Potential of Power-to-Methane in the EU energy transition to a low carbon system using cost optimization

Highlights: • Scenarios show up to 546 GW PtM capacity with 27 of 55 of them above 40 GW. • Large PtM capacity (∼550 GW) can be deployed with limited impact on system cost. • System drivers favoring PtM are low CO₂ storage potential and >60% VRE penetration. • System drivers exert more influence over PtM potential than technology drivers. Power-to-Methane (PtM) can provide flexibility to the electricity grid while aiding decarbonization of other sectors. This study focuses specifically on the methanation component of PtM in 2050. Scenarios with 80–95% CO₂ reduction by 2050 (vs. 1990) are analyzed and barriers and drivers for methanation are identified. PtM arises for scenarios with 95% CO₂ reduction, no CO₂ underground storage and low CAPEX (75 €/kW only for methanation). Capacity deployed across EU is 40 GW (8% of gas demand) for these conditions, which increases to 122 GW when liquefied methane gas (LMG) is used for marine transport. The simultaneous occurrence of all positive drivers for PtM, which include limited biomass potential, low Power-to-Liquid performance, use of PtM waste heat, among others, can increase this capacity to 546 GW (75% of gas demand). Gas demand is reduced to between 3.8 and 14 EJ (compared to ∼20 EJ for 2015) with lower values corresponding to scenarios that are more restricted. Annual costs for PtM are between 2.5 and 10 bln€/year with EU28's GDP being 15.3 trillion €/year (2017). Results indicate that direct subsidy of the technology is more effective and specific than taxing the fossil alternative (natural gas) if the objective is to promote the technology. Studies with higher spatial resolution should be done to identify specific local conditions that could make PtM more attractive compared to an EU scale.