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2RPM and its Role in the Energy transition
Renewable Energy FinanceERASMUS intensive program
Lappeenranta, 11th of June 2014
Renewable Power Methane and its Role in the
Energy Transition
3RPM and its Role in the Energy transition
About me
▪ now LUT Energy, Professorship for Solar Economy
▪ 2011 – 2013 Reiner Lemoine Institut: Managing Director
▪ 2009 – 2012 University of Kassel, Dissertation, Economics of Hybrid PV Power Plants
▪ 2009 – 2011 Q-Cells/ Market Development: Technology Evaluation/ Business Analysis
▪ 2007 – 2009 Q-Cells/ Research Center: Technology Screening
▪ 2002 – 2007 Study of Energy Systems Engineering in Clausthal and Berlin
. Thesis @ Desertec/ CoR: Global Supply Potential of STEGs and Appl. in UAE
▪ 2001 – 2006 Study of Physics in Clausthal, Bath (UK) and Berlin
. Thesis @ HZB: Exciton Diffusion in Organic Solar Cells
▪ 1996 – 1999 Study of General Business, VWA Kempten
▪ 1993 – 1999 Assistant at a Tax Advisory and Accounting Company
▪ 2006 – ~60 Scientific publications on: RE system analysis, RPM, hybrid PV systems, PV
grid-parity, PV fuel-parity, solar resources, PV-Wind complementarity, PV off-grid,
organic PV and CSP
▪ 2006 – contribution as co-founder of DESERTEC Foundation, member of IEA-PVPS
. Task 8 and EU PV Technology Platform
4RPM and its Role in the Energy transition
Agenda: Status of Solar PV
Solar PV – Cornerstone of Energy Transition
RPM – Roughly the Idea
Why RPM based on Wind and PV?
RPM systemic view and the vision behind
100% Solar Economy: Local View
100% Solar Economy: National View – DE
100% Solar Economy: National View – IE
100% Solar Economy: Global View
Summary
5RPM and its Role in the Energy transition
Do we understand a Solar Cell?
Photovoltaics: unique advantages
source: Glunz, 2007
unique advantages
• no moving parts
• modularity
• direct convertion of
solar radiation to
electricity
6RPM and its Role in the Energy transition
The Main PV Market Segments
UtilityCommercial /
IndustrialResidential Off-Grid
large power plants
(> 1 MW)
Utility or electricity
wholesale market
as customer
Often > 100 kW
installations
Professional
customers
Small and very
small installations
(< 10 kW)
Mainly homeowners
Varying system
sizes
Varying
customer types
PV can be used in all regions in the world, by the poorest to the
richest, in decentral and central applications
- highly modular and flexibly adaptable to respective needs -
7RPM and its Role in the Energy transition
A short history of the solar cell efficiency
2
2
/
/
mWpowerradiativeincident
mWpowerelectricgeneratedefficiency
rad
el
8RPM and its Role in the Energy transition
Global installed PV capacity: cumulated and added
source: EPIA, 2014
9RPM and its Role in the Energy transition
Core Methodologies: Levelized Cost of Electricity
k
Y
Capex
ref 1WACC)(1
WACC)(1WACC
PRLCOE
N
N
• PV generation cost have to be compared to ohter electricity generation technologies in
cost per energy [€/kWh]
• transformation of €/kWp in €/kWh: investment (Capex), operation and maintenance (k),
capital cost (WACC), lifetime (N), energy yield at site (Yref, PR)
• LCOE in general for all power generation technologies [€/kWh]
• composition of: investment (Capex), capital recovery factor (function of WACC and lifetime),
operation and maintenance (Opex), full load hours (FLh), fuel cost, efficiency, carbon cost
elelel
fix GHGcarbonfuelOpex
FLh
OpexcrfCapex
varLCOE
10RPM and its Role in the Energy transition
Core Methodologies: Learning Curve Concept
cx: cost at historically cumulated output level of Px (Capexx)
c0: cost at initial output level P0 (Capex0)Px: historically cumulated output level P0: initial output level Pt: annual production of a specific year GRt: growth rate of a specific yearPR: progress ratio, unity minus learning rate 0.001
