Copyright © 2017 The Brattle Group, Inc.Copyright © 2019 The Brattle Group, Inc.

Power2Gas

CENTER OR PERIPHERY IN FUTURE ENERGY SYSTEMS

PRESENTED TOPower2Gas Conference Marseille

PRESENTED BYJurgen Weiss

October 23, 2019

Privileged and ConfidentialPrepared at the Request of Counsel brattle.com | 2

Disclaimer

This presentation discusses Power2Gas issues with the aim of stimulating debate.  No representation or warranty is being made as to the accuracy or completeness of the presentation. Actual future outcomes are significantly dependent upon future events that are outside of the Presenter’s control, and therefore may differ, perhaps materially, from the scenario described. 

No person is entitled to rely on the presentation’s contents as a prediction of future outcomes.  The presenter, Jurgen Weiss, and his employer, The Brattle Group, and their respective affiliates, directors, employees, representatives or agents (collectively, the “Presenter”) will not accept any liability under any theory for losses suffered, whether direct or consequential, arising from the reliance on this presentation, and can not be held responsible if any conclusions drawn from this presentation should prove to be inaccurate. 

Any recipient of this presentation, whether in electronic, hard copy, visual or oral form, proposing to engage in commercial activity or make commercial decisions in relation to energy markets and/or energy prices anywhere in the world should apply dedicated, specialist analysis to the specific legal and business challenges spanning the activities/decisions in question. This presentation in no way offers to substitute for such analysis. 

brattle.com | 3

There are many potential applications of P2G (and broader P2X) to replace NG

Source: BP Energy Outlook 2019https://www.bp.com/en/global/corporate/energy‐economics/energy‐outlook/demand‐by‐fuel/natural‐gas.html

Global Gas Consumption by Sector Potential P2G Applications

Power

TransportNon Combusted

Buildings

Industry

PowerReplace current gas‐fired generation; long‐term/seasonal storage

TransportHydrogen Fuel Cell Vehicles or CNG, P2L for planes, ships, etc.

Non Combusted

Hydrogen or RNG as feedstock

Buildings Space and water heating with RNG

Industry Hydrogen/RNG for process heat

brattle.com | 4

Climate change is the primary driver of interest in P2G

  In many States/countries, gas use in power sector and buildings represents half of GHG emissions => huge potential for (renewable) P2G to address GHG issues

Massachusetts as an Example of 2050 GHG targets

Residential

Industrial

Electric Sector

Transportation

MMT CO2e

25%x202071 MMT

80%x205019 MMT

Source: MA GHG Emissions Inventory, December 2018. Note: Energy‐related emissions (e.g., transportation, electricity, buildings, industrial) in this figure are based on state inventory.

Natural Gas Systems

Industrial Processes Agriculture, Land Use, Waste

Commercial

MA 2016 GHG Emissions

Electric sector emissions decreased by 50% from 1990 levels

199095 MMT

201674 MMT

brattle.com | 5

Replacing all NG with P2G by 2040/2050 seems unlikely (even without cost considerations)

Notes and Sources: Assumes 60% P2G conversion efficiency; Uses 2016 blend of wind and solar and 2016 capacity factor; 

  Doing so would require about 10 times current global power generation capacity, and 75 times current wind and solar capacity.

  The cost of P2G and its substitutes determines the potential role in electricity, buildings and industry.

brattle.com | 6

The future cost of P2G is highly uncertain and depends on the evolution of capital costs, operations and input costs

Estimates of Levelized Cost of Power to Gas2020-2050

Low Cost Scenario High Cost Scenario

OperationsEfficiency, Hours, OPEX

Input CostsPower, H2O, CO2

Capital Costs Electrolizer, Methanizer

P2G Cost Drivers

Electricity

Electrolysis

CO2 capture and compression

MethanationTransportation

2050 – Varying Electricity Prices

Electricity

Electrolysis

CO2 capture and compression

MethanationTransportation

Low Cost Scenario High Cost Scenario

Q: Will capex decline like solar PV, batteries or less?

Q: How cheap is power?Carbon, Water?

Q: How much efficiency increase? How many full load hours?

  2050 costs below $10/MMBtu seem possible only if electricity is very cheap, learning rates (20%) and annual deployment growth (30%) similar to solar PV

brattle.com | 7

Highly renewable electricity systems will likely have prolonged periods of surplus generation

– The IEA identifies the “sweet spot” for electrolyzer use between 3,000 and 6,000 hours per year, based primarily on electricity price duration curve

– Highly renewable/decarbonized electricity systems could have a significantly different price duration curve with significant hours of excess (curtailed) generation.

– Excess generation tends to occur during consecutive hours, so that low‐cost electricity compatible with electrolyzer/methanizeroperations may be available.

