Navigant Research forecasts that the transportation segment, with hydrogen demand as a catalyst, will jump-start power-to-gas (P2G) demand and further drive down electrolyzer and other infrastructure costs.
P2G—the conversion of electrical power into gaseous energy carriers—has been held back from mass adoption by high costs, regulatory hurdles, and difficulties with infrastructure. However, Navigant suggests, as the levelized cost of renewable energy falls and as electrolyzer technologies improve and decline in price, P2G business models are taking shape.
Navigant notes that P2G offers benefits to the electric grid through the integration of renewable energy sources. By ramping production up or down from a 50% setpoint, a P2G plant can emulate a load or generator from the grid’s perspective—thus ramping and smoothing renewables power output and time-shifting energy supply on a scale from hours to months.
P2G business models are reaching an inflection point, thanks to improving electrolyzer technology and falling capital costs among renewables like PV and wind. With hydrogen demand from the transportation sector as a catalyst, P2G is forecast to take off since it can both provide high-value clean fuels and support the electric grid with flexible operation—on timescales from seconds to months.—Adam Forni, senior research analyst with Navigant Research
As costs fall, Navigant expects growth in the non-transport segments, creating opportunities for a variety of market players. According to the report, Power-to-Gas for Renewables Integration, electrolyzer vendors scaling up operations should seek partnerships with a ranges of companies from renewable energy developers to software storage companies.
Navigant also suggests that renewables developers should consider P2G on any project of sufficient scale, and gas utilities should consider what it means that hydrogen could be the fuel of the low carbon future. Meanwhile, electric utilities and grid operators should recognize the value electrolyzers can provide to the grid.