0.010
0.100
1.000
10.000
100.000
1,000.000
10,000.000
100,000.000
1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
year
an
nu
al p
rod
uc
tio
n [
MW
p]
space terrestrial roof-top power plant
Si solar cell terrestrial module roof-top programm
major markets
major inventions
off-grid on-grid
0.001
0.010
0.100
1.000
10.000
100.000
1,000.000
10,000.000
100,000.000
1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
year
an
nu
al p
rod
uc
tio
n [
MW
p]
space terrestrial roof-top power plant
Si solar cell terrestrial module roof-top programm
major markets
major inventions
off-grid on-grid
source: Breyer Ch., et al., 2012. Research and Development Investments in PV – A limiting Factor for a fast PV Diffusion?, 25th EU PVSEC/
WCPEC-5, Valencia 2010, September 6–10 ; Breyer Ch., et al., 2012. Global current and historic photovoltaic research and
development investments from the public and private sector, Energy Policy, submitted
cost reduction by x% per each doubling of cumulated
historic capacity (PV modules: ~20%, PV systems: ~16%)
current wholesale
price range
11RPM and its Role in the Energy transition
Solar PV: long-term Capex projection
source: ISE, 2014
12RPM and its Role in the Energy transition
Solar Resource and current and projected cost
data source: NASA SSE 6.0, calculation by HDKR model 1h interval at mean day of monthfor all months of the year
source: Breyer Ch. and Schmid J., 2010. Population Density and Area weighted Solar Irradiation: global Overview on Solar Resource Conditions for fixed tilted, 1-axis and 2-axes PV Systems, 25th PVSEC/ WCPEC-5, Valencia, September 6–10
Moderate region
LCOE2014: 90 – 140 €/MWh
LCOE2020: 80 – 110 €/MWh
LCOE2030: 65 – 85 €/MWh
LCOE2050: 50 – 60 €/MWh
Sunny regions
LCOE2014: 50 – 80 €/MWh
LCOE2020: 40 – 60 €/MWh
LCOE2030: 30 – 50 €/MWh
LCOE2050: 25 – 40 €/MWh
13RPM and its Role in the Energy transition
Agenda: Status of Solar PV
Solar PV – Cornerstone of Energy Transition
RPM – Roughly the Idea
Why RPM based on Wind and PV?
RPM systemic view and the vision behind
100% Solar Economy: Local View
100% Solar Economy: National View – DE
100% Solar Economy: National View – IE
100% Solar Economy: Global View
Summary
14RPM and its Role in the Energy transition
source:
ETOGAS, 2013
Learning from Nature
photons-to-biomass biomass-to-fuel
Key insights:• processes well established
• efficiency of photons-to-biomass is quite low
• efficiency of photons-to-biomass-to fuel is even lower
15RPM and its Role in the Energy transition
Renewable Power Methane (RPM)
source: ETOGAS, ZSW, 2010
Key insights:• 2 step process: electrolysis + methanation
• input: electricity, H2O, CO2
• output: CH4, H2O, H2 (optionally), O2
• power-to-gas efficiency: ~60% (>80% with use of waste heat)
Sabatier Process
16RPM and its Role in the Energy transition
Different names and plants
Renewable power methane (RPM)
Power-to-gas (P2G, PtG)
RE-Methane, E-Methane
E-Gas
International:
• Denmark, Electrochaea, 250 kW
• Canada, Hydrogenics, 1 MW
• Switzerland, plans
• Ireland, plans
• Finland, pre-plans25 kW, ZSW, 2009
6,3 MW
17RPM and its Role in the Energy transition
RPM is even sexy enough for advertisments
source: Spiegel, 2014
Rough translation:
”Is it possible to have electricity in
pipelines?
MAN can.”
Background:
• MAN constructed and built parts of
the Werlte plant
• MAN has significant activities in
energy engineering
• MAN is an associate company to
Audi (both are part of Volkswagen)
18RPM and its Role in the Energy transition
Agenda: Status of Solar PV
Solar PV – Cornerstone of Energy Transition
RPM – Roughly the Idea
Why RPM based on Wind and PV?
