Economic and policy requirements for the deployment of Power to Methane (P2M) for grid-scale energy management

Biological power to methane, where CO2 and renewable H2 are biologically converted to synthetic methane gas, could deliver strategic benefits including provision of a gaseous fuel that is compatible with existing infrastructure, increased energy security, a mechanism to recycle CO2 to displace the extraction of fossil carbon, enabling the storage of renewable energy, and provision of a vector for transportation and storage of hydrogen. This study shows that the technology is currently economically viable under very limited conditions given current UK and EU policy and economic frameworks. Three key policy and economic modifications are needed for broader deployment; i) international emissions allowance schemes should be structured such that recycling of carbon gases are encouraged, ii) ready access to low cost of capital funding mechanisms for technologies that can deliver multiple energy and environmental benefits, and iii) revenue is generated from all value propositions which, in the case of Power to Methane, includes the service of enabling of long-term energy storage. This study indicates that minimum revenues of £2.50 (€2.80) / kWh to £10 (€11.30) / kWh for enabling energy storage would be sufficient to deliver positive Net Present Values given the conditions and assumptions made.