ECONOMICS OF GLOBAL GAS-TO-LIQUIDS (GTL) · Economics of global gas-to-liquids (GtL) fuels trading...

ECONOMICS OF GLOBAL GAS-TO-LIQUIDS (GTL)

FUELS TRADING

BASED ON HYBRID PV-WIND POWER PLANTS

Mahdi Fasihi, Dmitrii Bogdanov and Christian BreyerNeo-Carbon Energy 5th Researchers’ SeminarFebruary 15-16, 2016

Economics of global gas-to-liquids (GtL) fuels trading based on hybrid PV-Wind power plantsMahdi Fasihi [email protected]

Agenda

MotivationMethodology and DataResultsSummary


MotivationFossil fuels

• increasing demand• diminishing resources• emissions

RE available, but energy system transformation is challenging• fluctuating RE and energy storage• 100% electrification impossible for mobility sector

Power-to-Gas & Gas-to-Liquids are technologies introduced to marketsRE-diesel

• a non-diminishing resource• costs stable or declining• no costs for harmful emissions (CO2, etc.)• available infrastructure • energy storage• a step towards fuel security

Cost competitive in 2030?

UBA 2013

Usage almost impossible• aviation• shipping

Usage necessary• electric lighting


Agenda



MethodologyRE-PtG-GtL Value Chain

Key insights:• substitution of the fossil hydrocarbon

value chain by a RE basis• utilization of downstream fossil

infrastructure• integrated heating system• water recycling

Hybrid PV-Wind & Battery Power-to-Gas Gas-to-Liquids Shipping


MethodologyTwo Approaches

Annual Basis Model• Hybrid PV-Wind Plants with a fixed capacity (5 GW each)• Annual output SNG as a function of inputs power (installed capacities and FLh)• Only PV single-axis tracking and Wind are installed

Hourly basis Model• Optimized configuration of PV single-axis tracking, Wind and Battery based on an hourly

potential in a limited area for a fixed annual SNG production for the least cost constraint• Inputs (installed PV, Wind and battery capacity) as a function of FLh and annual output with

least cost

Gas-to-Liquids plant always runs on a base load


DataPlants’ Location (case study)

1) Patagonia, Argentina:• Hybrid PV-Wind Power Plant• PtG Plant• GtL Plant

2) Rotterdam, the Netherlands:

Marine distance• Patagonia – Rotterdam: 13,500 km


DataHybrid PV-Wind Power Plant Key Specification (Annual Basis Model)

PV single-axistracking Plants

• Irradiation: 2410 kWh/(m2 a)• Performance Ratio: 0.83• FLh: 2000 h• Lifetime: 35 y• Capex: 550 €/kW• Opex: 1.5% of capex p.a.• Installed capacity: 5 GWp• LCOE: 25.4 €/MWh

Wind Plant

• FLh: 5200 h• Lifetime: 25 y• Capex: 1000 €/kW• Opex: 2% of capex p.a.• Installed capacity: 5 GWp• LCOE: 20.3 €/MWh

Hybrid PV-WindPlant

• PV & Wind overlap: 5%• FLh: 6840 h• Installed capacity: 5 GWp• Capex: 7.8 bn€• LCOEnet: 22.9 €/MWh

• Lifetime: 15 y• Capex: 150 €/kWhel

• Opex: 6% of capex p.a.• Cycle efficiency: 90%

Battery


DataPower-to-Gas Key Specification

Electrolysis & Methanation

• AE* PtH2 eff. : 86.3% (HHV)• AE PtQ** eff.: 8%• Methan. H2tSNG eff.: 77.9%• Methan. H2tQ eff.: 14%• Lifetime: 30 y• Capex: 500 €/kWel• Opex: 3% of capex p.a.• Overall eff.: 67.2% (HHV)

CO2 Capture Plant

• Lifetime: 30 y• Electricity dem.: 225 kWhel/tCO2• Heat demand: 1500 kWhth/tCO2• Capex: 228 €/(tCO2 a)• Opex: 4% of capex p.a.

RO Seawater Desalination

• Lifetime: 30 y• Electricity demand: 3 kWh/m3

• Water eff.: 45%• Capex: 2.23 €/(m3 a)• Opex: 1.5% of capex p.a.

Water Storage• Lifetime: 30 y• Capex: 0.0074 €/(m3 a)• Opex: 1.5% of capex p.a.

