Harnessing Renewable Power with Power-to-X: Challenges and Opportunities
by People Integrated
Below are examples of PtX products:
Power-to-Hydrogen: Electrolysis of water produces hydrogen, which can be used directly for heating, electricity generation, and in the transport sector (e.g., in fuel cells) as well as a chemical commodity (e.g., at refineries). It may also be possible to mix a small amount into the natural gas grid (Energinet, 2019).
Power-to-Gas: The synthesis of carbon and hydrogen produces synthetic methane, which can be directly fed into the natural gas grid and used for the same purposes as natural gas.
Power-to-Liquid: The synthesis of carbon and hydrogen produces e-fuels (so called because they are produced using electricity in the process) such as e-diesel, e-methanol, e-kerosene (jet fuel), and e-dimethylates. These fuels are chemically identical to current fossil fuels and can therefore be used directly in heavy transport, such as ships, aircraft, and trucks. These fuels are carbon neutral because they are produced from renewable power and carbon recycled from other uses. Unlike power, carbon-neutral fuels can be stored easily and relatively inexpensively.
Power-to-Chemicals: The synthesis of nitrogen and hydrogen produces chemicals used in the production of medicine, plastics, and many other products that currently rely on fossil resources.
Benefits of Power-to-X
Benefits of Power-to-X
One of the clear benefits of Power-to-X (PtX) technologies is their ability to facilitate the integration of variable renewable energy into traditional power grids by balancing demand and supply. This implies that the primary electricity used for electrolysis will be excess electricity available when there is an abundance of renewable energy. Specifically, during periods when renewable energy sources produce more electricity than the immediate demands for direct electrification can accommodate, or when the price of electricity drops low enough to make the production of green hydrogen economically viable. In addition to being sustainable and free from greenhouse gas emissions or pollutants, chemically bound energy is relatively flexible and cheaper to store than electricity. This makes the energy usable during periods when renewable energy production is insufficient to meet immediate power demands (Energinet, 2019). PtX solutions also enable the transportation of energy from areas with high generation to areas with high demand. For example, some of the best wind resources are often located offshore or in rural areas where the demand for power is low. Wind energy can be converted to hydrogen, which can then be transported to regions with higher demand (Bofinger, 2022).
The benefits of PtX can be summarized as follows:
Considering these benefits, PtX technologies are crucial for the development of a net-zero-emission future. Kim Hedegaard believes that the importance and potential of PtX require shared responsibility to support the technology:
"All parties — consumers, governments, corporations, and individuals — should contribute to the green transition, especially early on."
Commercialisation of Power-to-X solutions
Commercialisation of Power-to-X solutions
In addition to environmental benefits, PtX technologies must also offer economic incentives for industry adoption. Mads Brøgger favors that perspective:
"The biggest challenge for PtX is establishing viable business cases amid uncertain production and sales prices, especially with immature technologies and unclear customer willingness to pay a premium for PtX products over natural gas."
Therefore, despite the rapid development in key technologies, most products created through PtX pathways are still economically uncompetitive with fossil fuel alternatives (Figure 4, Bofinger, 2022; Dahiru et al., 2022).
Figure 4. Production costs of PtX products and average stock prices in autumn 2022.
The chart indicates that gaseous products, such as methane (CH₄) and biomethane (BioCH₄) can be economically competitive with current natural gas prices in Europe. However, Power-to-Liquid (PtL) products remain too costly to produce, even with increased fuel prices. In contrast, formic acid and ammonia produced via Power-to-Chemicals (PtC) could be competitively priced. Consequently, gaseous products, formic acid, and ammonia from PtX systems may already represent viable alternatives in the energy market. The chart indicates that gaseous products, such as methane (CH₄) and biomethane (BioCH₄) can be economically competitive with current natural gas prices in Europe. However, Power-to-Liquid (PtL) products remain too costly to produce, even with increased fuel prices. In contrast, formic acid and ammonia produced via Power-to-Chemicals (PtC) could be competitively priced. Consequently, gaseous products, formic acid, and ammonia from PtX systems may already represent viable alternatives in the energy market. Kim Hedegaard suggests another perspective to current economic viability of green products:
"One of the challenges in green transition lies in a widespread misunderstanding of its purpose. Many focus on hydrogen economy and green premiums, how to make green solutions competitive and build a profitable business. But that's not the primary goal. The task is to solve the climate crisis, which requires keeping our attention on the long-term mission. While the creation of a sustainable business model is important, prioritizing competitiveness too heavily can set up unnecessary barriers and risk delaying the transition by as much as 10-20 years."