RPM systemic view and the vision behind
100% Solar Economy: Local View
100% Solar Economy: National View – DE
100% Solar Economy: National View – IE
100% Solar Economy: Global View
Summary
19RPM and its Role in the Energy transition
Need for RPM
Key insights:• limited resources
• high oil price due to
demand > supply
• disastrous ecologic
footprint
• nuclear no economic
option
• solar PV and wind
energy are intermittent
20RPM and its Role in the Energy transition
Resources and Energy Demand
source: Perez R. and Perez M., 2009. A fundamental look on energy reserves for the
planet. The IEA SHC Solar Update, Volume 50
Key insights:• no lack of energy
resouces
• limited conventional
resources
• solar and wind resources
need to be the major
pillars of a sustainable
energy supply
Remark:
• conventional resources
might be lower than
depicted by Perez
21RPM and its Role in the Energy transition
source:
Gerlach A.-K., 2011. Diploma Thesis
Gerlach A.-K., Breyer Ch., et al., 2011. PV and Wind
Power – Complementary Technologies, 26th EU
PVSEC, Hamburg, September 5–9
PV and Wind: Resource in Space and Time
22RPM and its Role in the Energy transition
East Germany: Seasonal Availability
• PV and wind energy complement each other very good
• Maximum FLh are hardly increased, but minimal ones significantly
• Load in Germany: maximum in winter and minimum in summer, thus very
good fundamental match by combination of solar PV and wind energy
23RPM and its Role in the Energy transition
• often much wind and less PV, less wind
and much PV, and part load of wind and
PV
• maximum power feed-in of wind and PV
at the same time not observed
• complementarity of PV and wind energy
(seasonal and hourly)
East Germany: Hourly Availability
24RPM and its Role in the Energy transition
Definitions:
• overlap full load hours (FLh)
PV and wind power feed-in,
appearing at the same time
• critical overlap FLh
sum of PV-Wind FLh at more than
1 GW (PV and Wind at 1 GW each)
• both in relation to total FLh
Key results:• PV and wind complement each other
• PV and wind show almost no competitive
characteristics
PV-Wind – Complementary Technologies
source: Gerlach A.-K., Breyer Ch., et al., 2011. PV and
Wind Power – Complementary Technologies,
ISES Solar World Congress, Kassel
25RPM and its Role in the Energy transition
Power plant investments in EU (2013/ 2000 – 2013)
PV and wind power will
become the core pillars
of a sustainable power
supply
gas fired power plants
are the bridging
technology towards a
100% RE power supply
investments in gas
infrastructure are NO
stranded investments
(unlike coal and nuclear)source: EPIA, 2014
Power plant investments in EU in 2000 – 2013 in GW
Power plant investments in EU in 2013 (gross) in GW Power plant investments in EU in 2013 (net) in GW
source: EPIA, 2014
26RPM and its Role in the Energy transition
Agenda: Status of Solar PV
Solar PV – Cornerstone of Energy Transition
RPM – Roughly the Idea
Why RPM based on Wind and PV?
RPM systemic view and the vision behind
100% Solar Economy: Local View
100% Solar Economy: National View – DE
100% Solar Economy: National View – IE
100% Solar Economy: Global View
Summary
27RPM and its Role in the Energy transition
Solar Economy (as defined by Fortum)
source: Brunila A., 2012. Fortum – Power and heat company in
the Nordic countries, Russia, Poland and the Baltics
28RPM and its Role in the Energy transition
RPM as a bridging option for mobility
source:
ETOGAS, 2010; FVV/ LBST, 2013
• mobility sector faced to
resource, emissions and
economic constraints
• various power-to-mobility
concepts (BEV, FCEV, PHEV,
CNG-V, PtGtL)
• power-to-gas-mobility
• power-to-liquid-mobility
29RPM and its Role in the Energy transition
Energy System
• key RES
• basic loads
• storage
• ICT
• all RES
• self-supply
• more loads
• heat
• gases
• conv. sources
30RPM and its Role in the Energy transition
Storage options in General and RPM
source: Breyer Ch., Rieke S., et al., 2011. Hybrid PV-Wind-Renewable
Methane Power Plants – A Potential Cornerstone of Global
Energy Supply, 26th EU PVSEC, Hamburg, September 5-9
daily seasonal
storage for PV + Wind
TES
Key insights:
• gas is the only long term energy storage
• RPM might be favoured due to an
evolutionary transition process
33RPM and its Role in the Energy transition
Agenda: Status of Solar PV
Solar PV – Cornerstone of Energy Transition
RPM – Roughly the Idea
Why RPM based on Wind and PV?
