Power-to-X in Energy Hubs: Operations and Policies Supporting the Scale-Up of Renewable Fuel Production

TL;DR

This paper presents EnerHub2X, a mixed-integer linear program for optimizing Power-to-X energy hubs, demonstrating how market incentives and renewable capacity alignment can scale renewable fuel production efficiently.

Contribution

It introduces EnerHub2X, a novel optimization model for P2X energy hubs that considers market dynamics, technical constraints, and policy implications for renewable fuel scale-up.

Findings

Without price incentives, mainly hydrogen is produced and sold.

A 50% fuel price premium enables production of renewable ammonia and methanol.

Renewable power purchase agreements enhance flexibility and policy compliance.

Abstract

Power-to-X (P2X) needs to scale up rapidly to provide the fuels required in the hard-to-decarbonize industrial and heavy transport sector. Only recently, the European Commission proposed requirements for \textit{renewable} fuels. P2X energy hubs enable efficient synergies between energy infrastructures, production facilities, and storage options. In this study, we explore the optimal operation of an energy hub by leveraging the flexibility of P2X including hydrogen, methanol, and ammonia synthesizers, and analyze potential revenue streams such as the day-ahead and ancillary service markets. We propose EnerHub2X, a mixed-integer linear program that maximizes the hub's profit based on current market prices, considering technical constraints of P2X such as unit commitment and non-linear efficiencies. We model a representative Danish energy hub and find that without price incentives, it mainly produces liquid hydrogen and sells renewable electricity. Only by adding a price premium of about 50\% (0.16 \euro{}/kg) to the conventional fuel prices, sufficient amounts of renewable ammonia and methanol are produced. To utilize production efficiently, on-site renewable capacity and P2X must be carefully aligned. We show that renewable power purchase agreements can provide flexibility while complying with the rules set by the European Commission.