* Alkaline Electrolyzer** Heat photo: www.climeworks.com


DataGas-to-Liquids: Key Specification

Syngas production• CPO: 2n CH4 + n O2 2n CO + 4n H2

• Side reaction: CH4 + 2 O2 CO2 + 2 H2O

• Carbon efficiency: 94% (Shell technology)• No gas treating (halved opex)• No ASU (up to 8% lower in capital cost)

Fischer-Tropsch Synthesis• FTS: n CO + 2n H2 (-CH2-)n + n H2O• Side reaction: CO + H2O CO2 + H2

• Heat loss: 22% of inlet SNG

Products upgrading• (-CH2-)n + H2 CnH2n+2

GtL overall• Capex: 68 k€/bbl• Opex: 3.5% of capex p.a.• Efficiency: 65%• Lifetime: 30 y

Shipping• Marine distance: 13,500 km• Ship DW: 100,000 ton• Speed: 14 knots

Diesel; 60%

Jet fuel/kerosene; 25%

Naphtha; 15%

1 barrel of GtL products (vol%)


Agenda



Reminder!RE-PtG-GtL Value Chain

How would the energy and mass balance of this system be?


ResultsRE-PtG-LNG Value Chain Energy & Mass Balance (Sankey Diagram)

System integration benefits:• 100% of oxygen demand supplied by electrolyzer (elimination of Air Separation Unit)• 87% of energy demand for CO2 capture plant supplied by excess heat• 70% of electrolyzer’s water demand supplied by methanation and FT process output

*LT: low temperature**HT: high temperature

Heat exchanger eff.: 90%PtG eff.: 65.4%GtL eff.: 65%Heat loss: 14%

Electrolyzer, the main electricity consumerOxygen available for GtLplant and potential market

Overall efficiency: 42.5%


ResultsCost Distribution in RE-PtG-GtL Value Chain

LCOG (7% WACC):• 53.3 €/MWhth

• 20.9 USD/MMBtu• 121 USD/bbl

LCOG (5% WACC):• 45.5 €/MWhth

• 17.8 USD/MMBtu• 103 USD/bbl

LCOF (7% WACC):• 100 €/MWhth

• 39.1 USD/MMBtu• 227 USD/bbl• 0.97 €/l FT-diesel

LCOF (5% WACC):• 85.9 €/MWhth

• 33.6 USD/MMBtu• 195 USD/bbl• 0.83 €/l FT-diesel

• USD/€ = 1.35


ResultsCapital expenditures for the RE-SNG-LNG value chain

• main capex parts are the hybrid PV-Wind, PtG and the GtL plant• capex of 13.3 bn€, generate annually 9.6 million barrel GtL products available in EU• PtG and GtL stand for only 18 and 14% of capital expenditures, but 30.4 and 45.6% of final

production cost, respectively.


ResultsFinal Cost and Market Potential

30

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100

110

40 60 80 100 120 140 160 180 200

Cost

[€/M

Wht

h]

Crude oil price [USD/bbl]

RE-diesel cost and conventional diesel price in the European UnionConventional diesel price (no CO2 emission cost)

Conventional diesel price (+ 25 €/t CO2 emission cost)

Conventional diesel price (+ 50 €/t CO2 emission cost)

RE-diesel cost (7% WACC + no O2 benefit)

RE-diesel cost (7% WACC + 15 €/t O2 benefit)


RE-diesel cost (5% WACC + no O2 benefit)



The first breakeven can be expected for a produced RE-diesel with a WACC of 5% and anO2 benefit of 30 €/tCO2 and a conventional diesel price with CO2 emission cost of 50 €/tCO2and a crude oil price of 121 USD/bbl.

A realistic breakeven is expected for the crude oil prices between 130-180 USD/bbl.

CO2 emission cost:• Diesel CO2 emission: 74 tCO2/TJ• 0-50 €/tCO2

• 0-30 USD/bblO2 profit:• O2 market price: up to 80 €/tO2

• Our most optimistic scenario: 30 €/tO2

• Diesel cost in EU: 119% of Brent crudeoil price


ResultsSensitivity Analysis

The four most relevant RE-diesel LCOF influencing factors are:• Hybrid PV-Wind FLh• Electrolyzer efficiency• WACC• Hybrid PV-Wind capexThe RE-PtG-GtL value chain needs to be located at the bestcomplementary solar and wind sites in the world, combined with ade-risking strategy and a special focus on mid to long termelectrolyzer efficiency improvements.

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0.90 1.00 1.10

Rela

tive

cost

of R

E-di

esel

(%)

Change in input

Geographical changes

hyb PV-Wind FLh

overlap

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0.90 1.00 1.10

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cost

of R

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(%)

Change in input

Plants' energy efficiency

GtL eff.

electrolyzer eff.

