Reversible Power-to-Gas systems for energy conversion and storage

The intermittent nature of renewable energy sources like wind and solar creates challenges in real-time energy balancing. While battery storage is one solution, Power-to-Gas (PtG) offers another, enabling the conversion of surplus electricity into storable hydrogen. Reversible PtG systems further enhance this capability by allowing the conversion of hydrogen back into electricity during periods of high demand and price. This dual functionality effectively links hydrogen and electricity markets, potentially mitigating price volatility. This study focuses on the economic viability of these reversible PtG systems, contrasting modular designs (separate electrolyzer and fuel cell/gas turbine) with integrated systems (unitized regenerative fuel cells, e.g., using solid oxide cell (SOC) technology). The research aims to identify conditions under which reversibility becomes economically advantageous, considering factors like hydrogen prices and electricity price fluctuations.

Existing literature highlights the increasing cost-competitiveness of hydrogen production via electrolysis. However, the economic feasibility of converting hydrogen back to electricity using fuel cells or gas turbines has been questioned due to high costs. Unitized regenerative fuel cells, particularly those based on SOC or PEM technology, offer an integrated approach, using the same equipment for both hydrogen production and electricity generation. While studies have explored the economics of individual PtG components, a comprehensive analysis of the economic advantages of reversible operation within different system designs remains limited. This gap underscores the need for a detailed model that incorporates the dynamics of electricity and hydrogen prices to evaluate the complete value proposition of reversible PtG systems.

The authors develop an analytical model to evaluate the unit economics of reversible PtG systems, considering both modular and integrated designs. The model incorporates hourly electricity prices, hydrogen prices (assumed time-invariant as buyers and sellers typically agree on fixed prices), conversion rates (electricity to hydrogen and vice versa), variable operating costs, and system capital costs. The model optimizes capacity factors (percentage of available capacity utilized) at each hour to maximize the contribution margin, considering that systems may operate in only one direction at a time. The model also accounts for the time and energy required to bring systems to operating temperature from a cold start, which impacts the overall efficiency. The analysis calculates levelized fixed costs (LFC) for each system, representing the unit acquisition cost per kWh, incorporating fixed operating costs, taxes, and debt/equity costs. Cost competitiveness is assessed by comparing the optimized contribution margin to the LFC. The reversibility feature's value is determined by assessing whether both hydrogen production and electricity generation are economically viable at a given hydrogen price. The model is calibrated using market data from Germany and Texas, reflecting differences in electricity price volatility. Projections are made by incorporating forecasts of technological improvements (decreasing system prices and increasing conversion efficiencies) for electrolyzers, gas turbines, and SOC fuel cells, based on literature and data analysis, including regression analysis of SOC costs.

The study's key findings revolve around the economic viability and value of reversibility for different PtG system types under varying market conditions. For modular systems, the analysis found that the electrolyzer subsystem is cost-competitive in both Germany and Texas at current hydrogen prices (for small and medium-scale supply). However, the gas turbine subsystem is not economically viable, meaning reversibility adds no value in this case. For integrated systems based on SOC technology, the findings are significantly different. In Texas, with its higher electricity price volatility, integrated systems are shown to be cost-competitive even at current industrial-scale hydrogen prices. This is because the system efficiently produces hydrogen while occasionally generating electricity during periods of high prices. This reversibility, while not the primary function, adds significant value in this market. In Germany, while not as pronounced, the integrated SOC system's competitiveness was also demonstrated. Projections for the future show that as technological advancements lead to falling system prices and increased efficiencies, integrated reversible PtG systems will maintain their economic edge, even if hydrogen prices decline significantly. The inherent flexibility of these integrated systems allows them to adapt by more frequently operating in the electricity generation mode when hydrogen prices are low.

The study's findings challenge the conventional view that hydrogen-to-electricity conversion in PtG systems is economically unfeasible. The results strongly suggest that the integrated design, particularly those utilizing SOCs, changes this perspective. The key is the inherent flexibility of the system to switch between hydrogen generation and electricity production, enabling it to capitalize on price fluctuations in electricity markets. The higher the volatility of electricity prices, the greater the economic advantage of reversibility for integrated systems. This flexibility serves as a buffer against the intermittency of renewable energy sources and contributes to increased grid stability. The results also highlight the importance of considering market-specific factors (electricity price volatility) when assessing the viability of reversible PtG systems. The study shows that reversibility can be valuable not just in the future, but already in specific markets, showcasing the potential of integrated PtG systems as a cost-effective solution for energy storage and grid balancing.

This research demonstrates the economic competitiveness of integrated reversible PtG systems, specifically those based on SOC technology, particularly in markets with volatile electricity prices. This is a significant contribution to the discussion on the role of PtG in the energy transition. The inherent flexibility of these systems enables adaptation to changing market conditions, ensuring sustained economic viability despite potential decreases in hydrogen prices. Further research could investigate the synergistic benefits of integrating renewable energy sources directly into PtG systems and comparing the cost-effectiveness of reversible PtG systems against alternative energy storage technologies such as batteries or pumped hydro.

The model makes several simplifying assumptions. Hourly electricity prices are considered exogenously determined, ignoring potential market impacts of increased PtG deployment. The model assumes instantaneous switching between modes of operation, neglecting the practical time required for system transitions. Additionally, the projections rely on technological progress forecasts based on existing trends, which could be subject to uncertainties. While the model incorporates cold start-up costs, the assumptions made may not fully capture all the real-world complexities involved.