Innovative large-scale energy storage technologies and Power-to-Gas concepts after optimization. D7.6: Full CBA analysis of power-to-gas in the context of various reference scenarios

Power-to-gas (PtG) is a promising technology that could be useful in the transition to a much less CO2 intensive economy. However, given current technological levels and market conditions, PtG technologies might not get adopted sufficiently from a societal perspective. Current market condi-tions, including the regulatory regime and CO2 prices, do not favour the implementation of PtG. Fur-thermore, PtG requires further technological progress to reduce its cost and to bring it to a higher technological readiness level. Such technological progress may still take several years, since the general nature of innovation processes mean that i) the revenues for individual projects are quite uncertain (the risk for investors is high) and that ii) knowledge spill-overs prevent the benefits of the R&D to fall entirely to the investors. In order to overcome these barriers, public support will be nec-essary to bring the PtG technology to the market. The current report presents a social cost benefit analysis based on energy system modelling for the European Union until 2050 for various scenarios. Both external effects (security of supply and envi-ronmental impacts) and private costs and benefits (energy system costs) are analysed and com-bined. The report focusses at the following research question: What are the social costs and benefits of PtG in the European context under various scenarios? PtG is defined here as transforming electrical power via electrolysis into hydrogen and subsequently deploying methanation for making synthetic natural gas. The process without methanation, i.e. only electrolyzing water to generate hydrogen, is not studied separately, although it is of course part of the future energy systems analysed.