Introduction
The impressive cost reductions of wind and solar energy has generated great enthusiasm around the future of renewable energy, but their variable and non-dispatchable nature poses an important challenge.
A lot of research is ongoing to develop mechanisms for balancing the variable output of wind and solar power. Any such method must either:
Produce power mostly when there is little wind and sun
Consume or transmit power mostly when there is a lot of wind and sun
For this reason, any mechanism for balancing variable renewable energy (VRE) inherently involves low utilization rates. And when a reasonable discount rate (time-value of money) is applied, capacity under-utilization becomes very costly even for mild capital costs.
This capacity under-utilization is a particularly important challenge for low-carbon power plants like nuclear, coal or gas with CO2 capture and storage (CCS), and biomass.
All these options have high up-front costs and need to be run at the highest possible utilization rate (capacity factor) to give an attractive rate of return. If they must be used at a low capacity factor to balance wind and solar, the cost of the entire system increases sharply.
The challenge of such capacity under-utilization inspired our recent peer-reviewed study (open access) in the journal “Energy” that investigates a CCS power and hydrogen plant, especially designed to mitigate this fundamental challenge.
This article summarizes our main findings.
Flexible power and hydrogen production
The technology investigated in our paper is called Gas Switching Reforming (GSR).
This technology reforms natural gas to syngas and separates out hydrogen in much the same way as the steam methane reforming technology used for most global hydrogen production today.
The primary difference is that all CO2 emissions are inherently separated by the process as shown in the orange blocks below.
Flexibility is possible because the produced hydrogen can either be combusted to produce power during times of low VRE output or directly sold to the market during times of high VRE output (the green diamond in the figure above).
From the point of view of capacity utilization, this arrangement ensures high utilization of all process equipment shown in the figure, except for the power cycle (which is generally quite cheap). In addition, high utilization rates of the downstream CO2 transport and storage infrastructure is also ensured.
In this way, the GSR technology can produce flexible low-carbon power for balancing renewables, while minimizing the important challenge of capacity under-utilization.
Power system modeling
To quantify this system benefit, the GSR technology was implemented in a power system model next to a range of other technologies including: onshore wind, solar PV, natural gas combined cycle (NGCC), advanced ultra-supercritical (AUSC) coal, NGCC and AUSC with CCS, open cycle gas turbine (OCGT), hydrogen fired combined and open cycle power plants, lithium-ion batteries, and polymer electrolyte membrane (PEM) electrolysis.
The power system model optimizes investment and hourly dispatch of all these technologies, given hourly load and VRE availability factors, cost data for each technology, and CO2 emissions tax assumptions.
The main result is the technology mix that will result in the lowest total system cost.
Technology costs and performance data were selected to be representative of the year 2040.
Main findings
Simulations were completed based on three main technology availability scenarios:
- A scenario where no CCS is allowed (NoCCS)
- A scenario where conventional CCS from NGCC and AUSC plants is allowed (CCS)
- A scenario where the GSR technology is also included (AllTech)
Optimal technology mix
When a CO2 price of €100/ton was considered, the following optimal capacity and generation mix was deployed:
The NoCCS scenario deployed considerable unabated NGCC (natural gas) capacity to balance VRE, resulting in significant CO2 emissions.
There will always be long periods without wind and sun, and natural gas-fired power plants are the most cost-effective option for powering the economy during these times.
In the CCS scenario, most CO2 emissions were avoided by deployment of NGCC-CCS plants, but the VRE share decreased substantially.
This happens because CCS power plants (in addition to CO2 transport and storage infrastructure) are more capital intensive, so it is more economically efficient to operate them at high capacity factors than to balance low-cost wind and solar power.
In the AllTech scenario, GSR displaces all NGCC-CCS plants. In addition, VRE market share increases significantly relative to the CCS scenario.
This is due to the more cost-effective flexibility allowed by the flexible power and hydrogen production from the GSR technology.
Specifically, GSR operates at its maximum allowable capacity factor of 90%, but it is only producing power for about half of that time to balance wind and solar. For the other half of its operating time, it is producing hydrogen at a highly competitive sales price of €1.67/kg.
