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Alberta Energy Storage Symposium

- Power-to-Gas Relevance in Alberta

November 19, 2013

Presented by: David Teichroeb

Business Development, Alternative

& Emerging Technology

Enbridge Inc.

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Enbridge Footprint

• Approximately $51 billion in

assets

• Employ 10,000 in Canada &

U.S.

• Permanent & contractors

• Worlds largest liquid pipeline

operation

• Canada’s largest natural gas

distribution company

• Electricity transmission

• More than $4 billion in Green

and alternative energy

• Includes fuel cells,

geothermal power, run of

river hydro, heat to power,

• More than 1240 MW of wind

and solar assets by 2014

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Investing in Multiple Storage Technologies

Hydrogenics, Mississauga, Ont.

• Electricity Storage with Hydrogen

– Power-to-Gas uses hydrogen electrolyzers for

bulk storage of surplus renewable power

– Store renewable hydrogen in natural gas grid

– Grid stabilization and integration of renewables

Temporal Power, Mississauga, Ont.

• Flywheel Energy Storage

– Flywheels enable correction of short-duration

power imbalances

– Mechanical battery storing kinetic energy

– Renewable integration and system regulation

Source: Hydrogenics 2MW Power-to-

Gas Project in Germany

Source: Temporal Power

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Flexibility of Power-to-Gas

Power-to-Gas converts surplus non-emitting power into

renewable fuel, power or heat when and where it is needed

Power-to-Gas Solution

Dispatchable Power

Nuclear

H2 to Liquid Fuel

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Canada’s Emerging Clean Energy Gridlock

• Canada’s electricity is a relatively low-carbon power supply

– 75% is supplied from non-emitting supplies (large hydro,

nuclear and renewables) 1

• Objective is to increase to 90% non-emitting by 2020

– Challenging and costly without energy storage:

• Increasing renewables adds to surplus conditions

• Adds to exports which subsidize neighbouring economies

• Wastes non-emitting energy by turning off wind turbines and

spilling water over dams

• Increasing public push-back against new energy

infrastructure like wind, nuclear, electricity transmission etc.

Footnote 1: “Now or Never”, Standing Senate Committee on Energy the Environment, and Natural

Resources; 2012

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Greenfield Non-Emitting Energy Opportunities

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Flexible Infrastructure with Innovation

- Integrating Pipelines & Wires

• Energy storage is not new - Canada already has over 800

billion cubic feet of underground gas storage

• Economic storage is possible if we convert renewables into

a gas - match need with existing infrastructure.

• Canada’s natural gas system stores equivalent of 234 TWh

• This is over 40% of annual electricity use

• Innovative Power-to-Gas use of water electrolyzers converts

non-emitting power to hydrogen gas

• Renewable gas injected in existing natural gas grid

• Renewable energy can be stored for many months

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Different Needs Require Different Solutions

• No single storage solution will meet all requirements

• Long-duration storage with hydrogen opens new opportunities

Source: International

Gas Union Research

Conference 2011,

Abstract from Dr.

Gerald Linked

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Projected Range of Operating Efficiencies

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Small Land and Visual Footprint

Future 40 MW Power-to-Gas plant demonstrates low

visual profile for greater urban and rural acceptance

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Conserving our Non-Emitting Inventory

100 MW of wind

• 245,000 MWh/year (total)

• Potential for surplus

• 58,000 MWh high-value, peak

32 MW Power-to-Gas

• Doubles on-peak renewables

• Energy when needed (no surplus)

Doubling the Effective On-Peak Renewable Energy

3:1 Ratio of Wind and “Power-to-Gas” Storage

+

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Milliseconds to

Minutes Hours Daily

Weeks to

Seasonal

Shift Energy

Congestion Relief

Renewable H2 – SMR Alt

Alternative to Exports

Gas Dispatch With

Renewable Fuel

Underground Storage

> 230 TWh Storage

Increased Energy System Flexibility

Power-to-Gas benefits are many, and spread over wide group of stakeholders

Emission Credits

< GHG

Surplus RE

IESO Services &

Renewable Following

Long-Duration Arbitrage

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As Renewable Penetration Grows – Scale Matters

Unique Contracting path is needed to unlock the value of

Power-to-Gas

• Gas storage exceeds potential of

alternative bulk options

• Consumer Benefit – low

marginal cost of pipeline storage

• Power-to-Gas offers more than a

thimbleful of storage > 230 TWh

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ISO Renewable

Integration

Gas

Utilities Green Gas

Power-to-Gas

Operators

Happy Consumers

1) Green gas from wasted

energy

2) Gas storage exists, is

proven & low cost

3) Renewable premium on

customer bill is less

1) Balance power grid

for less $$

2) Reduce curtailment of

wind, hydro & nuclear

3) Enable renewable

conservation

Purchasing

Energy

Services

Pipeline Services Power Services

Large consumer benefits, but contracting needs to bridge electricity and gas sectors

Benefits to Electricity & Natural Gas Sectors

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Compare Equivalent Energy Content by Cost

$MWh $/MMBtu

5.00 $1.47

10.00 $2.93

15.00 $4.40

20.00 $5.86

25.00 $7.33

30.00 $8.79

35.00 $10.26

40.00 $11.72

45.00 $13.19

50.00 $14.65

55.00 $16.12

60.00 $17.58

65.00 $19.05

70.00 $20.52

Current Mkt Price of Natural

Gas (Delivered)

Range for Early Commercial

Cost for Renewable Gas

Deliveries by Pipeline

$35/MWh ($10.26 MMBTU)

