Major New European Report on Power-to-Gas Energy Storage

28th January 2015

ITM Power (AIM: ITM), the energy storage and clean fuel company, is pleased to announce the imminent publication of a major new report “Commercialisation of Energy Storage in Europe”, funded by the FCHJU and compiled by a coalition of 32 organisations including Shell, Siemens, Alsthom, Vattenfall and Eurogas.

The Fuel Cells and Hydrogen Joint Undertaking (FCH JU) is a unique public private partnership supporting research, technological development and demonstration activities in fuel cell and hydrogen energy technologies in Europe. Its aim is to accelerate the market introduction of these technologies, realising their potential as an instrument in achieving a carbon-lean energy system. For the period 2014-2020 the FCHJU will be investing 665m euro. In addition in the same period, the CEF (Connecting Europe Facility) will be investing 11,930m euro and 5,850m euro respectively in transport and energy infrastructure.

The preliminary findings of the report identify the European energy storage potential for electrolysis as several hundred GW with up to 170GW in Germany alone, if 2050 decarbonisation targets are to be met. It states the use of electrolytic hydrogen in the gas grid, mobility or industry can productively utilize nearly all excess renewable energy, unlike power-to-power storage (such as batteries) whose utilisation becomes compromised as the renewables penetration increases. It will recommend that policymakers address the low degree of regulatory acknowledgement of storage as a specific component of the electric power value
chain and exempt electrolysers from final consumption fees.

Other key findings of the report include:
- There will be economic potential for very large amounts of storage for the integration of intermittent renewables.
- Storage can create value in the short run, but reviewing regulation is key to unlocking this opportunity.
- Storage demand will depend on country-specific characteristics, in particular the level of interconnectivity, and island countries like the UK will require the most storage.
- Conversion of electricity to heat and heat storage is a proven and relatively low cost option for providing flexibility to the power system, but its potential is limited by the share of electricity demand used for heating and its seasonal variation.
- Conversion of electricity to hydrogen and its use in the gas grid (power-to-gas), hydrogen mobility or industry can productively utilize nearly all excess renewable energy.

Other Major Power-to-Gas and Energy Storage reports
In Germany a number of reports have been published. The “Study of the requirement for electricity storage in Germany”, by Agora Energiewende, identifies a requirement in Germany for electrolysis (for the power-to-gas, power-to-liquids and hydrogen mobility markets) of up to 16GW, 80GW and 130GW by the years 2023, 2033 and 2050 respectively. This is confirmed by the report, “Power-to-Gas in transport” (a report to Federal Ministry of Transport and Digital Infrastructure by DLR, Berlin) which estimates the markets in Germany for power-to-hydrogen and power-to-SNG, in mobility applications alone, as each
reaching up to 140 TWh per annum by 2050.

In France the report “Analysis of the role of natural gas transportation in the hydrogen economy in France” (a report to GRTGaz, by E-Cube), estimates that hydrogen injection in the French natural gas grid could manage 25TWh of excess energy per year. It predicts the level of excess energy growing to 75TWh by 2050 and a combination of methanation and hydrogen injection being required. It advocates the upgrading of biogas as the most cost-effective route for sourcing CO2 for methanation.

The “Study of hydrogen and methanation as processes for capturing the value of excess electricity” (a report by ADEME GRTGaz and GRDF, France), identifies up to 13TWh of excess electricity in France by 2030, and up to 67TWh by 2050, which must be transferred out of the power system or lost (as opposed to absorbed by power-to-power storage technologies). It estimates a requirement for 1.2-1.4GW of P2G plant in France by 2030 and up to 24GW by 2050, and calls for 5-10% of installed P2G capacity to be for hydrogen injection and the rest for SNG injection with the CO2 requirement supplied entirely from bio-renewable sources. Importantly it also calls for a legislative, regulatory and tax framework to be established for P2G in  France and across the EU.

