RENEWABLE ENERGY BASED SYNTHETIC FUELS FOR A NET ZERO EMISSIONS WORLD

Transcription

1 RENEWABLE ENERGY BASED SYNTHETIC FUELS FOR A NET ZERO EMISSIONS WORLD Mahdi Fasihi, Dmitrii Bogdanov and Christian Breyer Neo-Carbon Energy 6 th Researchers Seminar Lappeenranta, August 29-30, 2016

2 Agenda Motivation Methodology and Data Results (Annual Basis Model) Results (Hourly Model) Summary 2

3 Motivation Fossil fuels increasing demand diminishing resources emissions Global warming, COP21 and national targets to keep global temperatures "well below" 2º C above pre-industrial times "endeavor to limit" them even more, to 1.5º C emissions under a sustainable level RE available, but energy system transformation is challenging fluctuating RE and energy storage 100% direct electrification impossible for mobility sector Usage almost impossible aviation shipping Usage necessary electric lighting UBA

4 Motivation Power-to-Gas an emerging technology LNG and Gas-to-Liquids in commercial phase Power-to-Liquids technology ready for market RE-SNG or RE-diesel non-diminishing resources costs stable or declining no costs for harmful emissions (CO 2, etc.) drop in fuels for available infrastructure energy storage a step towards fuel security Cost competitive in 2030 and 2040? Global generation potential? 4

5 Agenda Motivation Methodology and Data Results (Annual Basis Model) Results (Hourly Model) Summary 5

6 Methodology RE-PtG-LNG Value Chain Key insights: Substitution of the fossil hydrocarbon value chain by a RE basis Utilization of downstream fossil infrastructure Integrated heating system Water recycling Hybrid PV-Wind & Battery Power-to-Gas SNG Liquefaction LNG Shipping LNG Regasification 6

7 Methodology RE-PtG-GtL Value Chain Key insights: substitution of the fossil hydrocarbon value chain by a RE basis utilization of downstream fossil infrastructure integrated heating system water recycling Dashed lines represent fluctuating flows Continuous lines represent steady flows 1 barrel of GtL products (vol%) Naphtha; 15% Jet fuel/kerosene; 25% Hybrid PV-Wind & Battery Power-to-Gas Gas-to-Liquids Diesel; 60% 7

8 Methodology RE-PtL Value Chain Key insights: substitution of the fossil hydrocarbon upstream value chain by a RE basis utilization of downstream fossil infrastructure integrated heating system water recycling 1 barrel of PtL products (vol%) Hybrid PV-Wind & Battery Power-to-Liquids Naphtha; 15% Jet fuel/kerosene; 25% Dashed lines represent fluctuating flows Continuous lines represent steady flows Diesel; 60% 8

9 Methodology Two Approaches Annual Basis Model Hybrid PV-Wind Plants with a fixed capacity (5 GW each) Annual output fuel as a function of inputs power (installed capacities and FLh) Only PV single-axis tracking and Wind are installed Hourly basis Model Optimised configuration of PV fixed tilted and single-axis tracking, Wind, Methanation and Battery based on an hourly potential in a limited area for the least cost fuel production Inputs (installed PV, Wind and battery capacity) as a function of FLh and annual output with least cost Liquefaction, GtL and Hydrogen-to-Liquids plants always run on base load 9

10 Data Plants Location (case study) 1) Patagonia, Argentina: Hybrid PV-Wind Power Plant CO 2 capture Plant Desalination Plant PtX Plants 2) Japan as the target market for RE-LNG Regasification Plant Marine distance Patagonia Rotterdam: 17,500 km 3) EU as the target market for RE-diesel Marine distance Patagonia Rotterdam: 13,500 km 10

11 Agenda Motivation Methodology and Data Results (Annual Basis Model) Results (Hourly Model) Summary 11

12 RE-PtG-LNG Value Chain Energy Flow & Mass Balance System integration benefits: 87% of energy needed for CO 2 capture plant is coming from excess heat 48% of electrolyser s water demand coming out of methanation Heat exchanger eff.: 90% LNG value chain eff.: 89% Electrolyser, the main electricity consumer Oxygen available for potential market Overall efficiency: 58% *LT: low temperature **HT: high temperature 12

