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THE ECONOMICS OF LNG SUPPLY...THE ECONOMICS OF LNG SUPPLY BASED ON HYBRID PV-WIND POWER PLANTS Mahdi...

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THE ECONOMICS OF LNG SUPPLY

BASED ON HYBRID PV-WIND

POWER PLANTS

Mahdi Fasihi and Christian BreyerNeo-Carbon Energy 2nd Researchers’ SeminarLappeenranta, 16.03.2015

First insights on economics of global PtG based LNG trading in 2030

NEO-CARBON ENERGY 2nd Researchers’ SeminarMahdi Fasihi [email protected]

Agenda

MotivationMethodology and DataResultsFurther StudySummary

NEO-CARBON ENERGY 2nd Researchers’ SeminarMahdi Fasihi [email protected]

Motivation

Natural Gas proved reserves 2013Data source: BP Statistical Review June 2014

LNG is a solution for NG transportation in long distances

RE-LNG• A non-diminishing reserve• Fixed cost• No Pollution• No Carbon emission cost• A step toward fuel security

NEO-CARBON ENERGY 2nd Researchers’ SeminarMahdi Fasihi [email protected]

Agenda

MotivationMethodology and DataResultsFurther StudySummary

NEO-CARBON ENERGY 2nd Researchers’ SeminarMahdi Fasihi [email protected]

RE-LNG Value Chain

Hybrid PV-Wind Methane Production Methane Liquefaction LNG Shipping LNG Regasification

NEO-CARBON ENERGY 2nd Researchers’ SeminarMahdi Fasihi [email protected]

DataPlants’ Location

Source: Breyer Ch., Rieke S., Sterner M., Schmid J., 2011. Hybrid PV-Wind-Renewable Power Methane Plants – An Economic Outlook, 6th IRES, Berlin, Nov. 28-30

1) Patagonia, Argentina:• Hybrid PV-Wind Power Plant• Electrolysis+Methanation Plant• Liquefaction Plant

2) Japan:• Regasification Plant

NEO-CARBON ENERGY 2nd Researchers’ SeminarMahdi Fasihi [email protected]

DataHybrid PV-Wind Power Plant

Hybrid PV-Wind Power Plant• Place: Patagonia, Argentina• Capacity: 5 GWel each• FLH: 5691 h

• 5% overlap• Cost assumptions for year 2030

• 7% WACC• LCOE: 22.84 €/MWhel

1-axis tracking PV plantsFLH: 2490 hCapex: 550 €/kWIrradiation: 3000 [kWh/m2/a]PR: 0.83LCOE: 19.9 €/MWhel

FLH: 3500 hCapex: 800 €/kWLCOE: 23 €/MWhel

NEO-CARBON ENERGY 2nd Researchers’ SeminarMahdi Fasihi [email protected]

DataPower to Gas (Electrolysis and Methanation)

Electrolysis + Methanation• Place: Argentina• Capacity: 5 GWel

• FLH: 5691 h• Lifetime: 30 y• Overall eff.: 64%

Electricity (100%)

CO2

Wat

er

Heat

Oxyg

en

H2 (78%) CH4 (64%)

Electrolysis eff.: 78%Methanation eff.: 82%

Cost assumptions for year 2030• Capex: 500 €/kWel

• Water and CO2 with additional costs

NEO-CARBON ENERGY 2nd Researchers’ SeminarMahdi Fasihi [email protected]

DataLiquefaction

• Conventional LNG is over 97% liquid methane (CH4)• Cooling Methane to -162 ºC.• Volume decreases 600 times

Liquefaction Plant:• Place: Patagonia, Argentina• Volume: 1732.5 mcm/a Methane• Lifetime: 25 y• Efficiency: 96%• Capex: 0.196 m€/mcm/a NG• Opex: 3.5% of capex, annually

Pure Methane vs. NG

• Higher efficiency• Simpler facilities• Lower cost

Source: KBR Company_LNG Liquefaction- Not All Plants Are Created Equal

NEO-CARBON ENERGY 2nd Researchers’ SeminarMahdi Fasihi [email protected]

DataLNG Shipping

Source: seaspout.wordpress.com

From: Patagonia, ArgentinaTo: Japan, YokohamaMarine Distance: 17500 km

• Capacity: 138000 m3 LNG• Speed: 20 knots• Time on sea, one way: 20 days• Boil-off gas: 0.1 %/d• Efficiency: 99.9 %/d• LNG ships required: 2.4• Lifetime: 25 years• Capex: 151 m€/unit• Opex: 3.5% of capex, annually

LNG-powered ships use boil-off gas as the marine fuel.

