The commercial aspects of Power-to-X
It is pretty simple and it’s the very foundation of doing business, Arbitrage: taking advantage of differing prices for the same asset. And that is what Power-to-X is all about.
While the technologies unlocking the potential of P-t-X are advancing well in support of new commercial opportunities, the commercial challenge is starting to emerge; P-t-X enables several new value streams – how should those be quantified and applied to existing and new business cases?
Below, we have created a simple guide to provide an overview. The commercial benefits can be grouped into three categories: Time shifting, Market bridging and Rapid response.
Regardless of category, the commercial element is the same: Buy cheap, sell expensive.
- Time shifting: The simplest application. Storage of electricity, at times of low/negative prices – and release at times of high electricity price. Either via battery storage for smaller volumes of energy- or via heat- or hydrogen storage for larger volumes of energy.
Maturity: Commercially applied at various locations across the world.
- Market bridging: The more advanced application. Here excess electricity, again at low or negative price, is converted into another type of energy, e.g. hydrogen or heat. After the conversion, the energy is sold into the relevant markets.
Maturity: Several pilot-plants in construction or operation at various locations across the world.
- Rapid response: The sophisticated application, where smart control systems allows for urgent supply of stored electricity during sudden events of instability in the electricity grid. The as-is solution is fossil powered power-plants idling at ‘stand-by’ mode.
Maturity: Commercial solutions available with OEMs and specialized suppliers.
In summary, the core of Power-to-X is that this activates several new revenue streams – both to existing business cases as well as for new ones.
Based on our experiences advising Clients on Power-to-X, the evident questions relevant for Project developers and Infrastructural fund managers to consider, are:
- What’s the demand prevailing in proximity of your infrastructural asset, and what’s the P-t-X enablers for meeting this demand?
- What’s the value of meeting existing demand – as well as for possible P-t-X spin-off revenue streams?
- What’s the business case for a P-t-X application across your challenged sites, considering current losses from curtailment and low/negative power prices?
- When is the right time to move? Supply/demand situation is in high flux, potentially leaving you behind if not prepared in advance.
Brinckmann offers Research and Advisory, specialized within Renewable Energy. Onshore Wind, Offshore Wind, Solar PV and Power-to-X. Based on our massive experience and track record from within the renewable energy industry, we understand the industry and its dynamics.
We support our Clients in entering new markets and evaluating new opportunities, providing market screening, market risk assessment, supplier/technology review, benchmarking, and Due Diligence support.
Managing Partner and Senior Advisor
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