Smart power-to-gas deployment strategies informed by spatially explicit cost and value models

Abstract

Green hydrogen allows coupling renewable electricity to hard-to-decarbonize sectors, such as long-distance transport and carbon-intensive industries, in order to achieve net zero emissions. Evaluating the cost and value of power-to-gas is a major challenge, owing to the spatial distribution and temporal variability of renewable electricity, CO2 and energy demand. Here, we propose a method, based on geographic information system (GIS) and techno-economic modeling, to: (i) compare the levelized cost and levelized value of power-to-gas across locations; (ii) identify potential hotspots for their future implementation in Switzerland; and (iii) set cost improvement targets as well as smart deployment strategies. Our method accounts for the spatial and temporal (both hourly and seasonal) availability of renewable electricity and CO2 sources, as well as the presence of gas infrastructure, heating networks, oxygen and gas demand centers. We find that only green hydrogen plants connected directly to run-of-river hydropower plants are currently profitable in Switzerland (with NPV per CAPEX ranging between 2.3-5.6). However, considering technological progress by 2050, a few green hydrogen plants deployed in the demand centers and powered by rooftop PV electricity will also become economically attractive. Moreover, a few synthetic methane plants connected to run-of-river hydropower plants currently show slight profitability (NPV per CAPEX reaching values up to 1.3) and in 2050 (NPV per CAPEX up to 3.1), whereas those connected to rooftop PV will remain uneconomical even in 2050. Based on our findings, we devise a long-term roadmap for policy makers and project developers to plan future green hydrogen projects. The proposed methodology, which is applied to Switzerland, can be extended to other countries.