Pritil Gunjan examines the challenges and opportunities involved in the electrification and decarbonisation of natural gas.
Legislative pushes toward an ambitious green economy and sustainability measures are being supported by cost reductions and technological milestones, unlocking huge decarbonisation opportunities driving the energy transition.
Operational small or mid-sized power plants running on high hydrogen content gaseous fuels are not uncommon. These include coke oven gas, byproduct gases from chemical processes, or renewable sources like wood gasification in syngas.
Although some decarbonisation strategies focus on renewable technologies supported by energy storage and demand flexibility, others deploy low carbon resources such as nuclear, hydro, geothermal, bioenergy, and carbon capture to achieve emissions targets.
As customer needs have evolved, so has the adoption of distributed energy resources – they are set to accelerate at a compound annual growth rate of 10.3% until 2030 – and clean technology resources across residential, commercial, and industrial consumers, which has blurred the demarcation between producers and consumers.
There continues to be a debate on the role of electrification (from mobility to buildings to industrial production) in the global decarbonisation journey.
Given the diversity of electrification and decarbonisation policies and agendas across global markets, different technology mixes are expected to evolve to support local needs.
On one hand, electrification is likely going to be a critical enabler in decarbonising the global energy ecosystem. But regional fuel prices and capital costs of equipment and installation are particularly strong determinants of economic competitiveness for electrified technologies.
On the other hand, decarbonisation can also be achieved by integrating alternative fuels such as renewable natural gas (RNG) produced from sustainable waste and landfills into existing infrastructure and gas pipelines.
The natural gas system has an important ability to support resiliency power needs through its inherent physical and operational capabilities, which enable it to meet the volatile power profiles resulting from imbalance.
Investors and corporations are setting ambitious targets for emissions reductions and assessing their supply chains’ resiliency and associated infrastructure costs. Resiliency and responsiveness are extremely critical to ensuring that energy providers can meet seasonal and peak customer needs.
Decarbonisation of gas can be achieved by blending RNG into existing infrastructure to support decarbonisation of the value chain.
RNG can be biomethane or biogas produced from biomass or hydrogen produced from renewable energy through the electrolysis processes.
However, the RNG market is still challenged by cost efficiency and availability of feedstocks. Biomethane and hydrogen are still produced in limited quantities across key regions and need to be scaled up to justify the economics.
Supportive policies and subsidy schemes will likely play an important role across electricity and gas decarbonisation.
So what are the main opportunities for the decarbonisation of natural gas? Let me highlight four of them:
Power sector decarbonisation
Burning renewable hydrogen in gas turbines for power generation can unlock decarbonisation opportunities across the energy sector.
Natural gas turbines and renewable energy sources can be substituted across baseload generations that emit higher carbon. As investment in renewable energy generation increases, new grid services are required to ensure that these resources can be integrated effectively and that the overall operation of the grid is as efficient as possible.
Based on Guidehouse Insights estimates, 520GW of centralised and distributed generation technologies are going to be annually installed in 2030, of which 400GW or 75% is expected to come from renewable energy sources.
Excess renewable energy can be used to create renewable hydrogen that can be used in gas turbines and stored for application in the industrial and manufacturing sectors.
Natural gas contributes to almost 30% of the energy used in the industry. The industrial sector presents increasing opportunities for transitioning to a low carbon fuel mix.
However, this transition requires active investment and innovations across the usage of alternatives such as hydrogen and electrification in steel, cement, and chemical production; low carbon options across industrial feedstocks; value chain efficiency; and innovations in high temperature heat processes to bring in economies of scale.
Regulatory changes and economic incentives around carbon pricing and infrastructural investments across a sustainable value chain, carbon capture and storage, and electricity grids are anticipated to aid decarbonisation efforts across the industrial sector.
Building efficiency and decarbonisation
The transportation of RNG to buildings requires investments in infrastructure and technology.
Energy providers need to evaluate the economics of electrification and decarbonisation alternatives, such as new efficient heat pumps and variable refrigerant flow systems.
Building electrification technologies are rapidly becoming more cost-effective and reliable than fossil fuel systems in a variety of planning scenarios and climatic conditions.
Regulatory developments also stress decarbonisation and therefore favour full electrification as a low emissions building approach.
Although headwinds prevail, full electrification faces high transaction costs, low consumer awareness, lack of regional stock availability, and other barriers.
In the mobility sector, both battery EVs and fuel cell vehicles are ramping up their business cases to achieve net zero emissions.
Although momentum for plug-in EVs is strong, the technology is not yet technically or commercially ready to displace internal combustion engines in all road vehicle classes and geographies.
There are other solutions and strategies that can fill the gap; such as advanced biofuels, hydrogen, drive automation and networking technologies, and mode switching.
The mobility sector is witnessing a strong push towards zero emissions vehicles such as battery EVs or fuel cell trucks and zero or low carbon fuels such as renewable electricity, biomethane, and other biofuels.
Many of these solutions are immature and complicated to deploy, but leading suppliers are finding innovative ways to deploy and use these technologies. Suppliers that are slower to act risk losing business to innovative suppliers or more emissions efficient modes such as rail.
To conclude: Applications of decarbonisation and electrification need to percolate across the mobility, buildings, heating, industrial, and power generation sectors.
Although clean energy plans have begun to take shape across countries and regions, the availability of RNG, energy efficiency measures, and low carbon sources varies considerably around the world. Power generation along with the industrial sector could be a key segment to ramp up decarbonisation plans.
Ramping up carbon accounting, monitoring, and reporting methods will also be essential to assess progress and milestones across the decarbonisation journey.
ABOUT THE AUTHOR
Pritil Gunjan is Associate Director of Energy at Guidehouse
Pritil Gunjan also spoke to Nigel Blackaby about flexibility in
all its guises and the role it plays in grid stability. Listen to the
interview on www.enlit-europe.com/365