Renewable fuel regulation: Implications for e-fuel production infrastructure in energy hubs

TL;DR

This paper examines how renewable fuel regulations influence the infrastructure development of energy hubs producing e-fuels like hydrogen, e-methanol, and e-ammonia, focusing on capacity expansion and investment under EU rules.

Contribution

It presents a mixed-integer linear model analyzing infrastructure investments for renewable e-fuel production considering EU regulatory constraints and different economic scenarios.

Findings

E-methanol offers the best economic case with limited storage.

Maximum electrolyzer size dictates PPA volume under regulation.

Investment strategies vary with fuel prices and regulatory rules.

Abstract

Renewable fuels of non-biological origin (RFNBOs) are needed to decarbonize hard-to-electrify sectors that rely on liquid or gaseous fuels, such as long-haul shipping. The EU's Delegated Act on RFNBOs defines renewable hydrogen by considering rules on additionality as well as temporal and geographical correlation of the electricity used. For a Danish case study, we examine the impact on the capacity expansion problem of an energy hub producing renewable hydrogen, e-methanol, and e-ammonia using a mixed-integer linear problem formulation. We analyze the investments in production capacity, storage assets, and Power Purchase Agreement (PPA) volume under different fuel price assumptions for 2030. We find that e-methanol (combined with limited storage to secure hydrogen supply to the synthesizer) provides the best business case with a PPA volume based on the maximum allowed electrolyzer size.