Economic Feasibility of Pipe Storage and Underground Reservoir Storage Options for Power-to-Gas Load Balancing

This paper investigates the economic feasibility of Power-to-Gas (P2G) systems and gas storage options for both H2 and renewable methane. The study is based on a model-based analysis using the net present value (NPV) method, as well as Monte Carlo simulation for taking fuel and electricity price risks into account. We study three investment cases: a Base Case where the gas is directly sold, a Variant A where temporal arbitrage opportunities between the electricity and gas market are exploited, and a Variant B where the balancing markets (secondary reserve market for electricity, external balancing market for natural gas) are addressed. Centralized and decentralized storage facilities are compared with each other and the optimal type and size determined. In a detailed sensitivity analysis and cost analysis we identify the key factors which could potentially improve the economic viability of the concepts assessed.
We find that P2G for bridging the balancing markets for power and gas cannot be operated profitably. For both temporal arbitrage and balancing energy, pipe storage is preferred. Relatively high feed-in tariffs (100 € MW-1 for H2, 130 € MW-1 for methane) are required to render pipe storage for P2G economically viable.