Power-to-X Market

Power-to-X technology is an emerging solution that enables the storage of excess electricity from renewable sources for subsequent dispatch and/or facilitates the provision of a low capital-intensive decarbonization solution to produce sustainable fuel and chemicals. For instance, the excess and underutilized renewable energy from solar and wind farms is used to power technologies capable of converting water into hydrogen, which can be used as a sustainable fuel in the transportation industry. The adoption of power-to-X technology and associated products facilitate the integration of renewable power generation solutions into high energy-consuming sectors such as transportation, agriculture, chemicals, and manufacturing, thus negating the demand for non-renewable fossil fuels.

There has been a constant rise in energy demand due to the increasing population and the subsequent demand from various industries. This has led to the exhaustive utilization of fossil fuels, which has caused adverse effects on the environment. The environmental issues concerning the emission of greenhouse gases have been progressively pushing various world economies to transition into adopting sustainable and fossil-free energy solutions. Although various countries are moving away from fossil fuel utilization to meet their decarbonization targets and control greenhouse gas emissions, renewable energy production is still not enough to suffice the enormous energy demand. For instance, the BP Statistical Review of World Energy states that fossil fuels meet ~80% of the global primary energy demand. Also, fossil fuels are non-renewable and are bound to deplete over time due to unrestricted and excessive mining. As a result, there is an urgent need to develop alternatives to improve waste heat recycling and energy conversion efficiency to reduce the reliance on fossil fuels and increase the efficiency of existing energy technologies. This is expected to propel the adoption of renewable energy solutions further. However, for this transition to succeed, significant issues related to renewable energy storage have to be addressed, thus presenting a rewarding opportunity for the growth of power-to-X technologies.

The power-to-X market, however, is still developing and faces several challenges. Most of the power-to-X solutions are capital-intensive. In addition to the high CAPEX, these solutions are characterized by high OPEX. Further, similar to any other mechanism that involves converting energy from one form to another, power-to-X technology also showcase low efficiency and substantial energy losses. However, in its early phase, the technology has ample room for rectifying these challenges, thus evolving into a key supportive technology that aids in the transition toward a truly sustainable scenario.

By type, the power-to-x market can be segmented into power-to-gas, power-to-heat, power-to-liquid, and others, which include power-to-fuel and power-to-chemicals. Power-to-gas refers to the technology through which excess renewable energy is used to power the electrolyzers to produce hydrogen or synthetic methane. Similarly, the other power-to-X solutions refer to the technology that facilitates the conversion of excess and underutilized energy from renewable sources to be converted into the corresponding end product, which is then used for the respective application.

By region, the global power-to-X market can be segmented into North America, Europe, Asia Pacific, Latin America, and the Middle East & Africa. North America features some of the world’s richest wind, solar, geothermal, hydro, and biomass resources. The region relies on renewable energy for large-scale power generation, particularly in the form of hydropower. In Canada, hydropower accounts for 63% of electricity generation. Similar developments in the US are presenting opportunities to deploy power-to-X solutions in the region.

Furthermore, Europe is heavily dependent on natural gas for its energy needs. Geopolitical situations, however, are leading to an increasing uncertainty regarding the supply of natural gas. This has caused various economies of the European region to adopt renewable and sustainable sources to meet their energy demand, which has revealed lucrative growth opportunities for power-to-X technologies in the region. The sustained industrial growth and the higher power demand in the Asia Pacific region contribute significantly to global warming. This is compelling economies, such as India, China, Japan, South Korea, and Malaysia, to look for efficient and sustainable power generation technologies. This can increase the utilization of power-to-X technologies in the region, with an additional advantage of reducing the emission of waste heat to the environment. Similar trends in other countries of the region may increase the commercial utilization of power-to-X in the near future.

The major players operating in the power-to-X market include Copenhagen Infrastructure Partners (Denmark), MAN Energy Solutions (Germany), thyssenkrupp AG (Germany), Valmet (Finland), and Siemens (Germany). Furthermore, intergovernmental organizations such as International Renewable Energy Agency (IRENA) are involved in the research & development, funding, and management of power-to-X technologies and associated solutions.