Abstract
The enrichment of natural gas with hydrogen has been identified as a promising pathway for power-to-gas technology with the potential to reduce emissions while achieving feasible return on investment. The evolving regulatory market in the province of Ontario motivates the analysis of business cases for hydrogen on the industrial microgrid scale. This paper aims to investigate the financial and environmental returns associated with producing and storing electrolytic hydrogen for injection into the natural gas feed of a manufacturer’s combined heat and power plants (CHPs). A mathematical methodology was developed for investigating the optimal operation of the integrated system (power-to-gas along with the current system) by considering hydrogen-enriched natural gas. The result of this simulation is an operation plan that delivers optimal economics and an estimate of greenhouse gas emissions. The simulation was implemented across an entire year for each combination of generation price limit and storage coefficient. Because the provincial grid imposes a lesser carbon footprint than that of a pure natural gas turbine, any offset of natural gas by hydrogen reduces the carbon intensity of the system. From an environmental perspective, the amount of carbon abated by the model fell within a range of 3000 ton CO2/year. From a policy perspective, this suggests that a minimum feasible carbon price of $60/ton CO2e must be set by applicable regulatory bodies. Lastly, a Failure Modes and Effects Analysis was performed for the proposed system to validate the safety of the design.
Highlights
The development of renewable energy infrastructure within the province of Ontario has resulted in a mismatch between supply and demand, with the Independent ElectricitySystem Operator (IESO) dumping terawatts of clean, low carbon electricity each year at very low cost [1,2]
The net present value (NPV) and internal rate of return (IRR) for each scenario can be determined, and the optimal configuration can be selected for a fixed carbon price and capital grant incentive
As the carbon price is varied from 30$/ton CO2e to 100$/ton CO2e, the storage coefficient and price limit of the electrolyzer change; they remain unaffected by changes in the capital grant because it scales the price for the entire range of system sizes
Summary
The development of renewable energy infrastructure within the province of Ontario has resulted in a mismatch between supply and demand, with the Independent ElectricitySystem Operator (IESO) dumping terawatts of clean, low carbon electricity each year at very low cost [1,2]. Of the many revenue streams available to power-to-gas, the enrichment of natural gas with electrolytic hydrogen has garnered significant interest given its ability to reduce operating costs while increasing renewable content [7,8]. This is important in the context of Ontario’s utility market, given Environment and Climate Change Canada’s 2016 proposal of a nationwide clean fuels standard that will include commercial and residential natural gas [9]. The production of hydrogen enriched natural gas (HENG) in Ontario is already occurring on the utility scale; based on global research, there is potential to realize significant financial and environmental returns through local industrialized implementation as well [10]
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