Optimizing hydrogen and e-methanol production through Power-to-X integration in biogas plants (2406.00442v1)

Abstract: The European Union strategy for net zero emissions relies on developing hydrogen and electro fuels infrastructure. These fuels will be crucial as energy carriers and balancing agents for renewable energy variability. Large scale production requires more renewable capacity, and various Power to X (PtX) concepts are emerging in renewable rich countries. However, sourcing renewable carbon to scale carbon based electro fuels is a significant challenge. This study explores a PtX hub that sources renewable CO2 from biogas plants, integrating renewable energy, hydrogen production, and methanol synthesis on site. This concept creates an internal market for energy and materials, interfacing with the external energy system. The size and operation of the PtX hub were optimized, considering integration with local energy systems and a potential hydrogen grid. The levelized costs of hydrogen and methanol were estimated for a 2030 start, considering new legislation on renewable fuels of non biological origin (RFNBOs). Our results show the PtX hub can rely mainly on on site renewable energy, selling excess electricity to the grid. A local hydrogen grid connection improves operations, and the behind the meter market lowers energy prices, buffering against market variability. We found methanol costs could be below 650 euros per ton and hydrogen production costs below 3 euros per kg, with standalone methanol plants costing 23 per cent more. The CO2 recovery to methanol production ratio is crucial, with over 90 per cent recovery requiring significant investment in CO2 and H2 storage. Overall, our findings support planning PtX infrastructures integrated with the agricultural sector as a cost effective way to access renewable carbon.

• The paper employs a linear optimization model (PyPSA) to co-optimize capacities and hourly operations, achieving lower production costs for hydrogen and methanol.
• The study demonstrates a 23% cost reduction in methanol production when using a hydrogen grid connection, highlighting the economic benefits of PtX integration.
• The research assesses how renewable energy variability, EU regulations, and add-on technologies like district heating and biochar credits influence optimal system design and internal market pricing.

This paper (2406.00442) investigates the techno-economic viability and optimal configuration of integrating Power-to-X (PtX) technologies, specifically hydrogen and e-methanol production, with modern biogas plants. The core motivation is to leverage the biogenic CO2 captured from biogas upgrading as a renewable carbon source for e-fuels, addressing a key challenge in scaling up carbon-based e-fuel production within the European Union's net-zero targets. The paper focuses on a conceptual PtX hub based on the GreenLab Skive industrial symbiosis park in Denmark, modeling an integrated site where renewable energy generation, hydrogen production, and methanol synthesis operate alongside the biogas plant.

The research aims to answer critical questions for practical implementation: estimating production costs for hydrogen and e-methanol in the integrated hub compared to standalone plants; identifying the optimal size and operation of the PtX components considering external energy prices, CO2 taxes, and the biogas plant's capacity; determining fair internal trading prices for energy and materials within the hub; and assessing the impact of add-on technologies like district heating connection or pyrolysis with biochar storage. A key methodological approach is the co-optimization of the size and hourly operation of all plants in the hub using a linear optimization model (PyPSA), allowing the capture of the impact of renewable energy variability and the European legal framework for Renewable Fuels of Non-Biological Origin (RFNBOs).

The EU legal framework, particularly the Renewable Energy Directive (RED II) and RFNBO regulations, significantly impacts implementation. Key principles include additionality (new renewable energy capacity for PtX), temporal correlation (matching renewable electricity generation and PtX operation, moving towards hourly matching post-2030), and geographic correlation (co-location of renewables and PtX). These rules require careful consideration in system design and operation to ensure compliance and benefit from incentives. The paper models the 2030 RFNBO rules, which allow monthly temporal matching initially but restrict grid electricity use to hours with low spot prices (below 20 €/MWh). Increasing CO2 taxes on fossil fuels are also modeled as a factor influencing competitiveness.

The modeled PtX hub includes various integrated components:

• Biogas Plant: A fixed-capacity plant providing biogenic CO2 (from amine scrubbing) and potentially digestate fibers for pyrolysis. Its standard operation costs are considered sunk.
• Renewables: On-site or nearby onshore wind and solar PV generation provides renewable electricity.
• H2 Production: Alkaline electrolysis produces hydrogen using renewable electricity, with potential excess heat recovery. Modeled with different investment costs for large (100 MW) and small (10 MW) scale plants.
• e-Methanol Synthesis: Direct CO2 hydrogenation process converting hydrogen and biogenic CO2 into methanol. The model includes CO2 and H2 compression and short-term storage components. The process is not highly flexible to intermittent operation, necessitating storage or connection to a stable H2 source.
• Central Heating: Technologies like natural gas boilers, electric boilers, biomass boilers, and pyrolysis (SkyClean) provide heat to internal networks at different temperature levels. Pyrolysis of digestate fibers or straw produces biochar for carbon storage and heat.
• Symbiosis Net: Infrastructure enabling internal trading (cables, pipes), intermediate storage (Li-ion batteries, thermal energy storage), and interfaces with external grids (electricity, NG, DH, biochar credits).

