The role of power-to-gas in the future energy system: Market and portfolio effects

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Title: The role of power-to-gas in the future energy system: Market and portfolio effects
Authors: Lynch, Muireann Á.Devine, Mel T.Bertsch, Valentin
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Date: 15-Oct-2019
Online since: 2019-08-12T08:25:12Z
Abstract: Electricity systems based on renewables have an increasing demand for flexibility. This paper considers the potential of power-to-gas to provide flexibility and enhance system integration of renewables. Existing research on power-to-gas typically analyses the system effects of a predetermined power-to-gas unit without endogenising the investment decision. Moreover, insights related to market and portfolio effects of power-to-gas are rare. To this end this work presents a stochastic electricity market model. Market players considered include generating firms with different generation portfolios and different consumer groups. Firms earn revenues from an energy market, a capacity market and a feed-in premium for renewable generation. They maximise their profits by optimising the operation of existing assets and investing in new generation assets and power-to-gas. Firms with renewable generation benefit from investing in power-to-gas. While the technology itself is loss-making, power-to-gas particularly increases demand and hence prices in low-load hours. Therefore, renewable generation becomes more profitable, which justifies the investment. Metrics such as LCOE, which consider each technology in isolation, fail to capture this effect. The increase in the electricity price results in higher costs to consumers and so the overall transfer from consumers to wind generators increases in the presence of power-to-gas.
Type of material: Journal Article
Publisher: Elsevier BV
Journal: Energy
Volume: 185
Start page: 1197
End page: 1209
Copyright (published version): 2019 Elsevier
Keywords: ElectricityWind energyPower-to-gasStochastic market modellingPortfolio effects
DOI: 10.1016/
Language: en
Status of Item: Peer reviewed
Appears in Collections:Electrical and Electronic Engineering Research Collection
Energy Institute Research Collection

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