NEO-CARBON ENERGY 2nd Researchers’ SeminarMahdi Fasihi [email protected]

DataRegasification

Source: gastechnews.com

• LNG is heated by sea water to be reconverted to NG• Cold energy of regasification can be used for extracting liquid oxygen

and nitrogen gas from air

Regasification Plant:• Place: Japan, Yokohama• Volume: 1630.7 mcm/a Methane• Lifetime: 30 years• Efficiency: 98.5%• Capex: 0.074 m€/mcm/a NG• Opex: 3.5% of capex, annually

NEO-CARBON ENERGY 2nd Researchers’ SeminarMahdi Fasihi [email protected]

Agenda

MotivationMethodology and DataResultsFurther StudySummary

NEO-CARBON ENERGY 2nd Researchers’ SeminarMahdi Fasihi [email protected]

ResultsCost Distribution in RE-LNG Value Chain

LCOE (7% WACC):• 59.32 €/MWhth

• 23.21 USD/MMBtu

LCOE (5% WACC):• 49.88 €/MWhth

• 19.51 USD/MMBtu

USD/€ = 1.35

NEO-CARBON ENERGY 2nd Researchers’ SeminarMahdi Fasihi [email protected]

ResultsMarket potential (2 scenarios)

The first breakeven can be expected for produced RE-SNGwith a WACC of 5% and NG price with CO2 emission cost of50 €/tCO2 and a crude oil price of 100 USD/bbl.

CO2 emission cost:• NG CO2 emission:

56 tCO2/TJ• 0-50 €/tCO2

• 0-4 USD/Mbtu• USD/€ = 1.35

• LNG price in Japan: 88.6% of crude oil price.

• Regasificationcost has beenadded

0

5

10

15

20

25

30

60 80 100 120 140 160

Cos

t [U

SD/M

Btu

]

Crude oil price [USD/bbl]

RE-SNG cost and Natural Gas price in Japan

NG price (no CO2 emission cost)

NG price (+ 25 €/t CO2 emission cost)

NG price (+ 50 €/t CO2 emission cost)

RE-SNG cost (7% WACC)

RE-SNG cost (5% WACC)

NEO-CARBON ENERGY 2nd Researchers’ SeminarMahdi Fasihi [email protected]

Agenda

MotivationMethodology and DataResultsFurther StudySummary

NEO-CARBON ENERGY 2nd Researchers’ SeminarMahdi Fasihi [email protected]

Further StudyGas to Liquids (GtL)

GtL is a refinery process toconvert natural gas or othergaseous hydrocarbons intolonger-chain hydrocarbons.

Benefits:• Lower shipping cost• No special plant needed at destination• Different types of products• Higher efficiency: 65%

Source: Wikipedia

50-80% 15-25% 0-30%

Fischer–Tropsch process

NEO-CARBON ENERGY 2nd Researchers’ SeminarMahdi Fasihi [email protected]

Further StudyPower to Liquids (PtL)

• The idea is to transform water and CO2 to high-puritysynthetic fuels (petrol, diesel, kerosene) with the aid ofrenewable electricity.

Benefits:• Integrated system• Lower shipping cost• No regasification plant at destination• Different types of products• Higher efficiency: 70%

NEO-CARBON ENERGY 2nd Researchers’ SeminarMahdi Fasihi [email protected]

Further StudyDifferent Possibilities’ Value Chain

DieselKerosene

Wax

MethanolDiesel

KeroseneWax

NEO-CARBON ENERGY 2nd Researchers’ SeminarMahdi Fasihi [email protected]

Agenda

MotivationMethodology and DataResultsFurther StudySummary

NEO-CARBON ENERGY 2nd Researchers’ SeminarMahdi Fasihi [email protected]

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

• Liquefaction plant, shipping and regasification plant are needed for delivering RE-SNG to far-off regions.

• RE-SNG is a non-diminishing carbon free fuel, which will insure both fuel security and environmental issues.

• The cost of delivered RE-SNG in Japan is 19.51 USD/MBTU (5% WACC).

• For crude oil price more than 100 USD/bbl and CO2 emission cost of 50 €/tCO2, RE-SNG is competitive to conventional NG price in Japan.

