[Paper Review] Cost-Optimal Power-to-Methanol: Flexible Operation or Intermediate Storage?

Simone Mucci, Alexander Mitsos+1 more|arXiv (Cornell University)|May 25, 2023

Hybrid Renewable Energy Systems4 citations

TL;DR

This study formulates a combined design and scheduling optimization for a Power-to-Methanol plant with battery and hydrogen storage to minimize methanol production cost. Results show that flexible operation of the entire plant—especially moderate flexibility in the methanol synthesis unit—significantly reduces costs, while hydrogen storage provides greater economic benefits than batteries, particularly under high and fluctuating electricity prices.

ABSTRACT

The synthesis of methanol from captured carbon dioxide and green hydrogen could be a promising replacement for the current fossil-based production. The major energy input and cost driver for such a process is the electricity for hydrogen production. Time-variable electricity cost or availability thus motivates flexible operation. However, it is unclear if each unit of the process should be operated flexibly, and if storage of electricity or hydrogen reduces the methanol production cost. To answer these questions, we modeled a Power-to-Methanol plant with batteries and hydrogen storage. Using this model, we solved a combined design and scheduling optimization problem, which provides the optimal size of the units of the plant and their optimal (quasi-stationary) operation. The annualized cost of methanol was minimized for a grid-connected and a stand-alone case study. The optimization results confirm that storage, especially hydrogen storage, is particularly beneficial when the electricity price is high and highly fluctuating. Irrespective of the presence of storage, the whole Power-to-Methanol plant should be operated flexibly: even moderate flexibility of the methanol synthesis unit significantly reduces the production cost.

Motivation & Objective

• To determine whether flexible operation or intermediate storage (batteries or hydrogen) reduces methanol production cost in Power-to-Methanol plants.
• To investigate the interplay between battery storage and hydrogen storage in minimizing annualized methanol cost.
• To evaluate the economic impact of varying flexibility levels in the methanol synthesis unit, especially in the presence of storage.
• To assess how electricity price profiles and renewable generation variability influence optimal plant design and operation.
• To provide a holistic, integrated design and scheduling optimization framework for Power-to-Methanol systems under real-world grid and stand-alone conditions.

Proposed method

• Formulated a mixed-integer nonlinear programming (MINLP) problem in GAMS to simultaneously optimize plant design (unit sizing) and operation scheduling.
• Integrated detailed performance models for electrolysis, methanol synthesis, battery storage, and hydrogen storage based on mass and energy balances.
• Used the BARON global optimizer to solve the MINLP problem for single scheduling scenarios, ensuring high solution quality despite non-convexities.
• Conducted case studies for both grid-connected and stand-alone configurations with varying electricity price and renewable generation profiles.
• Evaluated the impact of different flexibility levels (e.g., ramp rates up to 10%/h) on cost and design decisions.
• Applied time discretization to capture temporal variations in electricity cost and availability, enabling dynamic scheduling optimization.

Experimental results

Research questions

• RQ1 Does flexible operation of the Power-to-Methanol plant reduce methanol production cost compared to constant operation?
• RQ2 How do battery and hydrogen storage compare in reducing methanol production cost under fluctuating electricity prices?
• RQ3 What is the optimal level of flexibility required in the methanol synthesis unit when storage is available?
• RQ4 Under what electricity price and generation profiles is hydrogen storage more economically beneficial than battery storage?
• RQ5 How do design and scheduling decisions change between grid-connected and stand-alone operational modes?

Key findings

• Flexible operation of the entire Power-to-Methanol plant significantly reduces methanol production cost in all scenarios, even with intermediate storage.
• Moderate flexibility in the methanol synthesis unit (e.g., ramp rates ≤10%/h) already yields substantial cost reductions, with diminishing returns beyond this threshold.
• Hydrogen storage provides greater cost reduction than battery storage because it decouples hydrogen production from methanol synthesis, enabling downsizing of the methanol unit.
• Under high and highly fluctuating electricity prices, the combination of battery and hydrogen storage minimizes methanol cost, with hydrogen storage being the dominant contributor.
• In stand-alone configurations, storage is essential and widely used regardless of whether the methanol unit operates flexibly or at constant load.
• Optimal plant design is highly sensitive to electricity price and renewable generation profiles, necessitating long-term time series or multi-period optimization for accurate design.