Exploiting Electricity Market Dynamics using Flexible Electrolysis Units for Retrofitting Methanol Synthesis

Abstract

We investigate the economic viability of integrating flexible electrolysis units to produce hydrogen in methanol synthesis processes. Specifically, we investigate whether this approach can help reduce methanol production costs by strategically exploiting dynamics of electricity markets. Our study integrates high-fidelity process simulations, optimization tools, and microkinetic modeling (informed by density functional theory) to conduct detailed techno-economic analyses and to compare performance against traditional processes that use hydrogen produced via steam-methane reforming (SMR). We also use this approach to estimate the levelized cost of hydrogen (LCOH) as a function of time-varying electricity prices (from day-ahead and real-time prices) and of key techno-economic parameters. Our results show that the proposed electrification framework is cost-competitive under certain electricity market conditions. Specifically, we find that, when the electrolysis system is operated in flexible mode (and can respond to dynamics of electricity markets), the associated electricity cost nearly collapses to zero. Conversely, when the unit is not flexible (and cannot respond to markets), the electricity cost comprises 60% of the total cost. Our results also reveal that the LCOH of the flexible electrolysis system participating in real-time electricity markets is 31% lower than the LCOH obtained from SMR. Overall, this indicates that exploiting the dynamics of electricity markets can make hydrogen production cost-competitive and this can lead to viable alternatives to electrify methanol production and other hydrogen-based processes.