Global energy solutions company, Aggreko, recently published the results of a survey conducted to understand the pain points, challenges and opportunities around using hybrid technologies to shift from conventional to renewable power.
PEI writer Pamela Largue spoke to Carsten Reincke-Collon, Director of Future Technologies at Aggreko to learn more about the trends they are witnessing in this space.
What is hybrid energy and what are the main applications for hybrid systems?
A hybrid energy solution combines different sources of energy, typically at least one renewable source with conventional thermal power generation.
Often, a diesel or gas solution will be combined with wind or solar PV, creating a hybrid solution.
A hybrid solution can also be a generator combined with a battery. While the battery is not an energy source itself, it adds flexibility to the system and optimizes the system’s energy management. For example by displacing the need for conventional spinning reserve, which means you need less or no thermal generators for the provision of frequency control- and fewer generators mean less costs and less emissions.
Flexibility becomes ever more important as you increase the share of renewables in your grid. At some point, you will need short term storage, such as battery units to stabilize the grid independently from thermal power generation and deliver services around the integration of wind and/or solar power. Typical applications are peak shaving or load shifting.
Hybrid genuinely means combining different solutions to optimize your energy mix.
How commercially viable are hybrid options?
If we look at a use case in a remote site that needs power, for example a mining site, or community that is off grid, then you often have costs that are dominated by logistics.
Getting fuel to the site can increase costs significantly. If you can avoid having to deliver the fuel, but rather use renewable resources to produce energy, you can build an attractive commercial case quite quickly as the cost of renewable generation, especially solar, has become so low.
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If you have the space available on your premises or nearby, then it often makes sense to construct renewable generation to offset some of this fuel consumption.
Then you have to calculate against the blended cost of fuel and the additional equipment needed to convert that fuel into power.
It becomes a bit more challenging if you have to optimize a temporary power solution in an urban setting, in a shorter-term rental setting, or if you don’t have any space available for renewables. You would need to bring in a battery to optimize the operation of your thermal power equipment, using the batteries to run low load periods.
If you generate power at a high efficiency rather than having something idling for extended periods, it can influence the economics. It’s important to look at the economics of adding equipment to offset some of the fuel consumption, although you will also offset emissions.
The conversation becomes about the priority of the customer. How much they are willing to pay for a greener solution or a cleaner solution, rather than going for the standard conventional way of doing things?
How is Aggreko involved in the hybrid space?
I think a good example of one our projects is the 25.9MW hybrid solar-diesel system Aggreko will deliver to a new Gold Fields mine in the Chilean Andes.
The system will include solar PV and thermal diesel gensets to power the new Salares Norte open pit mine in northern Chile’s Atacama region.
Mines are a good example because they go through lifecycles. They start small in the exploration phase, and eventually enter the exploitation phase where you have on-site processing. Power consumption will naturally increase as facilities and operations grow.
Depending on the state of the market for the commodity that is mined, the extent and size of the operation can vary over the lifetime and lifespan of the mine, which makes it a good candidate to work with us in a flexible capacity.
The mine in the Andes will need about 25.9MW and sits at an altitude of 4,500m, which is challenging as specially adapted equipment is needed to operate at these altitudes. By the completion of the project, we will have installed 9.9MW of solar PV on site.
This project really shows the strength of the hybrid solution. It’s a 10-year project, which helps to justify the upfront investment in the solar plant. The longer the solar plant operates, the more fuel savings will result.
Are other sectors looking to hybrids to decarbonize?
Yes absolutely. For many sectors, it will become the default way of doing things. However, the more important question is how far do we progress, and how do we get there?
Renewable generation has become cheaper than conventional generation, but there are important questions to be answered. Do we have the right boundary conditions? Do you need the energy for long enough to justify the investment? Do you have the footprint or the space available to construct the renewables? Can you find the fitting commercial agreement type for the customer?
These questions are key to determining whether a hybrid solution can be utilized in a specific sector for a specific use case.
Aggreko recently conducted a survey to learn more about what the market thinks about hybrid tech, what were the results?
We conducted the survey to understand the pain points behind our customer’s energy transition, as well as how they are progressing and what challenges they are facing.
This feedback helps us to understand where we can focus our activities and tailor our support.
What we have found is that hybrid solutions are a stepping-stone, allowing the energy transition to happen gradually without a cliff-edge, or dramatic overnight shift in generation. Industries won’t immediately give up on conventional power generation but will gradually transition to a solution with a higher composition of renewables, therefore reducing emissions.
Hybrids allow for this gradual approach, which is important for many of our customers, especially those who don’t enjoy the luxury of a strong power infrastructure.
That’s where we can assist. We bridge gaps between power or infrastructure in often-remote locations. The state of infrastructure can sometimes keep our customers from using hybrid solutions and we help them address that.
Ultimately, the survey showed that this is a gradual transition, with hybrids seen as a premier choice to start that shift.
Have you noticed that some regions are more prone to adopting hybrid solutions?
It depends on the region yes, but also the kind of customers. Sometimes international customers will operate in a region that is not the fastest moving, with different ESG targets or policy landscapes.
The survey showed, for example, that the focus on carbon reduction was lower in North America than it was, for instance, in continental Europe or for the respondents in Africa.
It makes sense that in areas with a less strongly developed grid to operate on, you see higher interest in hybrid solutions.
And some sectors are more prone to hybrids. For instance, some Australian mining customers operate renewables in the solution, and they are experiencing great economic and emissions benefits.
Across many regions, we see that markets haven’t been set up to encourage the installation of additional renewables or storage for flexibility. If the regulatory framework is set up for grid connected applications, incentives might not be readily available which could impede the use of hybrids.
And what about hydrogen?
There is great potential for hydrogen across the energy transition. There is clearly a political intent to use it to store renewable energy and use it in additional value chains, whether it’s around fuel systems, or the chemical and steel industries.
If you look at the practicality of storing hydrogen, you can move it around as an energy carrier, it’s more of an energy vector than a fuel.
However, hydrogen must be produced from renewables. It doesn’t make sense to produce it from natural gas without capturing the CO2.
Hydrogen is expensive to store and transport, and the energy density is rather poor in liquefied or compressed form. Therefore, there are some challenges with hydrogen as a direct fuel.
Currently, we are seeing increasing interest in smaller, less energy intensive applications and some very high-profile customers are asking for demonstrators to show feasibility. It’s clearly the starting point for many decarbonization pathways and, because you can make other fuels from it, such as methanol, it promotes circular economy.
Hydrogen is far from being available as a commodity fuel, and therefore I think it’s early days with little commercial traction at this point in time.
Do you think there will be an uptake in alternative and biogenic fuels?
Alternative fuels or biogenic fuels are a first step when switching from diesel to gas, an important step in combination with hybridization.
Promoting alternatives such as renewable diesel, also called HVO, is an important phase on the decarbonization journey. It allows you to retain the reliability and robustness of the solution that the customer values, while helping them to reduce the carbon footprint significantly.
We see through the results of the survey just how important it is to offer our customers a full range of options to reduce emissions while maintaining reliability. This will equip them to take sound steps forward to decarbonize their systems.
