In the long run, Germany will need seasonal storage of solar power from the summer for the winter. German researchers are banking on “power to gas” (P2G). Craig Morris takes a look at how far away we are.
Since at least 2011, German researchers have been selling the concept of storing excess renewable electricity, especially in the summer, as a gas in the country’s existing natural gas lines, which could then be used for any purpose natural gas serves. The topic remains hot, with independent utility association VKU calling P2G a “promising” storage option just last month. And this month, Germany’s gas lobby group produced its own study showing that underground gas reservoirs could store some 200 terawatt-hours of “green gas.” And as I showed in my last post, IFEU has P2G on its roadmap by the mid-2030s.
Technically, we could start implementing it today, but it would be costly. Let’s do a quick back-of-the-envelope calculation.
We will first assume that green electricity costs 10 cents per kilowatt-hour. Right now, roughly 5-9 cents is paid for wind power, with new solar arrays currently coming in between 10 and 15 cents. Power from biomass generally costs a bit more, but 10 cents is a nice round ballpark figure.
Essentially, we would use the excess electricity to split water into hydrogen and oxygen, storing the hydrogen as “green gas” in natural gas networks (the oxygen would be emitted as a harmless waste gas). But nearly half of the energy contained in the excess green power could be lost in the process. So our kilowatt-hour of excess green power now costs 20 cents as green gas – and we have not even included any costs for electrolysis facilities.
A liter of gasoline or diesel contains around 10 kilowatt-hours of energy and currently costs around 1.50 euros in Germany, putting the price of a kilowatt-hour from gasoline at around 15 cents – but after taxes. The pre-tax cost is closer to four cents – roughly a fifth of what renewable hydrogen is likely to cost a decade from now.
The situation is not much better if we directly compare green gas to natural gas. I just looked up the best price on a consumer advocacy portal for my neighborhood, and the cheapest (after-tax!) offer was 5.6 cents per kilowatt-hour – between 3 and 4 times less expensive than green gas would be in Germany.
Of course, the cost of PV continues to drop, though the cost of wind power has largely stabilized. Going forward, the price of oil & gas is also expected to go in only one direction: up. Nonetheless, the merger in price between oil & gas and green power is unlikely to come about anytime soon; IFEU’s estimate of the mid-2030s is as plausible as it is speculative.
One other scenario is worth mentioning: conversion of Germany’s power mix on the grid, which includes nuclear and fossil electricity. When prices on the power exchange dip down to just a few cents, the equation is obviously much different – and I recently called for Germans to stop thinking in terms of excess power from renewables and simply think of excess power, including nuclear and fossil power. This scenario is indeed more likely than (green) hydrogen for the interim, so I am mainly arguing that a transition to green hydrogen remains a vision that is a few decades away.
Germany has few other options right now for seasonal storage. At least in economic terms, the country would therefore be well advised to design its energy transition so that the need for seasonal storage is postponed until that price parity approaches.