Abstract
This paper studies the economics of carbon-neutral synthetic fuel production from renewable electricity in remote areas where high-quality renewable resources are abundant. To this end, a graph-based optimisation modelling framework directly applicable to the strategic planning of remote renewable energy supply chains is proposed. More precisely, a hypergraph abstraction of planning problems is introduced, wherein nodes can be viewed as optimisation subproblems with their own parameters, variables, constraints and local objective. Nodes typically represent a subsystem such as a technology, a plant or a process. Hyperedges, on the other hand, express the connectivity between subsystems. The framework is leveraged to study the economics of carbon-neutral synthetic methane production from solar and wind energy in North Africa and its delivery to Northwestern European markets. The full supply chain is modelled in an integrated fashion, which makes it possible to accurately capture the interaction between various technologies on an hourly time scale. Results suggest that the cost of synthetic methane production and delivery would be slightly under 150 €/MWh (higher heating value) by 2030 for a system supplying 10 TWh annually and relying on a combination of solar photovoltaic and wind power plants, assuming a uniform weighted average cost of capital of 7%. A comprehensive sensitivity analysis is also carried out in order to assess the impact of various techno-economic parameters and assumptions on synthetic methane cost, including the availability of wind power plants, the investment costs of electrolysis, methanation and direct air capture plants, their operational flexibility, the energy consumption of direct air capture plants, and financing costs. The most expensive configuration (around 200 €/MWh) relies on solar photovoltaic power plants alone, while the cheapest configuration (around 88 €/MWh) makes use of a combination of solar PV and wind power plants and is obtained when financing costs are set to zero.
Highlights
Electricity generation from renewable resources combined with wide-ranging electrification has been a mainstay of European climate and energy policies, with the primary goal of decarbonising the power sector as well as other carbonintensive sectors.Major obstacles to such endeavours have surfaced in recent years
The framework is leveraged to study the economics of carbon-neutral synthetic methane production from renewable electricity and atmospheric carbon dioxide in North Africa and its delivery to Northwestern European markets
It is worth noting that using the lower heating value (LHV) would have increased the cost per MWh, as this would have effectively reduced the amount of energy that could have been retrieved per unit mass of methane delivered
Summary
Electricity generation from renewable resources combined with wide-ranging electrification has been a mainstay of European climate and energy policies, with the primary goal of decarbonising the power sector as well as other carbonintensive sectors.Major obstacles to such endeavours have surfaced in recent years. It has become clear that the technical renewable potential of some European countries (i.e., the maximum amount of renewable electricity that may be produced within a country’s borders and exclusive economic zone, while accounting for a variety of land eligibility constraints Ryberg et al, 2018) is insufficient to supply current energy demand levels (e.g., in densely-populated countries like Belgium Berger et al, 2020; Limpens et al, 2020 or the United Kingdom MacKay, 2008). It is still unclear whether pooling renewable resources at the European level would alleviate the problem. It is well documented that social acceptance issues tend to compound it (Segreto et al, 2020)
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