RPM systemic view and the vision behind
100% Solar Economy: Local View
100% Solar Economy: National View – DE
100% Solar Economy: National View – IE
100% Solar Economy: Global View
Summary
34RPM and its Role in the Energy transition
Model
• several electricity
sources and
storages supply one
load
100% RE – Allgäu Case: System
Region
• Allgäu in Southern Germany
as model region
• 200,000 inhabitants
source: Hlusiak M. and Breyer Ch., 2012. Integrating End-user and Grid focussed Batteries and mid-
to long-term Power-to-Gas Storage for reaching a 100 % RE Supply, 7th IRES/ 5th IRED, Berlin
35RPM and its Role in the Energy transition
100% RE – Allgäu Case: Load and Ressources
Load:
• strong daily variation
• seasonal variation
• (up to now) nearly no flexible loads
PV:
• generation profile suits daily but not seasonal
• fluctuating but predictable
Wind power:
• generation profile suits seasonal
• strongly fluctuating but predictable
Hydro power:
• generation profile suits partly seasonal
• more stable and predictable
Storage:
• relevant when the grids cannot balance anymore
• storage is highly relevant for 100% RE
36RPM and its Role in the Energy transition
Load• average: 140 MW
• hourly: 70 – 233 MW
Consumer Side• covers about 5 % RE-share with assumed
participation ratio
• 64 MW PV and 70 MWh batteries
Utility Side• technologies enter system in following order:
Hydro 50 MW
Wind 400 MW
PV 640 MW
Biomethane 18 MWth
Biogas 7 MWel,avg
Power-to-Methane 100 MWth
Batteries 320 MWh
Large methane storage 120 GWh
(figures are installed capacity at 100 % RE)
100% RE – Allgäu Case: Installed Capacities (2020)
Full load hours• Hydro: 3,230
• Wind: 1,730
• PV: 1,080
source: Hlusiak M. and Breyer Ch., 2012. Integrating End-user and Grid focussed Batteries and mid-
to long-term Power-to-Gas Storage for reaching a 100 % RE Supply, 7th IRES/ 5th IRED, Berlin
37RPM and its Role in the Energy transition
Gas Turbine PP• size nearly constant
Natural Gas• amount decreases linearly (= RE-share definition)
100 % RE System
• no single technology > 30 % of total cost
• PV and wind largest shares, more than half total
cost
Still missing in the Simulation• no synergetic coupling of power and heat
• no synergetic coupling of power and mobility
• power-to-gas (hydrogen only)
• no grid-connection to neighbouring regions
• all these simulation improvements would reduce
costs
100% RE – Allgäu Case: Cost by Components (2020)
source: Hlusiak M. and Breyer Ch., 2012. Integrating End-user and Grid focussed Batteries and mid-
to long-term Power-to-Gas Storage for reaching a 100 % RE Supply, 7th IRES/ 5th IRED, Berlin
38RPM and its Role in the Energy transition
Agenda: Status of Solar PV
Solar PV – Cornerstone of Energy Transition
RPM – Roughly the Idea
Why RPM based on Wind and PV?
RPM systemic view and the vision behind
100% Solar Economy: Local View
100% Solar Economy: National View – DE
100% Solar Economy: National View – IE
100% Solar Economy: Global View
Summary
39RPM and its Role in the Energy transition
100% RE in Germany – Fraunhofer ISE
source: Henning H.-M. and Palzer A., 2012. 100 % Renewables for Electricity and Heat – a
Holistic Model for a Future German Energy System , 7th IRES, Berlin
40RPM and its Role in the Energy transition
Gas Storage Estimate for Finland – preliminary
sources: Henning H.-M. and Palzer A., 2012; IEA, 2013; Gasum 2013
41RPM and its Role in the Energy transition
100% RE in Germany – Photon
Key insights:• 100% RE in Germany possible
• mix of PV (1/3) and wind energy (2/3) is close to optimum
• RE-Methan (power-to-gas) is an essential piece of puzzle
• coupling of power and heat is very important
• needed capacities: 170 GWp PV and 230 GW wind energy and 70 GW RE-Methane
• full cost w/o grids: ca. 7.5 €ct/kWh
• e-pool market modell: RE power centrally bought, covering of load, price dynamic for DSM, high direct demand
Quelle: Photon 2012(10), Welter P.
