Power-to-Gas in Norway
Abstract
:1. Introduction
2. Literature Review
2.1. Existing PtG Projects and Associated Studies
2.2. Norway as a Potential SNG Supplier for Europe
3. Materials and Methods
3.1. Methodology
3.2. PtG System Configuration
3.3. Principal Scenarios
3.4. Sensitivity Analysis
- CAPEX: Both electrolyzers and methanation processes have high learning rates, due to which there is significant uncertainty in estimates of future equipment and construction pricing. Furthermore, it has a significant impact on GPC. CAPEX includes both the initial setup costs, as well as costs towards electrolyzer stack replacement.
- OPEX: The overall operating expenses are expected to decrease due to improving technology, but can also increase, depending on site-specific conditions, the labor market, land lease and other macroeconomic variables.
- Electricity Price: Electricity is the main energy input in the PtG process, and hence a key variable for the sensitivity analysis. Statnett’s long-term market analysis also states that Norway’s electricity pricing is expected to become more volatile over the coming years [50], which further highlights the necessity for a sensitivity analysis.
- Utilization Rate: The realized production of SNG is based on the overall utilization rate of the PtG facility, which can go up or down based on availability of electricity and system maintenance requirements. Since the base utilization rate is significantly high at 90%, a sensitivity range of only +10% to −20% is considered. The corresponding range of utilization rate is 72% to 99%.
- Discount Rate: The discount rate will be dependent on both market conditions and the individual investor. It is expected to be lower for state-owned utilities, and higher for private small companies. Additionally, a low interest rate regime is expected to decrease the discount rate. A sensitivity analysis has been carried out to isolate these impacts on GPC.
4. Results
4.1. 2023 Scenario
4.2. 2030 Scenario
5. Discussion
6. Conclusions
Funding
Institutional Review Board Statement
Informed Consent Statement
Data Availability Statement
Conflicts of Interest
References
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Alkaline Electrolysis | Proton-Exchange Membrane (PEM) | Solid Oxide Electrolysis Cell (SOEC) | |
---|---|---|---|
Description | Alkaline technology is used extensively in the chlorine industry; a strong base such as potassium hydroxide is generally used as the electrolyte due to its high conductivity. | PEM uses a ionically conductive solid polymer; hydrogen ions travel through the polymer membrane toward the cathode. PEM has a very short reponse time of less than 2 s. | SOEC is based on steam water electrolysis at high temperatures, thereby reducing need for electrical power. Heat is only needed to vaporize water and can be obtained from waste industrial heat. |
Capital Costs (stack-only, >1 MW, USD/kWe) | 270; <100 expected | 400; <100 expected | >2000; <200 expected |
Efficiency (%, LHV) | 52–69% | 60–77% | 74–81% excluding heat to vaporize water) |
Typical Plant Size (tpd H2) | 60; 100 expected | 50–80; 100–120 expected | <20; 80 expected |
Stack Lifetime (in thousands of hours) | 60; 100 expected | 50–80; 100–120 expected | <20; 80 expected |
Operating Temperature (°C) | 60–80 | 50–80 | 650–1000 |
Operating Pressure (bar) | 1–30 | 20–50 | 1 |
Expected R&D Improvements | Scaling benefits to reduce costs; improvement in lifetime; improved heat exchangers. | Scaling benefits to reduce costs; improvement in material and component lifetimes. | Improvement in component lifetime by improving the resistance to high temperatures and improving the response to fluctuating energy inputs. |
Pros and Cons | Most mature technology; has the lowest capital cost but also the lowest efficiency. | Highly efficient but more expensive than alakaline electrolysis. | High future potential but still in the developmental stage. |
Item | 2023 Scenario | 2030 Scenario |
---|---|---|
Electrolyzer Capacity | 10 MWel | 100 MWel |
SNG Production | 33.2 GWhSNG/year | 344.4 GWhSNG/year |
Electricity Consumption | 79.2 GWh/year | 788.7 GWh/year |
Operations Lifetime | 20 years | 20 years |
Item | 2023 Scenario | 2030 Scenario | Remarks | Reference(s) |
---|---|---|---|---|
CAPEX 1 | ||||
PEM Electrolyzer Stack | 450 €/kWel | 245 €/kWel | See discussion below | [15,23,27,36,45,46], Assumption |
Balance of System | 660 €/kWel | 535 €/kWel | ||
Stack Replacement Cost | 225 €/kWel | 123 €/kWel | ||
Stack Lifetime | 60,000 h | 70,000 h | ||
Methanation Unit | 600 €/kWSNG | 275 €/kWSNG | [45] | |
Contingency | 10% | 10% | % of Total Installed Cost | Assumption |
OPEX | ||||
Electrolyzer | 3% | 1.5% | % of Electrolyzer CAPEX | [23,46], Assumption |
Methanation | 3% | 3% | % of Methanation CAPEX | [25] |
Insurance | 0.5% | 0.5% | % of Total Installed Cost | Assumption |
CO2 | 50 €/ton | 50 €/ton | Includes cost to capture and transport CO2. | [23,36] |
Transportation | 2.3 €/MWh | 2.3 €/MWh | Assuming pipeline distance of 1000 km between Norway and Germany. | [47] |
Energy Costs | ||||
Electricity | 2022: 44 €/MWh 2030: 40 €/MWh 2035: 32 €/MWh 2040: 23 €/MWh | See discussion below | [34,48,49,50], Assumption | |
Utilization and Efficiency | ||||
Utilization Rate | 90% | 90% | High utilization is assumed due to continuous operation mode (See discussion below). | Assumption |
Electrolyzer Efficiency (% HHV) | 75% | 78% | Electrolyzer efficiency is assumed to increase by 2030. | [25,51] |
Methanation Efficiency | 85% | 85% | Assuming that surplus heat generated in methanation is used. | [52] |
Financing | ||||
Depreciation | Straight line depreciation over useful life | Assumed total plant life of 20 years, policy support through accelerated depreciation could improve returns. | Assumption | |
Discount Rate | 9% | 9% | Based on the weighted average cost of capital for a large energy company in Norway. | [53] |
Funding source | Equity | Equity | 100% equity is considered to simplify model. | Assumption |
2023 Scenario | Levelized Cost (€/MWhSNG) | % of Total Costs |
---|---|---|
Electricity | 84 | 60% |
CAPEX | 26 | 19% |
OPEX | 17 | 12% |
CO2 | 11 | 8% |
Transport | 3 | 2% |
Total | 141 | 100% |
2030 Scenario | Levelized Cost (€/MWh) | % of Total Costs |
---|---|---|
Electricity | 67 | 63% |
CAPEX | 16 | 15% |
OPEX | 11 | 10% |
CO2 | 11 | 10% |
Transport | 3 | 2% |
Total | 108 | 100% |
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Agarwal, R. Economic Analysis of Renewable Power-to-Gas in Norway. Sustainability 2022, 14, 16882. https://doi.org/10.3390/su142416882
Agarwal R. Economic Analysis of Renewable Power-to-Gas in Norway. Sustainability. 2022; 14(24):16882. https://doi.org/10.3390/su142416882
Chicago/Turabian StyleAgarwal, Rishabh. 2022. "Economic Analysis of Renewable Power-to-Gas in Norway" Sustainability 14, no. 24: 16882. https://doi.org/10.3390/su142416882