The persistent cost disparity can partly be attributed to the decentralized nature and smaller scale of PtX plants. Traditional fossil fuel plants benefit from economies of scale, which allow them to negotiate lower feedstock prices (Bofinger, 2022). Additionally, PtX solutions involve relatively high capital costs for implementation. The volume and weight of hydrogen storage systems remain substantial, and their energy efficiency is currently inadequate. Furthermore, the durability of these storage systems is insufficient, necessitating better materials to extend equipment lifespan. Nonetheless, improvements in plant economics are anticipated due to declining renewable electricity prices and enhanced efficiency of the electrolysis process.
The challenges associated with implementing PtX solutions can be summarized as follows (Bofinger, 2022):
Mads Brøgger suggests an insider perspective on energy pricing:
"Denmark is very much an integral part of the European energy system, where electricity production is sometimes reduced when supply exceeds demand—a process known as down-regulation. For a PtX plant to use excess electricity, the price it is willing to pay must be higher than the financial benefits of down-regulation. However, as renewable energy capacity grows, the advantages of down-regulation is expected to decrease, making electricity cheaper for PtX production. In this transition, government subsidies and political incentives play a key role in making PtX more attractive and financially viable."
Large-Scale Industrialization of Electrolysis Technology: Historically, electrolysis-based hydrogen production has been limited to small-scale niche markets. However, there is now a growing demand for electrolysis technology, which is leading to a reduction in unit costs. Previously, the largest electrolysis plants had capacities of up to approximately 1 MW. Recently, RWE (German energy company) announced its plan to install hydrogen generating capacities of 300 MW in 100 MW increments by 2027. An example from the Danish energy market is the collaboration between Topsoe A/S and the US-based company First Ammonia. The goal is to develop green ammonia plants (owned by First Ammonia) with a production capacity of up to 5 million tonnes per year. Topsoe has already built an efficient, large-scale factory, which will manufacture electrolyzer units necessary for the initial production of green hydrogen that will be converted to ammonia. The factory is located in Denmark and will begin delivering stacks (electrolysis units) to customers in the first half of 2025. Kim Hedegaard comments this project:
"Our plant located in Herning represents the first generation of PtX technology. Launching the plant will teach us valuable lessons, much like the early wind turbines did. By applying and refining generations 0, 1, and 2 in real-world settings, we aim to accelerate commercialization. We're still in the early, flat stage of the S-curve. We're ready to scale PtX production 10, 100, or even 1,000 times, with efficiency improving as we grow. Advancements in efficiency, cost, and technology will reduce the green premium significantly."
Increased Value of Green PtX Products: Stricter European and national regulations for renewable energy fuels, effective from 2021, are expected to drive demand for more advanced e-fuels produced through electrolysis and PtX technologies.
Greater Focus on the Integration of Wind and Solar Power in the Electricity Market and Grid: The expansion of wind- and solarpower production is proceeding rapidly, especially in northern Europe, and now constitutes a significant portion of the electricity market. As a result, manufacturers, developers, and investors in wind and solar power are increasingly interested in technologies capable of utilizing fluctuating electricity generation. Electrolysis, with its ability to handle high volumes of flexible and interruptible electricity consumption, can enhance the utilization of electricity infrastructure.
However, a substantial reduction in the costs associated with PtX technologies and achieving cost parity with fossil fuels might be a long-term challenge. Rising inflation and higher capital expenditures have pushed the ambitious goal of $1/kg for green hydrogen further out of reach. One of the perspectives, that is gaining traction across the hydrogen industry, is that the oil and gas sector, that have been historically profiting from fossil fuels, could share the financial burden of transitioning to green technologies. Carbon taxes (a penalty that businesses must pay for excessive greenhouse gas emissions) could generate additional revenues to finance green projects, thus making green solutions more market viable.
Power-to-X potential in Denmark
Power-to-X potential in Denmark
Denmark has been experiencing a PtX paradox – there has been neither significant production nor consumption of PtX products (Dansk Energi, 2020). Demand has been waiting for a competitive price, while supply has been waiting to scale up production until a certain commitment from buyers was secured. Consequently, demand monitored supply, and supply monitored demand. Denmark, with its small and open economy, is influenced by foreign competition. Thus, decisions regarding the country’s future in the PtX market must have been weighed carefully and taken promptly to ensure that Danish companies are not disadvantaged compared to their foreign counterparts. While consumers are waiting for more competitive prices and companies for higher demand, PtX initiatives are making a cautious yet steady entry into the Danish market.
Denmark has set an ambitious target of reducing carbon emissions by 70% by 2030 and aims to run entirely on renewable energy, with 80% coming from wind power. While electrification and energy efficiency improvements are critical to achieving this goal, PtX will also play a crucial role in surpassing the 70% mark. Notably, production of e-ammonia and e-methanol is already established in Denmark, and the necessary infrastructure for transporting and trading ammonia is in place, given its global use in fertilizer.