42RPM and its Role in the Energy transition
100% RE in Germany – Reiner Lemoine Institut
source: Breyer Ch., Müller B., et al., 2013. Vergleich und Optimierung vonn zentral und dezentral
orientierten Ausbaupfaden zu einer Stromversorgung aus EE in DE, RLI, Berlin
43RPM and its Role in the Energy transition
100% RE in Germany – Reiner Lemoine Institut
Modelling of the power grid:
• real high voltage AV grid considered
• separation of Germany into 14 regions
• grid connection across borders considered
• capacity and distance for modelling
44RPM and its Role in the Energy transition
100% RE in Germany – Reiner Lemoine Institut
Key insights:
• cost of 100% RE similar to today‘s cost
• decentral and central option cost are more or
less the same
• system is switching from opex to capex and
fuel is squeezed out
• opex fraction still one third!
45RPM and its Role in the Energy transition
100% RE in Germany – Reiner Lemoine Institut
Key insights:
• most energy by wind power
• RPM of about 45 GW needed (only power sector!)
• Germany balanced by grids and storage
46RPM and its Role in the Energy transition
Agenda: Status of Solar PV
Solar PV – Cornerstone of Energy Transition
RPM – Roughly the Idea
Why RPM based on Wind and PV?
RPM systemic view and the vision behind
100% Solar Economy: Local View
100% Solar Economy: National View – DE
100% Solar Economy: National View – IE
100% Solar Economy: Global View
Summary
47RPM and its Role in the Energy transition
100% RE in Ireland – Aalborg University, DK
source:
Connolly D. and Mathiesen V., 2014. A technical and economic
analysis of one potential pathway to a 100% renewable energy
system, Int. J. Sustain Energy Planning and Mgm
Key characteristics:
• 100% RE system for all sector
• hourly resolved simulation
• solar PV ‚forgotten‘
• well balanced RE-heat and RE-mobility
• focus on energy flows and system costs
• no grid, no import/ export, not fully optimised
48RPM and its Role in the Energy transition
100% RE in Ireland – Aalborg University, DK
Key insights:
• several routes to E-fuels applied (see one example above)
• sustainable CO2 route acessible
• system efficiency of power-to-mobility acceptable
49RPM and its Role in the Energy transition
100% RE in Ireland – Aalborg University, DK
Key insights:
• 7 step approach feasible
• significant increase in power demand (~ +350%)
• BUT, no change in primary energy demand
• highly efficient power-based RE system enables
power-to-gas/liquid pathways
50RPM and its Role in the Energy transition
100% RE in Ireland – Aalborg University, DK
Key insights:
• 2020 system cost only 30% higher than reference (neglecting: cost
of climate change, cancer deaths, negative trade balance effects,
lower level of employment in energy sector, less tax income)
• 2050 system cost identical to reference
• simplified standard economic consideration, neglecting the full
view on total societal cost
• otherwise, maybe 30% less in cost (personal estimate)
• Significant increase in employment (> 100 000 jobs)
51RPM and its Role in the Energy transition
Agenda: Status of Solar PV
Solar PV – Cornerstone of Energy Transition
RPM – Roughly the Idea
Why RPM based on Wind and PV?
