4.6.1 Hybrid energy infrastructure concepts and system flexibility
The concepts described interact with different types of networks and enable coupling between different infrastructures. However, they all offer services to the electricity infrastructure, by providing flexibility33 Grond, L. & Holstein, H. (2014) Power-to-gas: Climbing the technology readiness ladder - Qualification of integrated power-to-gas systems in real-life environments is the next step. Gas for Energy issue 2/2014.
available in infrastructures other than the electricity infrastructure. In order to establish the value of the differing concepts in terms of their respective potentials to offer flexibility, one will need to distinguish between differing types of flexibility. Here both the demand for flexibility as well as the supply of flexibility will differ from one type to another. Hence, in this section a brief description of the taxonomy of flexibility in the electricity system is proposed as a framework for the valuation of concepts in terms of flexibility provision.
The taxonomy proposed primarily relates to the differing planning stages involved with electricity production. These planning stages are in part addressed in the existing short-term electricity market segments, the day-ahead market, the intraday market and the balancing mechanism. Figure 4-11 shows the role of the concept groups discussed in this chapter to the planning stages in electricity infrastructure.
Figure 4-11 The role of concepts in the planning stages of the electricity grid
Long-term trading takes place in the forward market and Over-The-Counter (OTC) market and are not structured on the basis of system planning. Yet, one may note that flexibility needs on differing time horizons beyond day-ahead may differ substantially. Here one may think of flexibility needs relating to the periodicity in demand primarily driven by economic activity and day light resulting in day/night cycles, weekly cycles marked by business days and weekends and finally seasonal cycles, in NW EU typically showing higher demand during wintertime than in summer. As notably wind and solar-PV have low operating costs and often volume as the basis for supporting tariffs or premia these technologies show limited price responsiveness and may be taken as fully deployed and effectively weather-driven. The remainder of price responsive supply and demand options will need to match the sum of demand and contributions of solar-PV and wind, also called residual demand in long-term markets down to the day-ahead market.
The flexibility needs in the short-term market segments from day-ahead planning down to the real time market (the balancing market) are mainly driven by unplanned plant - and network outages and forecast errors in day ahead planning. Since wind and solar-PV show relatively high forecast errors in comparison to demand forecasting, increasing levels of wind and solar-PV typically increase the flexibility needs between day-ahead scheduling and real time.
As indicated in Figure 4-11, the gas-to-power concepts are important for (reserve) power generation and frequency restoration. These options are indispensable for service delivery along the entire range of services. The power-to-heat concepts are relevant for the ‘short-term’ services, both in terms of reaction time as well as in ‘containment period’ (the period that the infrastructure combination is able to maintain the energy). The power-to-heat options are so called ‘sink-concepts’, meaning that there is no way of converting the heat energy back to power again. Technical challenges of the power-to-heat concepts entail the necessity for a (efficient) heat distribution system. For heat pump systems the technological efficiency performance is in practice disappointing. The investment costs for heat pump systems are still high. Industrial electric steam boilers are low cost systems that are very well capable of responding to power supply fluctuations. No substantial technological challenges exist at the moment.
The power-to-gas options are primarily relevant for the right segment of the figure, i.e. longer ‘containment’ periods and thus the services that entail secondary/tertiary reserves and long term storage. In combination with conventional (CHP, gas turbine, etc) or new (fuel cells) gas-to-power technology, the power-to-gas concepts are typically ‘source-concepts’, enabling re-electrification if required. Technical challenges of the power-to-gas options relate to the system complexity and the efficiency. For the power-to-methane concept the availability of CO2 and the simultaneity with power
supply to the system can be challenging, because most CO2 sources are base load whereas intermittent
power supply from RES can strongly fluctuate. Currently the amount of references of dynamic power-to- gas plants is very limited, meaning that its real value to the system is to be demonstrated. Investment costs for both electrolysis and methanation are still high at this moment; a strong business case is not foreseen for the short term (at current capital investment costs).
TKI study ‘Exploring the role of power-to-gas in the future Dutch energy system’ [ECN & DNV GL 2014] concludes that short term flexibility in terms of absorptive power is most cost effectively offered by (industrial) electric boilers rather than the power-to-gas concepts (mainly because of the higher lifetime costs of power-to-gas technology compared to that of electric boilers). This is in line with the
observation done in this analysis, based on techno-economic considerations.
4.6.2 Overview of technical and economic barriers
This chapter includes a screening of the technical and economic barriers of the different concepts. Table 4-1 summarizes these barriers. These same barriers and the underlying analysis is also being used in chapter 6 of this report and will be included in the overall analysis of the concept viability.
Table 4-1 Summary table of technical and economic barriers of the different concepts.
Concept Application Technical barrier Economic barrier
Electric heat pump in heating network
District heating
network Technological efficiency in practice disappointing. Depending at heat source (air, ground water or waste heat) the efficiency at low source temperature can be very low (near zero).
Investment costs still high and total cost of ownership can be disappointing because of lower than expected efficiency performance.
Electric industrial boiler
Industrial hot water or steam networks
Not yet clear what technical modifications are required for integrating an electric boiler in a conventional steam cycle.
No barriers; at low power prices this concept is cost competitive to gas fired alternative (base case).
Concept Application Technical barrier Economic barrier
Flexible CHP unit
District heating
network Technological improvement necessary to make this
concept possible (change of components). Also ‘internal’ heat storage needed in order to enable fast dynamic operation.
Investment costs and
operational costs are still high.
Hybrid district heating
District heating
network Efficient coupling and operation of heat pump in combination with CHP or gas fired boiler (challenge is the actual operations philosophy)
Investment costs of heat pumps are still high and economic performance very much dependant on actual efficiency. Hot water network storage
tank facility Industrial or district heating No barrier, proven technology, widely applied. No barrier, proven to be economically viable. Medium temperature (450 C)
storage
Industrial steam networks
No barriers, but considerable potential for performance improvement.
Production costs are generally higher than production costs for steam for a reference gas fired boiler.
Power-to-Hydrogen Industrial Demand must be present. Potential for efficiency
improvement.
Electrolysis still high investment costs due to lack of market.
Household Hydrogen intolerance of
existing natural gas infrastructure. Potential for efficiency improvement.
Small scale electrolysers have relatively high investment costs (unit investment)
Power-to-Methane
Regional grid Availability of CO2 as carbon
source.
Wobbe index adjustment vs gas quality.
Potential for efficiency improvement.
Investment costs of components still high (no market yet). Also costs for compression to grid pressure are a relevant barrier in this configuration. Distribution
grid Availability of COsource and the availability of 2 as carbon
CO2 in in terms of
simultaneity with power supply.
Wobbe index adjustment vs gas quality.
Summer production might exceed local gas demand. Potential for efficiency improvement.
Small scale units have relatively high investment costs (unit investment)
5 VALUATION
This chapter presents the valuation of the various hybrid energy infrastructure concepts discussed in the Chapter 4. The valuation of the various concepts will be based on three pillars, namely:
1. The value added with regard to flexibility 2. The value added in terms of economic value 3. The value added in terms of sustainability
In the following sections the approach and results for each of these dimensions is presented in more detail.