Alberta Energy Storage Symposium - Power-to-Gas Relevance in Alberta

November 19, 2013

Presented by: David Teichroeb Business Development, Alternative & Emerging Technology

Enbridge Inc.

Enbridge Footprint
Approximately $51 billion in assets

Employ 10,000 in Canada & U.S.

Permanent & contractors Worlds largest liquid pipeline operation Canadas 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

Source: Hydrogenics 2MW Power-toGas Project in Germany

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: Temporal Power

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

H2 to Liquid Fuel

Dispatchable Power

Nuclear

Canadas Emerging Clean Energy Gridlock

Canadas 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 5

Greenfield Non-Emitting Energy Opportunities

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. Canadas 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

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 8

Projected Range of Operating Efficiencies

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

Doubling the Effective On-Peak Renewable Energy 3:1 Ratio of Wind and Power-to-Gas Storage

+
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)

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Increased Energy System Flexibility

Power-to-Gas benefits are many, and spread over wide group of stakeholders
Milliseconds to Minutes
IESO Services & Renewable Following
Surplus RE

Hours
Shift Energy

Daily
Alternative to Exports

Weeks to Seasonal
Underground Storage

Gas Dispatch With Renewable Fuel

Renewable H2 SMR Alt

> 230 TWh Storage

Emission Credits

< GHG
Congestion Relief 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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Benefits to Electricity & Natural Gas Sectors

ISO
Renewable Integration

Purchasing Energy Services

Gas Utilities
Green Gas

Power Services

Power-to-Gas Operators

Pipeline Services

1) Balance power grid for less $$ 2) Reduce curtailment of wind, hydro & nuclear 3) Enable renewable conservation

1) Green gas from wasted energy 2) Gas storage exists, is proven & low cost 3) Renewable premium on customer bill is less
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Happy Consumers

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

Compare Equivalent Energy Content by Cost

Power-to-Gas Benefits
1. Conservation of renewable energy with existing systems
Do more with less renewable generation

Equal Energy Different Measures

$MWh $/MMBtu 5.00 $1.47 10.00 $2.93 15.00 $4.40 Current Mkt Price of Natural 20.00 $5.86 Gas (Delivered) 25.00 $7.33 $35/MWh ($10.26 MMBTU) 30.00 $8.79 Renewable Gas Premium 35.00 $10.26 40.00 $11.72 45.00 $13.19 Range for Early Commercial 50.00 $14.65 Cost for Renewable Gas 55.00 $16.12 Deliveries by Pipeline 60.00 $17.58 65.00 $19.05 70.00 $20.52

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

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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
Hydrogenics Electrolyzer

Advocating for market rules that support storage investments in North American markets
Demonstrate benefits of distributed, modular, scalable storage with short construction periods

Underground Gas Storage

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GHG Reduction Analysis 5 MW, AB Project

Modeling of GHG reductions and cost/tonne for different wind purchase price scenarios
Scenario 1: Displacing $5/MMBtu Natural Gas used in Steam Reforming in Upgraders SMR Cost per Annual process Cost Cut-off Price Tonne of GHG costs Premium for for Electricity GHG Reductions avoided Renewables Reduction (BAU case) tonnes / $ / MWh $ / year $ / year $ / tonne year $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

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

Modeling of GHG Reductions Based on Electrolyzer Capacity at 5% of Projected Wind Capacity
GHG Reductions 2013-2022 (10 years) kilotonnes 1,070 GHG Reductions 2013-2032 (20 years) kilotonnes 2,888 GHG Reductions 2013-2050 (37 years) kilotonnes 7,680

Scenarios

1. Hydrogen Production for Upgrading 2. Natural Gas Offset (regardless of end-use) 3. Electricity Generation Offset

830

2,238

5,952

971

2,620

6,968

Assumptions: Market penetration based on AESOs 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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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

Renewable Power via CCGT

Cost of electricity from $70 - $140 per MWh depending on input energy cost, ancillary service revenues, etc.
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CONFIDENTIAL; Not for Circulation

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 Electrolyzer MW Incremental MW Installed MW of at 5% Wind % Renewable H2 in of Electrolyzers Wind Capacity Upgrading (Upgrading) 2017 1,694 85 3.0% 200

Total MW of Electrolyzers 285

2022
2032

2,544
3,578

127
179

6.0%
8.0%

350
450

477
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 nonemitting 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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Conclusions for Albertas Consideration

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

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david.teichroeb@enbridge.com
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