Techno-economic evaluation of a power-to-methane plant : Levelized cost of methane, financial performance metrics, and sensitivity analysis

Abstract

This study presents a comprehensive techno-economic analysis of a power-to-methane plant, investigating its financial viability and profitability over 20 years. The financial performance of the plant is evaluated using key metrics such as net present value (NPV), internal rate of return (IRR), and levelized cost of methane (LCOM). The main findings reveal that under the current assumptions, the plant faces challenges in achieving financial viability, with a negative NPV of −$3,818,163 and an IRR of −1%, indicating a net loss over the 20 years and a lack of profitability for investors. The calculated LCOM is 1.75 $/kg, which provides an estimate of the cost to produce renewable methane from the plant. To further understand the conditions necessary for the plant to become financially viable, a sensitivity analysis is conducted, examining the effects of varying key parameters such as the selling price of methane, CO2 costs, and discount rates. The sensitivity analysis demonstrates that the financial viability and profitability of the plant are highly sensitive to the selling price of methane, with the NPV turning positive and the IRR exceeding the break-even point at selling prices above $2.1/kg. Moreover, the analysis reveals that higher CO2 costs lead to poorer financial performance, while lower discount rates result in a higher perceived value of the plant. In summary, the power-to-methane plant faces financial challenges under the current assumptions, but under certain conditions, it could become viable and profitable. The findings of this study provide valuable insights into the plant's potential market viability and can inform future decision-making processes and development strategies for power-to-methane technologies. It is recommended that additional research investigates the impact of technological advancements and integration with other renewable energy systems on the financial performance of the plant and their contribution to the transition to renewable energy systems.