Prospective economics of standalone electrofuels

Prospective economics for stand-aloneproduction of electrolytic hydrogen and

hydrocarbons

NeoCarbon Researchers’ seminarIlkka Hannula, Dec 2014

VTT Technical Research Centre of Finland

- Economic framework & methodology- Electrolyser economics under Finnish electricity market conditions

- Hydrogen- Electricity- Synfuels

- Electrolyser economics under German electricity market conditions- Hydrogen- Electricity- Synfuels

- AEC --> SOEC- Costs- Boundary conditions- Comparison- Time frames for deployment

- Summary

Content

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Price

Operating expense

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”BAU economics”

Operating expense

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Price

Negative electricity priceleads to negative OPEX

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Possible future OPEX curve?

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Neo-Carboneconomics?

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Finland 2013

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Hourly Elspot prices in 2013 (Finland’s area price)

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Average electricity price in Finland for selected amountof cheapest hours in 2013

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Variable costs of electrolytic H2 production(based on cheapest possible hours in Finland)

Based on following assumptions:• Finnish elspot 2013 pricing• Alkaline electrolysers having

54 % net efficiency (LHV) and750 €/kW specific investment

• Byproduct oxygen vented

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Variable + fixed costs of electrolytic H2 production(based on cheapest possible hours in Finland)




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Levelised cost of H2(based on cheapest possible hours in Finland)




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Levelised cost of H2(based on cheapest possible hours in Finland)




3.3 €/kg

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Integration to transportation in Finland

ElectrolyserElectricity H2

Synthesis Fuel for transp.CO2

= 54 % (LHV) = 83 % (LHV)


54 % net efficiency (LHV) and750 €/kW specific investment.

• Fuel synthesis having 83 % coldgas efficiency and 420 €/kW specificinvestment.

• Revenue from byproduct oxygenused to cover CO2 feedstock cost.

128 €/MWh

Germany 2013

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Hourly electricity price in Germany in circa 2013

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Finnish and German Price Duration Curves in circa 2013

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Finnish and German Reverse Price Duration Curvesin circa 2013

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Zooming on the cheapest hours of the year

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Average electricity price for selected amount ofcheapest hours in 2013

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Levelised cost of H2(based on cheapest possible hours in GER2013)

Based on following assumptions:• German electricity 2013 pricing• Alkaline electrolysers having



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2.8 €/kg

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Integration to transportation in GER2013



= 54 % (LHV) = 83 % (LHV)





110 €/MWh

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Audi e-gas plant visit• Location: Werlte, GER• Alkaline electrolysis (AEC):

• size: 6 MW• net efficiency: 54 % (LHV)

• Annual operating hours: 4000 h• Lev. cost of H2 (LCOH2): 250 €/MWh• EEG Umlage for feedstock electricity

• 63 €/MWh• contribution to LCOH2: 63/0.54

= 117 €/MWh• LCOH2 w/o EEG: 133 €/MWh

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Integration to transportation in GER2013



= 54 % (LHV) = 83 % (LHV)





Impact of electrolyser development potential

Breakdown of capital cost for 250-kW SOFC system (Fontell et al., 2004,Conceptual study of a 250 kW planar SOFC system for CHP application)

Effect of production volume on estimated direct manufacturedcost ($/kW) for stacks with planar rectangular cells.(DOE report: Conceptual study of a 250 kW planarSOFC system for CHP application, 2007)

Estimated future cost of SOEC system:200 / 0.31 * 2 = 1290 $/kW ~ 1000 €/kW

“It is expectedhowever, that the SOECstack (1/3 the cost)needs to be replacedevery 5 years, whereasmost of the systemcomponents (2/3 thecost) will last for mostof the 20 years.“(DTI report:GreenSynFuels, 2011)

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Comparison of hydrogen production costs

3.3 €/kg2.8 €/kg

1.9 €/kg

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Comparison of synfuel production costs

$145/bbl

$217/bbl$254/bbl*

*Based on 1.578 MWh/bbl,1 € = 1.33 $, 14.2 $/bbl refining margin

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When to switch from AEC to SOEC?

Specific inv. cost lower thanthis makes SOEC moreeconomic than AEC



• Solid oxide electrolysers having• 90 % net efficiency• Revenue from byproduct oxygen

used to cover CO2 feedstock cost.

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In 2013 the annual global production of photovoltaics (PV)was 38 gigawatts and the cumulative global productionwas 140 GW.

Installed PV power has grown exponentiallyat a rate of 43 percent each year since 1996,(almost doubling every two years).It is the world’s fastest-growing energy source.

Data: BP Statistical Review of World Energy 2014

World cumulative installed photovoltaic (PV) power

43 % average annualgrowth

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Possible trajectories for installed SOEC capacitybased on different levels of exponential annual increase

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Possible trajectories for installed SOEC capacitybased on different levels of exponential annual increase

Price

Required shape of thiscurve?

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Gasoline @ $100/bbl

Break-even OPEX curve

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Average electricity price needed to produceelectrolytic synfuels at $100/bbl (SOEC @ 1000 €/kW)

-380 €/MWh

Take home messages

• Negative electricity pricing currently arriving to Finland• In FIN energy markets (2013) lowest production cost achieved by

continuous operation• Negative electricity prices in German about 50 h per year

• In GER energy markets (ca 2013) lowest production costs achievedbetween 4000 to 8000 cheapest hours per year

• With an estimated future cost of SOEC system ~1000 €/kW:• Minimum H2 production cost: 1.9 €/kg• Minimum synfuels production cost: $145/bbl

• Electrolytic synfuels cheaper than gasoline ($100/bbl) when avg.annual electricity cost 16 €/MWh (SOEC @ 1000 €/kW)

• SOEC based systems become more economic than AEC afterprices drop below 2500 €/kW

• Estimated time for annual production volume of SOEC systems toreach 100 MW/a likely to take more than 13 years

NEO-CARBON ENERGY project is one of the Tekes’ strategic research openings.The project is carried out in cooperation between VTT, Lappeenranta University of Technology and University of

Turku / Futures Research Centre.

Engineering

Prospective economics of standalone electrofuels