13 RE-PtG-GtL Value Chain Energy Flow & Mass Balance Heat exchanger eff.: 90% PtG eff.: 65.4% GtL eff.: 65% Heat loss: 14% *LT: low temperature **HT: high temperature Electrolyser, the main electricity consumer Oxygen available for GtL plant and potential market Overall efficiency: 42.5% 13 System integration benefits: 100% of oxygen demand supplied by electrolyser (elimination of Air Separation Unit) 87% of energy demand for CO 2 capture plant supplied by excess heat 70% of electrolyser s water demand supplied by methanation and FT process output

14 RE-PtL Value Chain Energy Flow & Mass Balance Electrolyser, the main electricity consumer FT the main source of energy for the CO 2 capture plant Oxygen available for potential market 87% of energy demand supplied by excess heat H 2 tl eff.: 71.8 % Heat exchanger eff.: 90% Heat loss: 4.2% 63% of water demand supplied by RWGS and FT process output Overall efficiency: 57.5% 14

15 Cost Distribution in RE-PtX Value Chains for Cost Year 2030 (7% WACC) 1.21 /l FT_diesel 0.86 /l FT_diesel USD/MMBtu 15 PtG-GtL is more expensive than PtL for the same final product, thus it will not be further discussed.

16 Final Cost and Breakeven in 2030 LNG price in Japan: 102% of Brent crude oil price. (Regasification cost has been added) Diesel cost in EU: 119% of Brent crude oil price CO 2 emission cost: RE-diesel reach the fuel parity sooner than RE-SNG, even with higher production cost The first breakeven can be expected for a produced RE-diesel with a WACC of 5% and an O 2 benefit of 20 /t O2 and a conventional diesel price with CO 2 emission cost of 50 /t CO2 and a crude oil price of 80 USD/bbl in 2030 and 65 USD/bbl in /t CO2 NG CO 2 emission: 56 t CO2 /TJ Diesel CO 2 emission: 74 t CO2 /TJ O 2 profit: O 2 market price: up to 80 /t O2 Our most optimistic scenario: 20 /t O2 A realistic breakeven is expected for the crude oil prices between USD/bbl in 2030 and USD/bbl in

17 Final Cost and Breakeven in 2040 LNG price in Japan: 102% of Brent crude oil price. (Regasification cost has been added) Diesel cost in EU: 119% of Brent crude oil price CO 2 emission cost: RE-diesel reach the fuel parity sooner than RE-SNG, even with higher production cost The first breakeven can be expected for a produced RE-diesel with a WACC of 5% and an O 2 benefit of 20 /t O2 and a conventional diesel price with CO 2 emission cost of 50 /t CO2 and a crude oil price of 80 USD/bbl in 2030 and 65 USD/bbl in /t CO2 NG CO 2 emission: 56 t CO2 /TJ Diesel CO 2 emission: 74 t CO2 /TJ O 2 profit: O 2 market price: up to 80 /t O2 Our most optimistic scenario: 20 /t O2 A realistic breakeven is expected for the crude oil prices between USD/bbl in 2030 and USD/bbl in

18 Agenda Motivation Methodology and Data Results (Annual Basis Model) Results (Hourly Model) Summary 18

19 Hourly Basis Analysis: LCOE sites of high FLh of PV or Wind plants have the lowest LCOE LCOE of PV single-axis tracking is about 4 /MWh cheaper than LCOE of PV fixed tilted, and even more relevant more FLh (20-30%) on a least cost basis sharper cost reduction for PV than for wind electricity from 2030 to

20 Hourly Basis Analysis: LCOE for cost-optimised PtX systems optimal combination of PV and Wind for hybrid PV-Wind plants to achieve an optimal combination of LCOE and FLh for downstream PtX plants share of PV increases significantly from 2030 to 2040 and will become the dominating technology in the Americas, Africa, Asia and Oceania, finally in almost all regions within 45ºN/S around the equator top sites in the world reach hybrid PV-Wind LCOE of /MWh in 2030 and /MWh in 2040 top sites in the world can deliver electricity to coast at a cost of about 30 /MWh in 2030 and 25 /MWh in 2040 the extra cost is due to power transmission line and batteries cost, efficiency loss and excess electricity curtailments electricity generation and transmission for PtL system follows similar pattern, with small differences 21

21 Hourly Basis Analysis: Sources of additional LCOE for PtL in 2030 delivered electricity cost as a function of LCOE, excess electricity (including overlap), distance to the shore, and electricity storage options installation (battery and gas turbine) electricity storage mainly in PV dominated regions excess electricity due to overlap and curtailments (to optimize the capacity of transmission lines and PtX plants) distance to coast and consequently electricity transmission cost are determinative factors which can kill an exporting case 22