Some of the 10+ MW PtX projects in Denmark (Ministry of Foreign Affairs of Denmark, n.d.) include:
2019:
2020:
2021:
Furthermore, in December 2021, the Danish government launched a €161 million subsidy scheme to support PtX projects, aiming to reach between 4 and 6 GW of electrolysis capacity by 2030 (Durakovic, 2022). This initiative seeks to boost the production and use of green hydrogen in hard-to-abate sectors such as shipping, aviation, heavy road transport, and industry.
The market for PtX in Europe is expected to grow dramatically. Consumption of green hydrogen is projected to quadruple between 2030 and 2050, driven by the transition of heavy transport towards PtX products and EU climate targets (Dansk Energi, 2020). Denmark is well-positioned to secure a strong position in the production of green hydrogen, which requires large amounts of competitively priced renewable electricity, accounting for around 50% of total production costs (see Figure 6). Thanks to its abundant wind resources and massive expansion of offshore wind capacity, Denmark can already offer green electricity at a lower price than electricity produced using fossil fuels such as gas and coal (Dansk Energi, 2020). Denmark's geographical location also favors the export of renewable hydrogen. North-west Europe is expected to become a hub for renewable hydrogen in Europe due to its hydrogen-intensive industry, access to the North Sea, and relatively good existing gas infrastructure. Proximity to this hub provides Denmark with a competitive advantage in transport.
Mads Brøgger also speaks favorably regarding the Danish infrastructure readiness to meet the needs of the green transition:
"The natural gas network is valued at around 50 billion DKK, so repurposing parts of it for PtX supply system could make sense, especially with connections to the European system. I am also optimistic that the ongoing upgrades and investments by grid companies will equip the electrical infrastructure to meet rising demand. However, I see regulatory issues as a major obstacle. Grid companies often face penalties for taking proactive steps. Politically, efforts are needed to establish regulatory framework that encourages these critical upgrades and investments."
On the production side Kim Hedegaard highlights the progress in recent PtX advancements:
"We've proven high-temperature electrolysis works effectively in practice, achieving near-theoretical efficiency. Secondly, we've secured stakeholder support for a long term push for green alternatives despite limited short-term returns. Lastly, we just announced a supply agreement with First Ammonia for their first U.S. project. Wins like these show that companies are willing to take risks. This project will make green ammonia accessible, breaking past the barrier of lacking a production platform."
Sector coupling
Sector coupling
Denmark has achieved remarkable success in its green transition since 1990, with 68% of energy in electricity and district heating now derived from renewable sources and a 15% reduction in total energy consumption (Erhvervslivets Klimaalliance, 2021). To optimize the green transition, it is essential to view the energy system as a cohesive whole rather than focusing on separate sectors. Sector coupling provides a pathway to this integrated approach, enabling renewable energy to flow seamlessly between electricity, heating, gas, and water systems. By intelligently linking energy production and consumption, the system can balance supply and optimize infrastructure capacity. Such integration facilitates the ability to accelerate or delay energy consumption based on availability, ensuring the most efficient use of renewable resources.
Figure 7. Framework for intelligent sector coupling.
Denmark is uniquely positioned to lead in sector coupling thanks to its strengths in essential technologies and its highly efficient, sustainability-focused utility companies. Moreover, existing climate legislation provides clear direction for the transition while balancing competitiveness. Collaborative climate partnerships underline strong business support for green goals, while Denmark’s highly digitalized economy facilitates intelligent energy management. Its robust district heating infrastructure also plays a pivotal role in future sector coupling. Additionally, tradition of public-private collaboration fosters innovation and effective value chains, making Denmark a prime candidate to accelerate the adoption of integrated, sustainable energy systems.
Pilot sector coupling projects are already exploring and testing feasibility. One of them is Norlys GreenLab – an innovation center and industrial park, that provides a platform to test the integration of wind energy, Power-to-X, and methanol refining within a tax-free zone. Mads Brøgger shares his insights on potential improvements to enhance sector coupling:
"Adjustments to tax and regulatory policies along with regulatory push to collaborate could encourage better renewable decision-making and more effective sector integration. Second, in Denmark, we need to improve the coordination between electricity and district heating systems. This could enhance balancing between sectors like heating and renewable energy. Additionally, closer collaboration between e.g. the gas and electricity sectors would streamline PtX and energy efficiency."
