We received lots of great questions during part II of our webinar series on the future of gases on October 15th. Unfortunately, we did not have the time to answer all of them directly. We have now collected the questions and answers in this article for you to examine. We also invite you to watch the full webinar recording with translated captions. There is also a feedback questionnaire at https://www.lyyti.fi/questions/7ef614420d, which we hope as many as possible would fill in. Thank you for participating, we are already planning part III of our webinar series.
The Future of Gases part II: The Beginning of a Journey is available for watching here.
Questions and answers:
Any practical examples of how Gasgrid Finland can be involved in sector integration without endangering its neutrality as TSO? What are the obstacles to sector integration?
Sector integration is a wide topic that can be understood in various ways. One way to address sector integration is to approach it from a system optimization point of view. In this holistic approach, it’s important to pinpoint the challenges and obstacles that are currently hindering or slowing down more flexible energy transfer between different energy carrier systems, such as gas and electricity sectors. For example, from the optimization of the whole energy system, in some cases, it may be more resource-efficient to transfer energy as electricity and in some cases as gases. It is also important to recognize regulative or legislative limitations and develop them to allow a more flexible system. When sectors and potentially different markets are integrating harmonization of market rules and clarification of responsibilities of different stakeholders is needed. This development towards a more flexible and greener system requires systematic development and collaboration between different TSO’s, DSO’s, customers, and energy users as well as the regulators to first identify the challenges of integration and then developing a plan on how to overcome the challenges in the best way.
Gasgrid Finland can be involved in energy sector development and, for example, evaluate together with parties from other sectors the differences in market mechanisms, regulations, taxation, etc. and influence the development of these to a direction that allows more flexibility in the energy system without jeopardizing safety, the security of supply, neutrality and customer needs.
In addition, we at Gasgrid Finland can develop our own services and systems interfaces to be more flexible and consider future needs related to sector integration.
How do we get from today’s business to the future, how will Gasgrid Finland do business within the next five to ten or fifteen years? Can Gasgrid Finland be profitable with the new strategy? The transition period can be difficult.
Yes, it can. We focus on two dimensions of the market: current and future. In the current customer-centric market we aim at efficiency, reliability and predictability for our customers. This should enable us to keep tariffs for customers at competitive level and Gasgrid Finland remain profitable according to regulatory model.
The future market and platform are then investigated and developed in a gradual manner. Gasgrid Finland has capacity to invest in developing the future market. We will do this together with our existing and potentially new customers. We have planned to do this in a way it does not jeopardize our current customers and business. If the future markets of clean gases develop well in the coming decades and TSO will have a major role there, this can be a factor to enable positive growth. There are uncertainties but that is the reason why we see strategically important to start the development early together with our stakeholders.
How likely can you achieve your vision 2035?
Our vision 2035 is “Gases enable a carbon-neutral society – we provide a platform for it”. We believe it is possible to achieve our ambitious Vision 2035, but there can be a wide spectrum of outcomes of that vision. Platforms of gases will be part of the future energy and resource system. But how exactly, is yet to be determined. What is best in Finland may differ in Germany and vice versa. Therefore, we need to start now together with customers and other stakeholders. We believe in market-based and technology-neutral solutions and aim to develop Gasgrid Finland and gas markets in that direction.
What is the current H2 fraction that you allow in your gas grid? Is it possible that Gasgrid Finland would even build a separate hydrogen grid(s)?
Currently, over 99% of the gas transferred in our gas grid is natural gas and less than 1% is biogas. Natural gas typically contains less than 1% hydrogen.
We are currently starting evaluations in order to understand what the implications of a higher hydrogen content would be and what kind of investments a higher hydrogen content would require. This evaluation must be done very carefully, as a higher hydrogen content affects in addition to our system also our customers’ systems, processes, and equipment, and the current systems have been designed for natural gas with low hydrogen content.
Our vision 2035 is “Gases enable a carbon-neutral society – we provide a platform for it”. Separate hydrogen grids are one potential way of introducing hydrogen to energy and raw material systems in the future and influence the transition of energy systems towards carbon neutrality. As hydrogen transmission grids do not yet exist and the need for developing hydrogen economy has appeared relatively quickly, there is a significant need for market and regulatory development. This may include also some adjustments to the definition of Gasgrid Finland’s potential role in the future regarding hydrogen as Gasgrid Finland currently has a clearly defined task as TSO of the natural gas grid in Finland. However, Gasgrid Finland has excellent expertise and experience in gas transfer, which can be useful also for hydrogen systems in the future. As we are involved in developing the pathway towards a carbon-neutral society, we have started to evaluate the possibilities related to hydrogen and other clean gas systems together with our customers, the energy regulator, policymakers, and the owner.
