TEA breakdown: green ammonia and synthetic methane
Nov 21, 2024
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Shayle talks with Melissa Ball, an associate director at EIP specializing in climate technologies, and Greg Thiel, EIP's technology director. They delve into green ammonia and synthetic methane production, discussing the economic hurdles they face. Key topics include innovative methods for ammonia synthesis and the critical role of transportation costs. They analyze how to integrate renewable energy into these processes and explore decentralized production methods. Their insights highlight the need for cost reductions to boost the competitiveness of these emerging technologies.
Transitioning to green ammonia production requires addressing the economic challenges of hydrogen costs and effective integration with electrolysis.
Synthetic methane presents an opportunity to leverage existing infrastructure, but its viability hinges on reducing hydrogen production expenses and utilizing economical CO2 sources.
Deep dives
Techno-Economic Analysis of Green Ammonia Production
Producing green ammonia involves replacing the carbon-intensive hydrogen source used in traditional methods with green hydrogen obtained through electrolysis. This transition is critical because approximately 80% of the greenhouse gas emissions associated with ammonia production stem from steam methane reforming, the conventional hydrogen production method. The techno-economic analysis highlights that aside from transitioning hydrogen sources, the overall costs are highly influenced by the operational dynamics of electrolysis, particularly how it integrates with ammonia synthesis. The necessity of hydrogen storage and the potential increase in capital and operational expenses from modifying existing systems further complicate the economics of green ammonia production.
Challenges and Costs of Producing Synthetic Methane
Synthetic methane production presents a promising opportunity to utilize existing natural gas infrastructure but faces substantial economic challenges primarily due to the cost of hydrogen. The process requires a significant amount of hydrogen, making the hydrogen costs critical to overall feasibility. For instance, achieving economic sustainability with the current costs of both hydrogen and CO2 is challenging, as the expenses can easily exceed competitive benchmarks in natural gas pricing. Therefore, advancements in hydrogen production efficiency and cost reduction, alongside economical sources of CO2, are essential to make synthetic methane a viable alternative.
Decentralization in Energy Production
Decentralizing ammonia production offers strategic advantages by potentially cutting down transportation costs, which, in some cases, can account for up to 25% of the total price. This approach is appealing particularly in regions where natural gas prices are high or where transportation logistics are cumbersome. By producing ammonia closer to the point of use, companies may be able to mitigate some of the inherent costs associated with large-scale production facilities. However, achieving this decentralization economically requires innovative technologies that can operate efficiently at smaller scales, which are more susceptible to unfavorable economies of scale.
Future Outlook for Climate Technologies
The future of both green ammonia and synthetic methane hinges on breakthroughs in hydrogen production, emphasizing the need for cleaner and more affordable hydrogen. A transformative change, such as the ability to generate low-cost hydrogen from renewable energy or innovative carbon capture methods, could significantly impact the economics of these technologies. Additionally, exploring new reactor designs and integrating renewable sources of energy may streamline production processes and enhance efficiency. As the energy landscape evolves, addressing these foundational elements is crucial for fostering scalable, sustainable solutions in climate technology.
Shayle and his team at Energy Impact Partners (EIP) review a lot of climate-tech pitches. The best kind of pitch uses a solid techno-economic analysis (TEA) to model how a technology would compete in the real world. In a previous episode, we covered some of the ways startups get TEAs wrong — bad assumptions, false precision, focusing on parts instead of the system, etc.
So what does a good TEA look like?
In this episode, Shayle talks to his colleagues, Dr. Melissa Ball, EIP’s associate director of technology, and Dr. Greg Thiel, director of technology. They apply their TEA chops to two technology pathways — green ammonia and synthetic methane. EIP hasn’t invested in either area yet because both struggle with challenging economics. Shayle, Greg, and Melissa talk about what would have to change to make those economics work, covering topics like:
The basics of ammonia and methane production
The cost stack of ammonia production and the surprisingly large role transportation plays
The challenges of integrating ammonia production with renewables, like buffering hydrogen
Novel approaches to ammonia synthesis, including scaling down the existing process, lower temperature, and pressure
Catalyst: Climate tech startups need strong techno-economic analysis
Catalyst is brought to you by EnergyHub. EnergyHub is working with more than 70 utilities across North America to help scale VPP programs to manage load growth, maximize the value of renewables, and deliver flexibility at every level of the grid. To learn more about their Edge DERMS platform and services, go to energyhub.com.
On December 3 in Washington, DC, Latitude Media is bringing together a range of experts for Transition-AI 2024, a one-day, in-person event addressing both sides of the AI-energy nexus: the challenges AI poses to the grid, and the opportunities. Our podcast listeners get a 10% discount on this year’s conference using the code LMPODS10. Register today here!
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