In Holland the report “The role of power-to-gas in the future Dutch energy system” (by ECN and DNVGL for TKI Gas), regards power-to-gas as a robust part of the mix of energy technology options required to achieve deep CO2 emission reduction targets in the energy system (-80% to -95% by 2050), requiring up to 20GW of installed P2G capacity. The report states that the ultimate role of P2G partly depends on how climate and renewable energy policy are detailed and on the actual value that is implicitly attached to ‘green’ hydrogen and/or methane in the various end user sectors as a result of these policies.

In the USA, the Californian Public Utility Commission has recently introduced a mandate for 1.325 GW of energy storage in support of achieving the State’s 2020 target of 33% renewables. Also the report “Blending hydrogen into natural gas pipeline networks: a review of key issues” (a report by NREL), states that hydrogen concentrations of up to 50% in the existing US gas distribution system present only “a minor increase in overall risk”.

In the UK, the report “Reduction of CO2 emissions by addition of hydrogen to natural gas” (by Haines, Polman and de Laat, in IEA Greenhouse Gas Control Technologies Volume 1), proposes a stepwise process for converting the UK natural gas distribution system to 3% hydrogen initially, then 12%, then 25%, in three steps of approximately 15 years each. This is to enable phasing in new gas appliances which can tolerate various concentrations of hydrogen. The report “Power-to-Gas: A UK feasibility study (by National Grid, SSE, Shell, SGN, Kiwa, SHFCA and ITM Power), recommends the adoption of a 3% hydrogen concentration limit
in 2015. It estimates a build rate requirement for hydrogen injection systems of between 200 and 400MW p.a. across the period 2015-2050, culminating in a maximum dispatchable load of 23.5GW of electrolysis in 2050.

“Zero-carbon Britain: Rethinking the Future” (by the Centre for Alternative Technology), identifies a zerocarbon solution for Britain in 2050 which depends upon dedicating 180TWh of surplus renewable electricity from the power system to electrolysis. The hydrogen produced is employed (as hydrogen or a hydrogenderived fuel) in combination with 274TWh of biomass to completely decarbonise the UK heat, transport and power sectors.

From a global perspective the report “Technology Roadmap: Energy Storage” (by International Energy Agency, OECD/IEA), states for longer periods of storage, or to create a permanent surplus of energy over the year, only power-to-gas or heat will be sufficient and this will require cross-sector approaches to energy storage. To support electricity sector decarbonisation in the four regions modelled (US, India, China and EU) an estimated 310 GW of additional grid-connected electricity storage capacity is needed and the associated investment required, in the different scenarios modelled, ranges from $380 billion to $750 billion. The IEA is also bringing out a specific report shortly on hydrogen storage.

In summary, various studies have identified the emergence of substantial excess energy flows (measured in TWh and GW) in several nations as solar and wind penetrations increase. This applies especially in regions or islands with limited interconnections to other electricity grids, such as the UK and Ireland. In particular, the FCHJU study has identified the advantageous position of electrolysis in being able to continue to absorb these excesses as they increase in magnitude and frequency. This places power-to-gas in a key position, relative to other energy storage approaches, as the enabler for achieving high renewable penetrations while simultaneously providing green feeders into the heat and transport sectors. There is now a need to adjust the regulatory frameworks applying to the electricity and gas systems to encourage the early deployment of power-to-gas systems, so that sufficient national stocks of P2G plant can be built up to enable achieving the decarbonisation targets. This will result in increasingly substantial deployments of hydrogen and SNG injection plant in many countries.

Prof Marcus Newborough, Development Director, ITM Power PLC, commented: “Making power systems greener by deploying renewables leads to the production of excess energy and exacerbates grid balancing. Utilising the excess, rather than wasting it, forces decisions to be made about using energy storage as an enabler for decarbonisation. Among the energy storage technologies, electrolysis has a unique role in being able to offer value to all three legs of the energy system (i.e. power and heat and transport). As the findings of these recent analytical studies show, the emerging market opportunity for power-to-gas systems is simply vast!”

Rebecca Markillie
Marketing & Communications
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