Excess Generation Duration curve for simulated 95% Clean New England Power System

MWh

8760 hours in year

Consecutive 4h period

Non‐consecutive 4h period

As a result, (very) low cost electricitymay be a reasonable assumption

brattle.com | 8

Without carbon a price and cost declines P2G is more expensive than NG

Natural Gas Price Forecast*) compared to Range of P2G Cost Estimates

Sources: World Bank Pink Sheet and IEEEJ Outlook 2019.

$/MMBtu

Natural Gas (NG) Price

NG Price + $20/tCO2

NG Price + $50/tCO2

NG Price + $100/tCO2

NG Consumption (Mtoe)

RNG Price (High Scenario)

RNG Price (Low Scenario/$0/MWh)

$75

$20

$64

$12

$48

$6.5

*) Gas price forecasts assume demand increase over time.

brattle.com | 9

Even if “in the money”, P2G has to compete with other technologies.

Potential P2G Applications

Power

Replace current gas‐fired generation; long‐term/seasonal storage

Wind, solar PV, solar CSP, Nuclear,Batteries, Demand Response, EE, NG fired generation with CCUSThermal storage, gravity storage

Transport Hydrogen Fuel Cell Vehicles or CNG EVs, drop‐in biofuels 

Non Combusted

Hydrogen or RNG as feedstock

Hydrogen from NG with or without CCUS

Buildings Space and water heating with RNG EE, Heat Pumps (GSHP, ASHP)

Industry Hydrogen/RNG for process heat

NG/Hydrogen from NG with or without CCUS

Potential P2G Substitutes Most likely P2G Applications

Seasonal or Multi‐year storage

Aviation, shipping, some HDV

All with carbon price/High NG price markets

Very cold climates/HPs not feasible

All with carbon price/High NG price markets

brattle.com | 10

100% renewable electricity system will have significant seasonal storage needs

Winter Spring

Summer Fall

Note: The figures show the generation and load profiles during a high demand day of the respective season. 

HydroNuclear

Offshore Wind

Onshore Wind

Solar

Gas

Storage/Gas

Load

Balancing required between day and night hours using storage

Insufficient clean energy throughout the day; primarily gas required to meet load

Excess clean generation throughout the day

Limited excess mid‐day generation can be stored to meet some hours of deficiency; require gas for remaining supply

Hourly Electric Sector Load and Supply (New England)

brattle.com | 11

P2G gas could be the “dispatchable fuel” needed in decarbonized power systems.

Electricity Price Duration Curves (2018)

Source: Jepex, Bloomberg, ABB Velocity Suite. Top 2,000 hours

$/MWh

JapanGermany

Great BritainCAISO (California)ERCOT (Texas)

ISO‐NE (New England)

$400/MWh

$200/MWh

$100/MWh

Approximate range of power with P2G and CC

2050?

• Higher renewables shares likely increase both low and high price hours in the future, making P2P potentially competitive

• BUT: Other technologies may also compete (gravity storage, thermal storage, ??

brattle.com | 12

Some potential conclusions

– Evolution of Future P2G costs is highly uncertain• If cost declines like solar PV/batteries and power cheap, could be in the money with 

little/low carbon prices between 2030 and 2050 everywhere outside North America

– But Direct Electrification likely beats P2G where feasible/implementable• In transportation, personal transport, most MDV, perhaps even LDV – only 

some air travel, ships?!• In buildings, heat pumps – but serious implementation challenges

– Most likely markets where direct electrification is either infeasible or very hard to implement• Air travel, shipping, industrial (if carbon constraint), places where heat 

pumps don’t work or need expensive electrical upgrades

– When P2G delivery requires infrastructure (pipelines, distribution networks), question about P2G costs including network costs likely important if/as overall gas demand declines due to electrification

brattle.com | 13

PRESENTED  BY

Jurgen WeissPrincipal, Boston and Brussels+1.617.792.9055Jurgen.weiss@brattle.com

Dr. Jurgen Weiss is an energy economist with 25 years of consulting experience.He specializes in issues broadly motivated by climate change concerns, such asrenewable energy, energy efficiency, energy storage and the interactionbetween electricity, gas and transportation. He spearheads Brattle’selectrification and deep decarbonization efforts. He works for electric utilities,NGOs and government entities in North America, Europe, and the Middle East.

Dr. Weiss holds a Ph.D. in Business Economics from Harvard University, anM.B.A. from Columbia University and a B.A. from the European Partnership ofBusiness Schools,. As a high school student growing up in Stuttgart, he workedon the Mercedes assembly line putting gas tanks into cars.The views expressed in this presentation are strictly those of the presenter(s) and do not necessarily state or reflect the views of The Brattle Group, Inc. or its clients. 

THE POWER OF ECONOMICS

brattle.com