Power-to-X: amplifying renewable energy

Investors, companies and governments globally are working to meet net zero goals by 2050. As a result, the pursuit of renewable energy has become a growing priority. Power-to-X processes may be able to assist with investor needs of the future, not only filling the gaps in the renewable energy journey, but helping technologies extend into new sectors.

What is Power-to-X?

Power-to-X (PtX) is a concept that refers to the conversion of renewable energy sources, such as solar or wind power, into different forms of energy or materials that can be stored, transported and used in a variety of applications. The “X” in PtX can refer to different end products, such as hydrogen, synthetic fuels or chemicals like ammonia and methanol. It works by using electricity to drive chemical reactions to create higher energy and higher value chemicals including hydrogen from lower energy abundant chemicals like water – a process known as electrolysis.

Potential to fill renewable energy gaps

Several factors are driving the push for renewable energy. Russia’s invasion of Ukraine acted as a catalyst for many European nations to seek ways to ease reliance on fossil fuel energy, and the path to meeting 2050 climate goals is driving systemic change in how energy is sourced.

Wind and solar energy have proven to be among the most popular and successful alternative energy sources. However, there can be challenges due to the intermittency of wind and sunshine compared with fossil fuels. The PtX process has the potential to address this as it allows energy to be stored or converted into other energy vectors, meaning that surplus solar or wind sourced energy could be made available when supply is declining.

And to decarbonize the economy

It is possible that the PtX process can help to decarbonize sectors that have been historically difficult to electrify, such as industrial processes, long-haul truck journeys and air travel. Due to the high temperatures and energy density needed for these sectors, fossil fuels remain the primary energy source. However, refining resources into specialty chemicals is already being achieved through the PtX process. Ammonia is being used to create fertilizer, and as a more environmentally friendly option for steel and chemical production. Through the PtX process, these materials are being created through a far less carbon-intensive process.

Similarly, we are seeing how the PtX process is having a positive impact on heavy transport, with ammonia and methanol being created to support shipping, buses, trains and long-haul truck journeys. There also remains scope for where the PtX process can expand. Long duration energy storage is thought to be a long-term goal, but is one area where the process would allow these sectors to move away from fossil fuels, providing a route to decarbonization not yet achievable with other alternative energy sources.

The rise of alternative energy sources, which are already being supported by the PtX process, has the potential to also increase demand for electric cars and e-fuels, which could in turn bolster the opportunities available through clean energy investment.

Figure 1: How PtX is used and what it can solve for

Obstacles remain

Challenges remain before the PtX process is fully embraced. Prominent among these is the high cost PtX commands. Since 2009, there has been a remarkable decline in the LCOE for solar and wind power: the LCOE has declined by 89% for solar, by 67% for onshore wind, and by 66% for offshore wind.¹ In comparison, the cost of the PtX process, especially when producing low carbon hydrogen and synthetic fuels, remains higher than conventional fossil fuels.

To address the high capital costs, infrastructure to facilitate large-scale PtX processes requires significant investment as do supply chains. Currently, PtX lacks the same market incentives and regulatory clarity that other renewable energies have benefitted from. The policy landscape for PtX remains uncertain, with different countries and regions pursuing different pathways and standards for PtX certification, sustainability and market access.

With properly structured incentives and clear regulatory frameworks, PtX could benefit from increased awareness of its real-world applications in the renewable energy sector.

A bright future beckons

Meeting 2050 net zero targets is a priority that is expected to only gather steam, and PtX processes can fill in some of the gaps the energy transition is facing. The ability to store renewable energy could address many of the supply and demand issues of the sector, and the prospect of producing low carbon energy alternatives in fossil fuel dependent sectors shows how the process could have a significant positive impact in decarbonizing the global economy.

While PtX may have great potential for enhancing renewable energy, substantial support is needed for the growth and adoption of PtX. PtX has demonstrated its efficacy in a number of sectors, however, with clearer regulations, improved market incentives and reduced capital costs that would allow PtX to branch into new use cases, there is great potential for the technology to be more far reaching.