RPM systemic view and the vision behind
100% Solar Economy: Local View
100% Solar Economy: National View – DE
100% Solar Economy: National View – IE
100% Solar Economy: Global View
Summary
52RPM and its Role in the Energy transition
Energy system
Major components
• CCGT/ OCGT
• wind energy
• PV
• CSP
• TES
• battery
• renewable power
methane (RPM)
• heating rod
Key characteristic
• 100% RE
• hourly consideration
• Power supply security
• Worst case assumption
(no hydro, heat, mobility,
regional power exchange,
no H2 direct use)source: Pleßmann G., Erdmann M., Breyer Ch., et al., 2013. Global Energy Storage
Demand for a 100% Renewable Electricity Supply, 8th IRES, Berlin, November 18-20
53RPM and its Role in the Energy transition
Technology Capex Opexfix Opexvar Lifetime [a] Efficiency [%]
Photovoltaics 900 €/kWp 15 €/kWp 0 €/kWhel 25 -
Wind power 1000 €/kWel 30 €/kWel 0 €/kWhel 25 -
Battery 250 €/kWhel 20 €/kWhel 0 €/kWhel 10 80
Gas storage 0.05 €/kWhth 0.001 €/kWhth 0 €/kWhth 50 -
Power-to-Gas 936 €/kWel 24 €/kWel 0.03 €/kWel 20...30 50
CCGT 750 €/kWel 15 €/kWel 0 €/kWhel 30 58
OCGT 380 €/kWel 7.6 €/kWel 0 €/kWhel 30 38
CSP (solar field) 500 €/kWth 10 €/kWth 0 €/kWhth 25 50
Thermal storage 28 €/kWhth 0.3 €/kWhth 0 €/kWhth 20 93
Steam turbine 700 €/kWel 14 €/kWel 0 €/kWhel 30 42
Heating rod 20 €/kWth 0.4 €/kWth 0 €/kWhth 30 100
Hot heat burner 100 €/kWth 2 €/kWth 0 €/kWhth 20 95
Natural gas fuel - - 0.03 €/kWhth - -
Financial and technical assumptions for 2020
WACC: 7%; Capex CSP+8hTES: ~ 3200 €/kWel
source: Pleßmann G., Erdmann M., Breyer Ch., et al., 2013. Global Energy Storage Demand
for a 100% Renewable Electricity Supply, 8th IRES, Berlin, November 18-20
54RPM and its Role in the Energy transition
What does a 100% RES supply cost?
• LCOE: global average 142 €/MWh (min 80 – max 203 €/MWh)
• strong dependence on local resource conditions
• more components need to be included (hydro, heat, mobility, desalination, etc.)
• still worst case assumptions
source: Pleßmann G., Erdmann M., Breyer Ch., et al., 2013. Global Energy Storage Demand
for a 100% Renewable Electricity Supply, 8th IRES, Berlin, November 18-20
55RPM and its Role in the Energy transition
• LCOE (average): 142 €/ MWh (100% RES) 79 €/ MWh (50% RES)
• PV capacity: 7300 GWp (100% RES) 3350 GWp (50% RES)
• Energy supplied by storages: 35% (100% RES) 4% (50% RES)
What does a 50% RES supply cost?
source: Pleßmann G., Erdmann M., Breyer Ch., et al., 2013. Global Energy Storage Demand
for a 100% Renewable Electricity Supply, 8th IRES, Berlin, November 18-20
56RPM and its Role in the Energy transition
Global average:
Resulting cost optimal system configuration
Global capacities of resources
7,300 GW PV
6,700 GW Wind
3,900 GW CSPel
Global capacities of storages (elec.)
1,500 GWh Batteries (375 bn €)
1691,000 GWhth Gas storage (85 bn €)
2,360 GWel RPM capacity (2,210 bn €)
30,900 GWhth TES (865 bn €)
6 %
67 %
27 % Battery
TES
RPM
Shares of energy supply from storages
33 %
46 %
21 %PV
Wind
CSP
Shares of energy supply
9,400 TWh
13,200 TWh
6,000 TWh
source: Pleßmann G., Erdmann M., Breyer Ch., et al., 2013. Global Energy Storage Demand
for a 100% Renewable Electricity Supply, 8th IRES, Berlin, November 18-20
57RPM and its Role in the Energy transition
Agenda: Status of Solar PV
Solar PV – Cornerstone of Energy Transition
RPM – Roughly the Idea
Why RPM based on Wind and PV?
RPM systemic view and the vision behind
100% Solar Economy: Local View
100% Solar Economy: National View – DE
100% Solar Economy: National View – IE
100% Solar Economy: Global View
Summary
58RPM and its Role in the Energy transition
Summary
• there is no place on earth with ‚too less‘ sun – remember factor 2!
• ongoing (fast) PV cost reduction is very likely
• PV and wind power complement each other perfectly
• RPM is the only feasable seasonal storage option
• RPM is the only technology bridging all energy sectors
• 100% Solar Economy is economically viable in the next decade(s)
