Future of the energy market

What will the energy industry look like in the year 2050? And what consequences will that have for the gas market? Interesting questions, which are prompting the publication of ever more studies and forecasts to find answers. Even though many of these studies differ in their specific figures and results, they have one thing in common: they describe an energy world that doesn’t have a lot in common with the one we are familiar with today. The general consensus is that renewable energies will play an ever greater role, as will climate protection and energy efficiency.

The Energy Reference Forecast^[1], on which large parts of the German energy and climate policy are based, depicts the following image of the market, for example:

• Primary energy consumption will continually fall, while economic output increases at the same time. The growing energy needs of Asian economies mean the prices of crude oil, natural gas and steam coal on international markets are set to rise.
• Renewables continue to make a fast-growing contribution to energy supplies. More than half of all renewables will be used for electricity production.
• Energy-based greenhouse gas emissions will be more than 50% lower in 2050 than in 1990, the Kyoto year. The reason for this is falling primary energy consumption and its level of greenhouse gas intensity, which is falling over the long term.
• Thanks to increasingly efficient vehicles, the energy consumption in the transport sector will go down. Expansion of electromobility will make a contribution here too. Petrol and diesel will lose ground in favour of biofuels, electricity and natural gas.
• The national market areas for electrical power in Europe will continue to consolidate. Here, network expansion will also play a central role, which will further develop in Germany thanks to the changed institutional framework.
• The installed generation capacity of the German power plant fleet continues to rise. This is down primarily to the low contribution to guaranteed output made by the strongly growing renewable energies. High CO₂ allowance prices will ensure growing proportions of natural gas in energy production by 2050.
   

^{[1] See “Development of Energy Markets – Energy Reference Forecast”, commissioned by the German Ministry of Economics (BMWi) from Prognos AG, the Institute of Energy Economics at the University of Cologne (EWI) and the Institute of Economic Structure Research (GWS), 2014.}

Power-to-gas: gas from wind and sun

Germany’s energy transition has almost doubled the share of renewables such as wind, biomass, solar and hydro in power generation in only five years between 2010 and 2015 from 17 percent to 32 percent. But, when it comes to providing a country with a safe and reliable electricity supply, there is more to it than generation alone. Electricity generated from renewable sources still has to be transported to the consumer and has to be stored in sufficient quantities to ensure a constant supply on still, foggy February days as well as on windy or sunny July days. Current battery storage technology is not yet capable of reliably storing large quantities of electricity over long periods.

One solution for storing large quantities of electricity over long periods is the idea of using the gas infrastructure, that is to say the gas pipeline system and underground storage facilities, for this purpose. This technology is known as power-to-gas. The process initially involves using electricity in an electrolysis process to break water down into its constituent parts of oxygen and hydrogen. While the oxygen is released into the atmosphere or used in industrial applications, for example, the hydrogen can be used in many different ways to act as a source of energy. It can, for example, be used as fuel for cars and trains, in which the combustion engine has been replaced by fuel cells, or limited quantities can be fed into the gas pipeline network. If, after electrolysis, carbon dioxide is added in a second step to convert the hydrogen into synthetic methane, the main component of natural gas, there is no limit to the amount that can be transported and stored in the gas infrastructure. The synthetic methane produced in this way has the same properties as conventional natural gas. It can therefore completely replace natural gas in all applications, from electricity generation and industrial processes right through to domestic heating.

The existing German gas pipeline network is already equipped for transporting and storing large quantities of energy. Its 500,000 km of pipelines already transport nearly 1,000 billion kilowatt hours of energy. Compared with the 540 billion kilowatt hours transported by the German electricity network every year, that is nearly double the transport potential, which we cannot afford to ignore. The gas infrastructure is also greatly superior to the electricity infrastructure in terms of its storage capability. While the theoretical storage range of the electricity grid is 0.6 hours, that of the gas storage facilities is 2,000 hours, which is nearly three months.

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