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0.90 1.00 1.10

Rela

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cost

of R

E-di

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(%)

Change in input

Economic changes

hyb PV-Wind capex

elect.+methan capex

CO2 capex

GTL capex

WACC

Lifetime


ResultsHourly Basis Analysis: full load hours

• wind FLh are much higher than PVFLh due to 24h harvesting

• high FLh of hybrid PV-Wind plantsresult in cheaper downstreamprocesses such as PtG

• sites of high hybrid PV-Wind FLhare distributed across the world


ResultsHourly Basis Analysis: LCOE and LCOG

• top sites in the world reach hybridPV-Wind LCOE of 20 – 25 €/MWh

• Patagonia shows one of the bestconfigurations in the world

• SNG cost, as a function of hybridPV-Wind FLh, availability of cleanwater and low overlap


ResultsHourly Basis Analysis: optimized hybrid PV-Wind configuration

• least cost combination of PV andWind for hybrid PV-Wind assumed

• maximum 10% of the land can beused for each PV and Wind

• Wind is the dominating part in mostregions, as it reaches to the 10%limit faster

• cost optimized system generationpotential is 25% of generationpotential

• production sites in most cases nearcoast, thus optimized logistics

• global natural gas production in2014 of 36,000 TWh,gas


ResultsHourly Basis Analysis: RE-SNG industrial cost curves

• about 1,000 TWhgas potential for cost lessthan 65 €/MWhgas (25.4 USD/MMBtu)

• potential of 16,000 TWhgas for cost less then100 €/MWh,gas (39 USD/MMBtu)

• thus, potential of 25,600 TWhel RE generation

• RE-SNG production cost between 50-110 €/MWhgas

• RE-SNG may set an upper limit for fossil fuel prices• WACC 7%


ResultsHourly Basis Analysis: RE-PtG-GtL industrial cost curves

• about 1,000 TWhfuel potential for cost less than 120€/MWhfuel (47 USD/MMBtu, or 1.16 €/l of diesel)

• potential of 10,000 TWhfuel for cost less then 170€/MWhfuel (66.5 USD/MMBtu , or 1.64 €/l of diesel)

• RE-fuels production cost between 100-190 €/MWhfuel

• RE-fuels may set an upper limit for fossil fuel prices

• WACC 7%

Potential of 6,000 TWhdiesel (diesel represents 60% of GtL products),equal to of global diesel demand in 2030


Agenda



Summary• The idea is to use hybrid PV-Wind power plants’ power to produce RE-SNG and then RE-diesel.

• Refinery products downstream value chain can be used.

• RE-diesel is a non-diminishing fossil CO2 free fuel, which will insure both fuel security andenvironmental issues.

• The cost of delivered RE-diesel in Rotterdam is equivalent to 121 to 191 USD/bbl (20.9 – 32.9USD/MMBtu, 0.81 – 1.06 €/l conv. diesel, depending on assumptions for WACC, CO2 cost and O2 benefit.

• For a Brent crude oil price more than 121 USD/bbl and CO2 emission cost of 50 €/tCO2, and O2 benefit of30 €/tO2 RE-diesel is competitive to fossil diesel price in EU.

• This would be an upper limit for the fossil diesel price in the long-term.

• The by-products of the RE-PtG-GtL value chain can play a significant role in some regional cases

• Excess heat utilization can significantly increase the overall efficiency and would decrease the costs

• Substitution of fossil fuels by hybrid PV-Wind power plants could create a PV-wind market potential inthe order of terawatts.

Thank you for your attention!

NEO-CARBON Energy project is one of the Tekes strategy research openingsand the project is carried out in cooperation with Technical Research Centre of Finland VTT Ltd, Lappeenranta University of Technology (LUT) and University

of Turku, Finland Futures Research Centre.

Please check next slides for an overview of all data, assumptions and references.


Supplementary materialBackup: Plants' Annual Production & Consumption

Plants' AnnualProduction & Consumption Unit Amount

Hyb PV-Wind, generation [TWh,el] 36.00Hyb PV-Wind, used [TWh,el] 34.20Clean water production [mio m3] 1.96CO2 production & consumption [mio ton] 3.98SNG production & consumption [GWh,gas] 22 383SNG production & consumption [mio m3] 2 172SNG production & consumption [mio ton] 1.45O2 production [mio ton] 5.79O2 consumption [mio ton] 1.45Diesel production [bbl] 5 722 700Jet fuel/ Kerosene production [bbl] 2 384 500Naphtha production [bbl] 1 430 700


ResultsHourly Basis Analysis: ratio of PV and Wind, excess generation (cost optimized)

• balance between Wind and PV inmost regions

• PV is the dominating part in Atacamadesert and West Tibet

• wind is the dominating part inPatagonia

• very low excess in Patagonia• higher excess in other areas can be

reduced in a full energy systemintegration


ResultsHourly Basis Analysis: generation potential

• hybrid system potential is thesum of wind and PVgeneration potential

• generation potential of about120,000 TWhel indicates ahigh RE-SNG supply potential

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ECONOMICS OF GLOBAL GAS-TO-LIQUIDS (GTL) · Economics of global gas-to-liquids (GtL) fuels trading...

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