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ProPower: System Analysis Power2Products Economic and socio-ecological implications of a cross-sectoral power utilisation

Achieving climate protection targets requires defossilisation in all sectors and thus a comprehensive transformation of the energy system and industry. Power-to-X technologies use electricity to supply products and provide services and are thus both sector couplers and energy storage solutions. The range of technologies and fields of application for Power-to-X (PtX) is wide. At the same time, renewable electricity is a limited resource. This raises the question as to which PtX technologies – and associated business models – are promising for contributing in the best possible way to achieving climate targets and making the transformation process in the German economy sustainable – especially in the industry sector.

Against this background, the aim of the project ProPower was to develop an evaluation basis for PtX concepts that would make it easier for players from industry to include suitable technologies and business models in planning and evaluate them. At the same time, the project results are to provide political actors with orientation knowledge for energy and economic policy, which will support them to align measures and activities in order to reach and balance the three goals security of supply, environmental compatibility and affordability. The IÖW evaluated various Power-to-Gas (PtG) and Power-to-Liquid (PtL) technologies with regard to spatial, economic, ecological and social aspects and derived recommendations for action from the findings thus obtained.

The environmental assessment of the processes shows that they are environmentally beneficial only if renewable electricity is used. If carbon dioxide is required for the production of the gaseous or liquid energy carriers, no sources should be used that disproportionately burden the remaining emissions budget or hinder the use of alternative, climate-neutral processes in the industry sector.

The examination of potential business models and the economic evaluation of selected PtG and PtL processes has identified three key barriers to the implementation of PtG and PtL projects in Germany: First, PtG and PtL products are not yet economical compared to fossil reference products. Secondly, there is a lack of expertise in the business community, especially in project planning, but also in the application of PtX products. Third, market players are uncertain about the future relevance of PtG and PtL processes, as well as the further development of regulation and the international environment. Improving the competitive context thus requires a mix of push and pull instruments.

IÖW Project Team