Decarbonisation is difficult to achieve cost-effectively in most countries, due to fundamental limitations in solar and wind resources. The solution may lie in the development of renewable energy carriers and new zero-carbon energy supply chains.
This is according to research and analytics firm Lux Research’s new report, Evolution of Energy Networks: Decarbonising the Global Energy Trade, examining renewable energy carriers as well as countries and companies developing them.
Lux evaluated the lifetime costs of 15 different renewable energy carriers from electricity, hydrogen, synthetic methane and ammonia to liquid organic hydrogen carriers (LOHCs), vanadium and aluminium.
Delivering energy via land-based infrastructure becomes expensive at long distances as a result of inefficiencies of powerlines and capital costs of pipelines. However, delivery via ship is most cost-effective at long distances.
Lux’s analysis also found that across all renewable carriers, low-cost solar energy can be delivered to resource-constrained regions at 50% to 80% lower cost than generating solar locally.
The research group predicts the tipping point for deploying renewable energy import infrastructure will be in 2030, when imported electricity via new HVDC power lines becomes cheaper than low-carbon natural gas turbines.
The next tipping point will occur in 2040, according to the report, when imported liquid hydrogen becomes cheaper than low-carbon stream methane reformation.
These predictions allow 10 years for companies to develop partnership and pilot projects to demonstrate such a transformative energy paradigm. Major companies like Kawasaki Heavy Industries, Mitsui & Co., Equinor, and Shell are already developing decarbonised energy trade routes in Europe, Japan and Southeast Asia.
Tim Grejtak, an analyst at Lux Research and the lead author of the report, states: “Countries representing $9 trillion of global GDP cannot meet their energy demands solely through domestic renewable energy production and will require the import of renewable energy from more resource-rich countries.”
The analysis indicates that the expanded buildout of AC and DC powerlines will be the most cost-effective way of importing low-cost solar energy from distant regions, though only up to roughly 1,000km. At farther distances, other renewable energy carriers like synthetic fuels are less expensive.
“It’s important to note that imported energy costs can be competitive against other zero-carbon technologies, but no current energy carrier can offer costs low enough to completely replace liquid natural gas (LNG) or oil,” Grejtak concluded.