Wärtsilä estimated costs for a representative U.S. utility as it transitions across a typical 20-year planning horizon, from moderate renewable penetration in year one to 100% in year twenty, assuming one of two pathways: carbon- free (no thermal in final year or beyond), or carbon-neutral (combustion of renewable fuels only in final year and beyond). These costs were then compared to the same utility assuming no carbon requirements and investment decisions driven purely by economics.
Carbon neutral is the least expensive pathway that satisfies the Intergovernmental Panel on Climate Change (IPCC) requirements for net zero carbon dioxide emissions by 2050. Utilizing Power-to-Gas (PtG) as a long term dispatchable storage option makes this pathway even more affordable. (PtG) technology can provide weeks to months of fuel volumes for use in existing thermal capacity. For the representative U.S. utility analyzed here, combining the stored fuel potential with thermal capacity yields what is, in effect, a massive long-duration energy storage system (955 MW by 554 hour duration). To attend to seasonal variations in wind, solar and hydro resources, as well as atypical but not unexpected periods of low renewable generation, electric utility systems need storage systems with durations in excess of 10-12 hours, and Power to Gas (PtG) technology allows for this provision in a cost optimal way relative to battery storage technology. This does not mean PtG would replace the need for batteries, rather that PtG would supplement the use of more traditional storage technologies for cost-optimal outcomes and to assure reliability. The findings reflect recent publications that reach similar conclusions, that PtG is most effective for high renewable systems (approaching 100%) and a combination of storage technologies (including PtG) yields a lower cost system than one that relies entirely on battery storage.
The use of renewable, carbon-neutral fuels is not new to the utility industry and has a long history in the form of biofuels. For example, Hawaii Electric Company (HECO) is subject to a 100% renewable mandate and envisions use of existing thermal assets burning biofuels to achieve this goal. Investment in flexible, high efficiency simple cycle capacity, such as Reciprocating Engines, combined with renewable fuels, allows for a complement to battery storage systems similar to what was illustrated with the PtG Scenario in this work. The choice of thermal plus biofuels provides firm capacity with hundreds of hours of duration acting in effect as a giant battery, offsetting the much higher cost of providing the same energy via massive overbuilds of wind, solar and traditional energy storage mechanisms such as batteries.