• This would be an upper limit for the conventional LNG price in the long-term.

• Substitution of fossil fuels by hybrid PV-Wind power plants could create a PV market potential in the order of several TWp.

• PtG-GtL and PtL are the other options which need more investigations.

NEO-CARBON ENERGY 2nd Researchers’ SeminarMahdi Fasihi [email protected]

SummaryRe-LNG Value Chain (an overview of all data and assumptions)

Hybrid PV-Wind [1] Methanation [1] Liquefaction LNG Shipping RegasificationPatagonia, Argentina Argentina to Japan Yokohama, Japan

Capacity: 5 [GWel ,each] Capacity: 5 [GWel] Volume: 1732.5[mcm/a Methane]

Marine Distance: 17500 [km] [10] Volume: 1630.7[mcm/a Methane]3500 h Wind Electrolysis eff.: 78% Ship size: 138000 [m3 LNG] [11]

2490 h PV Methanation eff.: 82%Capex: 0.196

[m€/mcm/a NG] [2]

Speed: 20 [knots] [8]Capex: 0.074

[m€/mcm/a NG] [2]FLH: 5691 (5% overlap) FLH: 5691 Boil-off gas: 0.1 [%/day] [8]

PV, irradiation: 3000 [kWh/m2/a] Capex (2030): 500 [€/kWel]Efficiency: 99.9 [%/day]

Opex: 3.5%[of capex, annually] [2]

LNG ships required: 2.4Opex: 3.5%

[of capex, annually] [2]PV, PR: 0.83 Capex: 151 [m€/ship] [2]Wind capex (2030): 800 [€/kW] Opex: 3.5% [of capex, annually] [2]PV capex (2030): 550 [€/kW] [5] Charge and discharge time: 1 [day] [7]Lifetime: PV: 40 [y], Wind 30 [y] 30 [y] 25 [y] [3] 25 [y] [6] 30 [y] [9]

Efficiency 64 % 96% [4] 98 % 98.5% [8]LCOE(WACC 7%): 22.84 [€/Mwhel] 26.69 [€/MWhth] 4.45 [€/MWhth] 3.61 [€/MWhth] 1.73 [€/MWhth]LCOE(WACC 5%): 19.04 [€/Mwhel] 22.41 [€/MWhth] 3.83 [€/MWhth] 3.12 [€/MWhth] 1.48 [€/MWhth]

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.

NEO-CARBON ENERGY 2nd Researchers’ SeminarMahdi Fasihi [email protected]

References

[1] Breyer Ch., Rieke S., Sterner M., Schmid J., 2011. Hybrid PV-Wind-Renewable Power Methane Plants – An EconomicOutlook, 6th IRES, Berlin, Nov. 28-30[2] Lochner S. and Bothe D., 2009. The development of natural gas supply costs to Europe, the United States and Japanin a globalizing gas market—Model-based analysis until 2030, Energy Policy, 37, 1518–1528[3] Castillo L., Dorao C.A., 2010. Influence of the plot area in an economical analysis for selecting small scale LNGtechnologies for remote gas production, Journal of Natural Gas Science and Engineering, 2, 302-309[4] Kotzot H., Durr Ch., Coyle D., Caswell, Ch. 2007. LNG liquefaction—not all plants are created equal, 15thInternational Conference & Exhibition on Liquefied Natural Gas (LNG 15), Barcelona, April 24-27[5] Breyer Ch., projections on current Tier1 PV industry cost, cost roadmaps and learning curve impact[6] Maxwell D. and Zhu Z., 2011. Natural gas prices, LNG transport costs, and the dynamics of LNG imports, EnergyEconomics, 33, 217–226[7] Bahadori A., 2014. Natural Gas Processing - Technology and Engineering Design, Gulf Professional Publishing,Oxford, pp. 591–632[8] Khalilpour R. and Karimi I.A., 2012. Evaluation of utilization alternatives for stranded natural gas, Energy, 40, 317-328[9] Neto C. and Sauer I., 2006. LNG as a strategy to establish developing countries’ gas markets: The Brazilian case,Energy Policy, 34, 4103–4114[10] www.sea-distances.org/[11] Vanem E., Antãob P., Ivan Østvikc I., Comas F., 2008. Analysing the risk of LNG carrier operations, ReliabilityEngineering and System Safety, 93, 1328-1344


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