Scenario performance
The performance of each scenario was quantified by carrying out simulations at different CO2 prices. Four important system performance indicators are shown below over a wide range of CO2 prices.
When looking at CO2 emissions intensity, all three scenarios achieve a sharp reduction when the CO2 price is increased from 20 to 40 €/ton.
This is the range of CO2 prices when natural gas displaces coal (as is currently happening in Europe, thanks to the ETS).
Beyond this point, the scenarios diverge.
The NoCCS scenario slowly reduces emissions with higher CO2 prices by displacing more unabated NGCC power plants with wind and solar. However, this results in a gradual increase in the system cost of electricity.
A small amount of clean hydrogen production from electrolysis becomes economical at a CO2 price of €160/ton in the NoCCS scenario. When the CO2 price reaches €260/ton, all remaining NGCC plants are replaced by hydrogen combined cycle plants to eliminate all CO2 emissions. However, this requires substantial imports of clean hydrogen.
The AllTech scenario, on the other hand, manages to eliminate almost all CO2 emissions at a CO2 price of only €60/ton.
It also produces a large amount of clean hydrogen, equivalent to almost 90% of total electricity demand in energy value, which can be used to decarbonize sectors other than electricity.
The CCS scenario falls in-between the NoCCS and AllTech scenarios when it comes to emissions and costs. As explained earlier, it deploys less VRE because conventional CCS operates best as baseload capacity. The relatively low VRE share also means that electrolysis is not part of the optimal energy mix in the CCS scenario.
Sensitivity analysis
There are many uncertainties in such a modeling study. Therefore, the optimal technology mix in the AllTech scenario at a CO2 price of €100/ton was evaluated over a range of different uncertain modeling assumptions. The results are shown below.
Since GSR runs on natural gas, the natural gas price has a large influence. At low prices (representative of the US or Middle East), GSR is responsible for all generation in the optimal mix. At high prices (e.g. Japan), some GSR is displaced with coal plants with CCS (AUSC-CCS).
The hydrogen sales price is another important parameter for GSR. When H2 prices are low, it is not profitable for GSR to export hydrogen. In these cases, it acts like a normal power plant with CCS that must operate at high capacity factors, reducing the optimal VRE share. Higher hydrogen prices allow for flexible operation of GSR, bringing more wind and solar into the optimal energy mix.
The potential of GSR cost escalations was also considered. In the base case, GSR has slightly higher capital costs than NGCC with CCS. If GSR costs increase further, it is gradually displaced by NGCC-CCS plants with an associated reduction in VRE market share.
Further cost reductions of wind and solar power increase the optimal share of these technologies, while the introduction of some nuclear power mainly displaces GSR generation thanks to the ability of GSR to offer cost-effective flexibility.
A higher discount rate increases the amount of GSR relative to wind and solar because GSR is less capital intensive. The high time-value of money in the developing world where the vast majority of future energy infrastructure will be built is one of the major challenges for the low system utilization factors inherent in systems with high shares of VRE.
Conclusion
Flexible power and hydrogen production with CCS offers substantial benefits to a future energy system with high VRE shares.
In addition, it produces large quantities of clean hydrogen to decarbonize sectors other than electricity.
The primary reason for this promising performance is the ability of such plants to use all the capital involved in CO2 capture, transport and storage at a high capacity factor, while varying power output to balance variable renewables.
When only conventional CCS is available, the optimal share of variable renewables falls significantly and the total system cost increases because conventional CCS plants function best as baseload generators.
A scenario without any CCS maintains a high share of unabated natural gas power plants in the optimal energy mix, even at high CO2 prices. This results in relatively high system costs and emissions.
Flexible power and hydrogen production with CCS is therefore a promising enabling technology for both VRE expansion and the hydrogen economy.
The same philosophy can also be followed to design plants fuelled by coal or biomass, allowing for a more diverse mix of balancing fuels.
Further research is ongoing on this topic.
This is the original version of an article recently published on Energy Post.