To transition to a more advanced and integrated renewable energy system, the regulatory framework must evolve to support sector coupling and intelligent energy systems. Adjusting the existing regulations is insufficient, as the current frameworks, rooted in the fossil-based energy system, hinder integration and make the green transition slower and more expensive. Achieving the government’s climate goals requires comprehensive, ambitious, and action-oriented measures that prioritize a holistic approach to energy system transformation.
From renewable energy to everyday use.
From renewable energy to everyday use.
The continuous advancement of PtX technologies present significant opportunities across multiple sectors. Acting as a bridge between various industries, PtX enhances synergy and promotes a cohesive approach to sustainability. By producing sustainable fuels, PtX connects renewable energy with the transportation sector, enabling vehicles, ships, and aircraft to operate on cleaner energy sources. In the chemical industry, PtX facilitates the production of sustainable ammonia for fertilizers, thereby supporting sustainable agricultural practices.
Additionally, PtX contributes to a circular economy by utilizing captured CO2 in the production of synthetic fuels and chemicals. This process not only mitigates CO2 emissions but also creates value from waste, fostering a more sustainable industrial ecosystem. As countries invest in PtX infrastructure, new markets and business opportunities emerge, fostering innovation and economic development, which creates new jobs in renewable energy, engineering, and manufacturing sectors.
While PtX technologies are still evolving, they are becoming more widespread and efficient. Over time the cost of renewable fuels and chemicals is expected to decrease. End users could see cost savings on energy and fuel bills, particularly as fossil fuel prices become more volatile. In the transportation sector, PtX fuels can drive the adoption of heavy cargo transport using synthetic fuels. Consumers might also find new products on the market like hydrogen fuel cell vehicles with 3-5 minutes refuel time (TWI, n.d.).
The reduction in air pollution from decreased fossil fuel use can lead to better public health. Cleaner air, especially in urban areas, contributes to a higher quality of life for all residents.
PtX also drives a shift in how energy is consumed, pushing for innovative practices and behaviors. For instance, it encourages using electricity to charge hydrogen fuel cell vehicles and integrating smart home technologies to optimize energy usage based on availability and demand. Adopting these advancements will necessitate consumers to embrace new technologies and adapt their habits. Consequently, educating consumers about the benefits and mechanisms of PtX technologies becomes essential to facilitate this transition and maximize their potential impact.
Bolstering Power-to-X through executive talent acquisition and human capital consulting.
Bolstering Power-to-X through executive talent acquisition and human capital consulting.
The success of PtX initiatives hinges not only on technological innovation but also on the strategic acquisition of executive talent and effective human capital consulting. These elements are critical for driving advancements, scaling operations, and ensuring the overall success of PtX projects.
As the PtX industry is still evolving, the need for specialized talent is pressing. The PtX sector requires a diverse range of expertise, from chemical engineers and renewable energy specialists to economists and regulatory experts. A CTO with expertise in renewable energy and PtX technologies is essential for leading research and development efforts. An experienced COO can optimize production processes, scale operations, and ensure efficiency. A CFO with a strong background in energy markets and financing can secure funding and manage financial risks. People Integrated has an extensive network of professionals across various disciplines and tools to identify and attract these specialized professionals.
Our curiosity keeps us abreast of industry trends, emerging technologies, and market demands. This insight guides us in defining talent needs and adapting recruitment strategies accordingly. By understanding your company’s long-term strategy People Integrated anticipates future talent needs based on both industry trends and your business growth projections. Seeking leaders who are not only technically proficient but also innovative and capable of driving strategic initiatives is of the essence. As PtX is still a niche market and it might require expanding the search globally to attract diverse talent with unique perspectives and expertise.
Furthermore, by understanding your company’s values, work environment, and team dynamics, we not only focus on the technical proficiency and experience of candidates but also on their cultural fit within your organization. By partnering with People Integrated, companies can build strong, diverse teams that drive strategic goals. People Integrated helps:
Accelerate performance by identifying misalignments and guiding leaders to focus on what drives growth.
Align leadership capabilities with strategy using data-driven insights to ensure the right people are in the right roles.
Attract top executive talent through a rigorous executive search process that ensures the best fit for leadership positions.
Power-to-X (PtX) technology converts renewable electricity into gas, chemicals, and fuels, helping industries transition from fossil fuels to renewable energy. While renewable energy production grows, its intermittency and the inability to electrify all industries immediately mean fossil fuels still play a significant role. PtX offers a vital storage solution and a bridge for fossil-dependent sectors like transportation and heating.
Though PtX has been technically possible for some time, its widespread adoption requires research, cost reduction through upscaling, and regulatory support. Denmark, with its renewable energy resources and proximity to hydrogen-intensive industries in Northwest Europe, is well-positioned to become a key player in the PtX market. Sector coupling further supports the green transition by integrating energy systems for more efficient resource use.