22 Hourly Basis Analysis: The role of batteries from 2030 to 2040 batteries are mainly installed in regions far from coast such as central part of continents, or regions with a high share of PV in Africa, the installed capacity of batteries would be up to 60% of installed capacity of hybrid PV-wind plant by strong increasing relevance of battery technology from 2030 to

23 Hourly Basis Analysis: LCOF LCOF as a function of LCOE and FLh of plants components in 2030, top sites in the world reach LCOF of /MWh ( /l for diesel and USD/MMBtu for SNG) in 2040, top sites in the world reach LCOF of /MWh ( /l for diesel and USD/MMBtu for SNG) LNG value chain adds /MWh to delivered SNG cost regions not so far from coast are generally a better place due to lower electricity transmission cost more regions with attractive production cost in

24 Hourly Basis Analysis: Optimal hybrid PV-Wind generation potential maximum 10% of the land allowed to be used for PV and Wind each optimal combination of PV and Wind for hybrid PV-Wind plants to achieve an optimal combination of LCOE and FLh for downstream PtX plants regions with high share of wind have lower generation potential as they reach the 10% limit faster optimal electricity generation potential for PtL systems in 2030 is 5% higher, due to higher share of PV optimal electricity generation potential for 2040 is % higher, due to higher share of PV 25

25 Hourly Basis Analysis: Storage options for PtL in 2030 & 2040 in 2040 electricity stored in batteries will become 3.6 times more than % and 15% of electricity generation would be stored in batteries in 2030 and 2040 respectively, globally the total stored hydrogen would remain almost the same, although hydrogen production increases RE generation deficits for the RWGS covered by gas turbine decreases 4 times, as the batteries will have a bigger role in the system 26

26 Hourly Basis Analysis: Optimised PtG and PtL production potential potential of about 432,000 TWh SNG and 405,000 TWh liquid fuels in 2030 globally 25-30% increase in fuel production potential from 2030 to % and 12% more PtG production potential than PtL in 2030 and 2040 Middle East and Africa have the largest share of fuel production potential and Europe the lowest 27

27 Hourly Basis Analysis: Optimised PtG production potential potential of about 50,000 TWh SNG for cost less than 100 /MWh fuel (39.1 USD/MMBtu) in 2030 potential of about 240,000 TWh SNG for the same cost level in 2040 and 50,000 TWh SNG for less than 80 /MWh fuel (31.3 USD/MMBtu) 28

28 Hourly Basis Analysis: Optimised PtL production potential Global diesel jet fuel demand demand 2030 Global diesel demand 2040 potential of about 80,000 TWh liquid fuels for cost less than 100 /MWh liquid fuel (0.97 /l diesel ) in 2030 from that about 48,000 TWh diesel and 20,000 TWh jet fuel but global diesel demand in 2030 would be about 20,000 TWh diesel, and for that generation of 33,000 TWh liquid fuels is required. thus global diesel demand can be met at costs less than 93 /MWh diesel (0.87 /l diesel ) expected 2040 demand (21,000 TWh diesel ) could be met at costs less than 78 /MWh diesel (0.75 /l diesel ) however, how realistic is that diesel demand in a highly electrified energy system? 29

29 Agenda Motivation Methodology and Data Results (Annual Basis Model) Results (Hourly Model) Summary 30

30 Summary The idea is to use hybrid PV-Wind electricity to produce RE-SNG and RE-diesel in the best sites in the world for export. LNG value chain and refinery products downstream value chain can be used. RE-SNG and RE-diesel are non-diminishing fossil CO 2 free fuels, which will insure both fuel security and environmental issues. In the best scenario, for a Brent crude oil price more than 80 USD/bbl in 2030 and 65 USD/bbl in 2040 and CO 2 emission cost of 50 /t CO2, and O 2 benefit of 20 /t O2 RE-diesel is competitive to fossil diesel prices in EU. This would be a business opportunity whenever crude oil price is higher than mentioned level. The by-products of the RE-PtX value chain can play a significant role in case of application. The role of solar PV and battery increases substantially from 2030 to 2040 due to further declining costs Thank you for your attention! 31

31 NEO-CARBON Energy project is one of the Tekes strategy research openings and the project is carried out in cooperation with Technical Research Centre of Finland VTT Ltd, Lappeenranta University of Technology (LUT) and University of Turku, Finland Futures Research Centre.