Economic analysis with respect to Power-to-Gas energy storage with consideration of various market mechanisms

Abstract Power-to-Gas systems provide a versatile and effective form of energy storage. By utilizing renewable and off-peak electricity to create hydrogen through electrolysis, an alternative energy vector is created which can be utilized for grid management and energy transportation through the natural gas infrastructure. The rapid response of electrolysers has been proven to be able to match fluctuating demand signals means that they are not only useful for creating hydrogen for energy storage but can also provide important ancillary power services. As the largest market for hydrogen current is in the refining of petroleum, it makes sense that creating hydrogen through electrolysis provides an opportunity to purchase electricity at low cost while reducing the greenhouse gas emissions that would result from using the current steam methane reformation (SMR) approach for the production of the needed hydrogen. It is shown through MatLAB simulations that by using known electrical costs and hydrogen pricing or credit rates, reasonable payback periods and internal rates of return are attainable when the cost value of the hydrogen energy is compared to renewable ethanol costs, or when the production of the hydrogen considers cap-and-trade carbon emissions revenues.