What is the potential bio-methane production capacity in Finland?
According to the Finnish biogas association, production capacity could add up to 4-7 TWh in 2030 in Finland. The theoretical maximum for digestion technology is up to 25 TWh/a, and with current logistics and production solution techno-economical potential is around 10 TWh/a.
Is National/European legislation able to support new technologies in the gas sector (Biogas, Power-to-Methane, Power-to-hydrogen) equally compared to battery technologies?
I have understood that there are few problems in tax legislation considering this subject? For example, biogas is being taxed similarly to natural gas from the year 2022 beyond in Finland. What separates biogas from synthetic methane in this case? Doesn’t this drive the energy field to use hydrogen and batteries over biogas and synthetic methane in energy storage? What are or should be the key actions of the European H2 strategy regarding hydrogen transmission (and production/demand)
Gasgrid Finland strongly supports a market based and technology-neutral approach in developing and implementing new solutions. However, it must be recognized that the adaptation of new solutions often requires support before the solutions can become profitable and all the technological challenges that are prominent in the early implementation phase have been solved. The energy sector is currently going through a major transformation and as many things are changing simultaneously it is possible that some challenges in managing the regulations and other steering mechanisms will occur. Therefore, it is possible that in some cases the technology-neutral approach may not realize at all times, depending on the set of steering mechanisms that applies for a certain energy carrier or technology. For the technology-neutral and market-based approach to be fulfilled, it is important to have a frequent and open discussion in the energy sector generally and towards the policymakers and regulators.
In case the RES share (wind/solar) in the total electricity supply will grow significantly, I assume, that it would mean volatility in the electricity prices. Meaning that there would be very low prices when there are suitable weather conditions, but also high prices when there is not wind/solar output available. Can the hydrogen technology adapt to “generate hydrogen” price dependent (i.e. start/shut down the processes in relation to the prices)?
With the increase of volatile renewables in the energy system, more flexibility of the energy system is required. It will be interesting to follow the development of P2X technologies (e.g. hydrogen production), to see whether hydrogen production can provide the required flexibility to the system.
However, CAPEX of an industrial plant is typically in a significant role, when calculating the profitability of processes. In order to pay back the CAPEX and get a return on the investment, many industrial production processes require high yearly operational hours. This, of course, depends on a multitude of factors in addition to CAPEX and operational hours, such as in this case the electricity price and the value of hydrogen. Regarding hydrogen production, it remains to be seen what kind of business cases will be feasible and what will be the best ways of operating a hydrogen production plant both from an economical and technical point of view.
Nevertheless, gases as fuels, regardless of their origin, can provide flexibility to the system as they have reliable supply, and energy production with gas is easy and fast to adjust. Turning on or off, or adjusting the capacity of gas engines, boilers and turbines are possible with a short response time. In addition, gases have typically a high energy content and they can therefore be also stored either in pipelines to some extent or in a liquified form in separate gas storages.
When volatility increases, the energy markets must adapt to changes. In the future, it’s possible that solutions with the capability to provide flexibility and capacity changes with short response times will be valuable.
Could you please explain power to x?
Power to X is a term that covers several technology variations under one umbrella. The “power” in power to x refers to electricity and the “x” to different products. These products can be for example hydrogen, synthetic fuels, such as methane or other hydrocarbons (e.g. transportation fuels), or chemicals.
Power to x technologies utilize electricity as the energy source for electrolysis, with which hydrogen can be produced from water. A source of carbon is needed if one wishes to produce for example methane (CH4) that contains in addition to hydrogen also carbon. A commonly discussed source for carbon is CO2, which could be captured from an industrial process or from the atmosphere and utilized with so-called carbon, capture, and use (CCU) technologies. However, carbon could be derived from other origins as well, such as bio or waste-based alternatives. Finally, a synthesis or refining step is required for combining hydrogen and carbon for the production of the desired product, in this case, methane.
What is the purity of CO2 from Neste refinery and what kind of treatment of CO2 is needed before utilizing this stream in P2X process?
Unfortunately, we are unable to answer a question related to Neste’s operations.
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