On the long-term prospects of power-to-gas technologies

Electricity generation from variable renewable energy sources such as wind and solar has grown in some countries at such a high rate that long-term storage becomes relevant. The main rationale of power-to-gas (P2G) conversion of excess power is that the capacity of the gas pipelines and gas storage is much higher than that of the electricity transmission lines. This paper investigates the market prospects of hydrogen and methane from P2G conversion as a long-term electricity storage option. Of specific interest is the future development of investment costs, economies-of-scale, the impact of the electricity price, and its distribution as well as possible locations. We conclude that from an economic point-of-view, the future prospects of all P2G technologies are much less promising than currently indicated in several papers and discussions. It will become very hard for P2G to compete in the electricity markets despite a high technological learning potential. However, for both hydrogen and methane, there are prospects for use in the transport sector. Already today compressed gas vehicles are by and large competitive. This article is categorized under: Concentrating Solar Power > Economics and Policy Energy Systems Economics > Economics and Policy Energy Systems Analysis > Systems and Infrastructure Energy and Transport > Economics and Policy