Synergistic value in vertically integrated power‐to‐gas energy systems


Glenk, Gunther ; Reichelstein, Stefan


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DOI: https://doi.org/10.1111/poms.13116
URL: https://madoc.bib.uni-mannheim.de/52585
Additional URL: https://onlinelibrary.wiley.com/doi/full/10.1111/p...
URN: urn:nbn:de:bsz:180-madoc-525853
Document Type: Article
Year of publication: 2019
The title of a journal, publication series: Production and Operations Management : POMS
Volume: 29
Issue number: 3
Page range: 526-546
Place of publication: Hoboken, NJ
Publishing house: Wiley-Blackwell
ISSN: 1059-1478 , 1937-5956
Publication language: English
Institution: Business School > Stiftungsprofessur für ABWL (Reichelstein 2018-)
Pre-existing license: Creative Commons Attribution 4.0 International (CC BY 4.0)
Subject: 333.7 Natural resources, energy and environment
Keywords (English): operational volatility , vertical integration , capacity investment , renewable energy , power‐to‐gas
Abstract: In vertically integrated energy systems, integration frequently entails operational gains that must be traded off against the requisite cost of capacity investments. In the context of the model analyzed in this paper, the operational gains are subject to inherent volatility in both the price and the output of the intermediate product transferred within the vertically integrated structure. Our model framework provides necessary and sufficient conditions for the value (NPV) of an integrated system to exceed the sum of two optimized subsystems on their own. We then calibrate the model in Germany and Texas for systems that combine wind energy with Power‐to‐Gas (PtG) facilities that produce hydrogen. Depending on the prices for hydrogen in different market segments, we find that a synergistic investment value emerges in some settings. In the context of Texas, for instance, neither electricity generation from wind power nor hydrogen production from PtG is profitable on its own in the current market environment. Yet, provided both subsystems are sized optimally in relative terms, the attendant operational gains from vertical integration more than compensate for the stand‐alone losses of the two subsystems.
Additional information: This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribution and reproduction in any medium, provided the original work is properly cited.

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Glenk, Gunther ORCID: 0000-0003-2540-838X ; Reichelstein, Stefan (2019) Synergistic value in vertically integrated power‐to‐gas energy systems. Open Access Production and Operations Management : POMS Hoboken, NJ 29 3 526-546 [Article]
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BASE: Glenk, Gunther ; Reichelstein, Stefan

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ORCID: Glenk, Gunther ORCID: 0000-0003-2540-838X ; Reichelstein, Stefan

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