The optimization model, implemented in PyPSA, determines the optimal capacities and hourly power/material flows for all these components to minimize the total annualized system cost while meeting annual demands for H2 and/or MeOH. It considers investment costs, fixed and variable O&M costs, lifetimes, discount rates, and exogenous prices/tariffs for external grid interactions, including CO2 taxes and potential revenues from selling excess renewable electricity, district heating, or biochar credits. The shadow prices (KKT multipliers) from the optimization represent the marginal cost of energy carriers within the hub, indicating internal market equilibrium prices.

Key Results and Practical Implications:

1. Production Costs:
   • Integrating the PtX hub with a potential H2 grid connection ("H2 to Grid" scenario) results in estimated H2 production costs of 87-92 €/MWh (equivalent to around 2.6-2.8 €/kg H2) and e-methanol costs of 111-114 €/MWh (around 580-600 €/t MeOH).
   • A standalone e-methanol plant without H2 grid connection ("MeOH standalone" scenario) has significantly higher costs: 135-142 €/MWh for MeOH (around 710-750 €/t MeOH) and 107-111 €/MWh for the internally produced H2. This represents a 23% higher cost for methanol compared to the integrated "H2 to Grid" case.
   • These costs are competitive with the estimated CO2 tax required for fossil methanol to reach similar market prices (€180/tCO2 for 360 €/t fossil MeOH).
   • Higher CO2 recovery rates (above 90%) from the biogas plant increase MeOH costs, especially in standalone plants, due to increased storage requirements for H2 and CO2.
2. Behind-the-Meter Market:
   • The integrated PtX hub creates a behind-the-meter market that effectively shields internal energy and material prices from the high variability of external grids, particularly under RFNBO regulations.
   • Internal electricity and heat prices are lower and more stable, beneficial for all stakeholders in the industrial symbiosis.
   • The biogas plant benefits from lower heat and electricity costs within the hub, potentially reducing its biomethane production cost.
3. Optimal System Design:
   • H2 to Grid: Optimal design favors larger renewables (230-380 MW wind, 40-150 MW solar) and a large electrolyzer (125-145 MWel) to meet the H2 grid demand and capitalize on RE sales. Methanol production (around 8 MWmeoh) is smoother and requires less storage due to the connection to the larger H2 source. Li-ion batteries (10-15 MWh) provide internal electricity balancing. Heat demand is mostly met by internal heat integration.
   • MeOH Standalone: Optimal design involves smaller renewables (50-75 MW wind, 25-45 MW solar) sized primarily for the methanol plant's needs. It requires significant H2 (70-110 MWh) and CO2 (200-350 tons) storage capacity and a larger methanol plant (12.5-15.5 MWmeoh) to handle intermittent renewable supply. Higher RE sales can still be beneficial, increasing capacities for flexibility, especially with high external energy prices. Low-pressure CO2 gains value (25-40 €/ton) as it becomes a limiting resource.
   • Impact of External Prices & RE Sales: High external energy prices (like 2022) incentivize larger renewable capacity installations to maximize profitable RE sales to the grid. This significantly reduces the total system cost and can even make the PtX hub profitable from RE sales alone. The optimal design shifts to prioritize flexibility for RE export. Low energy prices (like 2019) lead to systems sized primarily for PtX production, with RE sales less impactful on profitability.
4. Add-on Technologies:
   • Enabling District Heating sales can increase revenues and slightly influence system design (more renewables, heat pumps) and operation, especially in the MeOH standalone case where it adds flexibility. It increases internal heat prices due to the opportunity cost of selling heat externally.
   • Biochar credits (from pyrolysis) incentivize installing the SkyClean pyrolysis plant. Its capacity is limited by the internal heat demand it can satisfy. Biochar revenue is tied to the CO2 tax value.

Implementation Considerations:

• The model uses hourly resolution data for renewable availability, demands, and external market prices, which is crucial for capturing the temporal correlation requirements of RFNBOs and optimizing storage needs. Implementing such systems in reality requires sophisticated control systems capable of responding to these dynamic signals.
• The specific cost assumptions for 2030 from the Danish Energy Agency are critical inputs. Real-world implementation requires careful forecasting and securing financing based on projected technology costs and market conditions.
• The "Symbiosis Net" concept highlights the need for shared infrastructure (pipes, cables, potentially storage) and agreements for behind-the-meter trading between different plants within the hub. This requires significant coordination and investment in site-specific infrastructure.
• The choice between the "H2 to Grid" and "MeOH standalone" configurations depends heavily on the availability of hydrogen grid connections and local demand for hydrogen vs. methanol. The H2 grid connection simplifies the MeOH plant design and reduces costs by providing a stable H2 supply and a large off-taker for excess H2.
• Implementing higher CO2 recovery rates necessitates substantial investment in CO2 and H2 storage and compression, increasing system complexity and cost. A trade-off exists between maximizing CO2 utilization and minimizing production costs, especially for standalone MeOH plants.
• The model assumes foresight (perfect knowledge of future prices and renewable availability). Real-world operation requires forecasting and control strategies to manage uncertainty and optimize storage dispatch and grid interaction.

Overall, the paper provides strong support for planning PtX infrastructure integrated with agricultural biogas plants as a cost-effective pathway to access renewable carbon resources and produce competitive renewable fuels, particularly when coupled with opportunities like hydrogen grid connections and renewable electricity sales. The PyPSA model and the data provided (available on GitHub) serve as a valuable basis for further detailed techno-economic studies and system design for similar PtX projects.