Technical and economic demand response potential analysis of low-carbon nitrogenous fertilizer plants in 2030

Abstract

Global fertilizer production accounts for 2 – 3% of the total energy consumption of which nitrogenous fertilizer is the vast majority. With natural gas as the dominant source of energy, the fertilizer industry is considered one of the largest greenhouse gas emitting industries. Nowadays, global energy markets are disrupted by Russia’s invasion of Ukraine. Thus, reducing natural gas consumption in industries has become of great importance to decrease the EU’s dependence on Russian fossil fuels in combination with tackling the climate crisis. In this study, we examine the demand response potential of a European low carbon fertilizer production facility in 2030 by applying a cost minimization linear programming model. First, a consumption and production profile of a fictive European fertilizer plant is estimated based on the current profiles of OCI Nitrogen’s and Yara Sluiskil’s fertilizer production facilities. Second, the impact on the energy consumption is determined for three decarbonization pathways: Business-as-usual scenario (BAU), Carbon capture and storage scenario (CCS), and a fully electrified Green Ammonia scenario. Third, the technical and economic demand response potentials are estimated through a linear optimization programming model. In the BAU scenario, a fertilizer production facility is expected to consume 34.2 PJ natural gas and 124.5 GWh electricity per year. A CCS system significantly increases the electricity consumption by more than a three-fold, but this is still only a relative energy increase of 3% while 96% of the CO2 emissions are now captured and stored. In the Green Ammonia Scenario, the total energy requirement increases by approximately 15%. The analysis on future trends of natural gas and carbon permits reports threshold values that show when the Green Ammonia production route is lower in total energy costs compared the BAU and CCS scenario. Concerning the demand response potential, the overall energy cost reduction in the BAU and CCS scenario was close to zero since the share of electricity consumed lower than 3%. Solving the optimization model for the Green Ammonia scenario showed that an economic demand response potential of 3.6% could be achieved with a 16.6% peak shifting potential annually. In this research, the electrolyzer is dimensioned 10% larger than required with an installed capacity of 1.3 GW. The technical and economic demand response potential could potentially be maximized by oversizing the electrolyzer up to a point where the demand response potential is still more profitable than the additional investment and operational costs.