Abstract
In the transition to decarbonized energy systems, Power-to-Gas (PtG) processes have the potential to connect the existing markets for electricity and hydrogen.
Specifically, reversible PtG systems can convert electricity to hydrogen at times of ample power supply, yet they can also operate in the reverse direction to deliver electricity during times when power is relatively scarce.
Here we develop a model for determining when reversible PtG systems are economically viable. We apply the model to the current market environment in both Germany and Texas and find that the reversibility feature of unitized regenerative fuel cells (solid oxide) makes them already cost-competitive at current hydrogen prices, provided the fluctuations in electricity prices are as pronounced as currently observed in Texas.
We further project that, due to their inherent flexibility, reversible PtG systems would remain economically viable at substantially lower hydrogen prices in the future, provided recent technological trends continue over the coming decade.
Introduction
The large-scale deployment of intermittent renewable energy sources, like wind and solar, poses a growing challenge in terms of balancing energy demand and supply in real time1,2. Aside from storage in batteries3,4, electrolytic hydrogen production via Power-to-Gas (PtG) processes can absorb electricity during times of ample power supply and thereby yield hydrogen for industrial customers5,6,7. Conversely, PtG systems that are also capable of operating in the reverse direction can convert hydrogen back to electricity during periods of limited power supply and correspondingly high power prices8,9. Thus, reversible PtG systems can effectively connect the markets for hydrogen and electricity10,11,12 and, in the process, limit the growing price volatility in electricity markets13,14.
Reversible PtG systems can be designed in a modular manner, for instance, by combining a one-directional electrolyzer for hydrogen production with a one-directional fuel cell or gas turbine for power generation15,16. While electrolyzers have been found to become increasingly cost-competitive in producing hydrogen17,18, fuel cells and gas turbines have so far been regarded as too expensive for converting hydrogen back to electricity that would subsequently be sold in wholesale markets9,19,20. In contrast, unitized regenerative fuel cells, which we refer to as integrated PtG systems, utilize the same equipment to deliver either hydrogen or electricity depending on the prevailing electricity prices at different points in time21,22,23.
This paper first develops an analytical model of the unit economics of reversible PtG systems. Our findings show that the technological characteristics of both modular and integrated systems entail certain ranges for hydrogen prices at which reversible PtG systems become cost-competitive.
While modular systems require sufficiently low hydrogen prices in order for the reversibility feature to be valuable, integrated systems can be economically viable for higher hydrogen prices by primarily generating hydrogen but also providing electricity during times of limited power supply. Such operations will therefore not only increase the supply of hydrogen but also provide an effective buffer against the intermittency of renewable power sources.
The empirical part of our analysis calibrates the model in the context of the electricity markets in Germany and Texas.
Despite improvements in the cost and conversion efficiency of modular PtG systems24,25, we confirm the findings of earlier studies that there is no economic case, either now or in the foreseeable future, for investing in modular systems that convert hydrogen back to electricity.
In contrast, integrated PtG systems based on solid oxide cell (SOC) technology are shown to be competitive at current hydrogen prices, given sufficient variation in daily electricity prices, as is already encountered in the Texas market.
For such systems, it is indeed efficient to mostly produce hydrogen and respond to sufficiently high electricity prices with electric power production.
Owing to their relatively high capacity utilization, integrated systems are also positioned more competitively than one-directional electrolyzers on their own.
Finally, we project that if recent trends regarding the acquisition cost and conversion efficiency of solid oxide fuel cells continue, such reversible PtG systems will remain economically viable even in the presence of substantially lower hydrogen prices in the future.
This is because the inherent flexibility in these systems enables them to respond to lower hydrogen prices by operating more frequently in reverse mode, delivering additional electricity to the power markets.