Renewable Gas Premium

Power-to-Gas Benefits 1. Conservation of renewable energy

with existing systems – Do more with less renewable

generation

2. Attractive marginal cost

– Renewables by pipe can be 50% - 70% more cost effective

– Green gas by recovering low-value exports / waste

3. Unmatched flexibility for ISO

– Single tool for bulk, seasonal storage of intermittent renewables; and,

– Fast-responding grid support

Equal Energy – Different Measures

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Current Canadian Activity

• Enbridge, Hydrogenics and CGA developing

Ontario pilot project

– 2 MW design rating; 25% overdrive capability

• Targeting construction in 2014 with renewable

hydrogen injection into pipeline system

• Screening for Alberta host site; 5 -10 MW

Power-to-Gas project

• Future scale; 5 to 50 MW distributed systems

• Advocating for market rules that support storage

investments in North American markets

• Demonstrate benefits of distributed, modular,

scalable storage with short construction periods

Hydrogenics Electrolyzer

Underground Gas Storage

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GHG Reduction Analysis – 5 MW, AB Project

Scenario 1: Displacing $5/MMBtu Natural Gas used in Steam

Reforming in Upgraders

Cut-off Price

for Electricity

Annual

GHG

Reductions

SMR

process

costs

avoided

(BAU case)

Cost

Premium for

Renewables

Cost per

Tonne of

GHG

Reduction

$ / MWh tonnes /

year $ / year $ / year $ / tonne

$20 1,487 $185,506 $318,753 $214

$30 3,772 $470,758 $343,194 $91

$40 5,838 $728,516 $457,293 $78

$50 6,988 $872,103 $574,824 $82

$60 7,478 $933,166 $646,654 $86

Modeling of GHG reductions and cost/tonne for different wind

purchase price scenarios

• Data derived from Pembina Institute modeling of 2009/2010/2011 AESO market data

• Economics driven by combination of electrolyzer capacity factor (capital amortized over MWh) and input price of electricity

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An Alberta Example - GHG Reductions

Scenarios

GHG

Reductions

2013-2022

(10 years)

GHG

Reductions

2013-2032

(20 years)

GHG

Reductions

2013-2050

(37 years)

kilotonnes kilotonnes kilotonnes

1. Hydrogen

Production for

Upgrading

1,070 2,888 7,680

2. Natural Gas

Offset

(regardless of

end-use)

830 2,238 5,952

3. Electricity

Generation

Offset

971 2,620 6,968

Modeling of GHG Reductions Based on Electrolyzer Capacity at

5% of Projected Wind Capacity

• Assumptions:

– Market penetration based on AESO’s current projected wind capacity in Alberta.

– Wind capacity factor of 32% which is based on actual performance from 2008-2012

– Electrolyzers store (charges) for 63% of the time

• based on the availability of wind at $40/MWh or less (between 2009-2011)

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Renewable Power via CCGT • Cost of electricity from $70 - $140 per MWh depending on

input energy cost, ancillary service revenues, etc.

Economics of Power-to-Gas

- Early Commercial Markets

Renewable H2 for Upgrading

• $78/Tonne GHG reductions

• Compared to SMR using $5/MMBtu natural gas

• Sensitivity:

– $4/MMBtu Gas ($95/Tonne)

– $8/MMBtu Gas ($27/Tonne)

– Assumptions:

• Revenues include electricity ancillary services

• Electrolyzer capacity factor ~ 63% based on Alberta

historical wind availability for 2009/10/11

• Input electricity price averaged $26/MWh with a cap at

$40/MWh as the “Cut-Off” price signal

CONFIDENTIAL; Not for Circulation

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Renewable Integration with Power-to-Gas

– Expanded Market for Wind Adoption

• By integrating electricity, gas pipeline, and hydrogen

markets, Alberta can expand renewable energy adoption:

– Current installed wind projections; 1,694 MW by 2017, 2,544 MW by

2022 and 3,578 MW by 2032

– Larger market would support increased wind adoption

• Expanded Market Scenario: Increased demand-pull with

modest penetration of renewable hydrogen for upgrading.

– Assuming no additional upgrader capacity in the province

AESO Forecast on Installed MW of

Wind

Electrolyzer MW at 5% Wind

Capacity % Renewable H2 in

Upgrading

Incremental MW of Electrolyzers

(Upgrading) Total MW of Electrolyzers

2017 1,694 85 3.0% 200 285

2022 2,544 127 6.0% 350 477

2032 3,578 179 8.0% 450 629

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Value to Stakeholders

Power-to-Gas Offers Many Compelling Benefits

Electricity Grid Operators

– More flexibility to operate

wind, hydro & nuclear

– Incremental; add when

needed without risky go-big

strategy (like pumped

hydro)

– Distributed solution;

flexibility to locate where power system need exists

Societal

– Maximize existing inventory

of renewable and non-

emitting power; less

pressure to build new plants

– Urban Friendly; Strategy

uses existing pipelines,

storage and power plants

– Reduced emissions;

dispatchable power plants

run on renewable fuel

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Power-to-Gas uniquely positioned for energy system flexibility

• Maximize renewables by delivering energy as green gas; less cost

• Using existing infrastructure and corridors more efficiently – both wires and pipes

• Future GHG reductions may be increasingly costly as power grids are greened

– Renewable diversity with wires, large hydrogen and natural gas sectors can lower costs

• Renewable hydrogen for refining can support the growth of wind

• Scale of gas storage can support a floor price for wind power while offering long-duration arbitrage to increase wind revenues

• Simultaneous bulk storage and ancillary services are possible; but, market rules and policy can help or hinder commercialization

Conclusions for Alberta’s Consideration

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david.teichroeb@enbridge.com