Impact of grid connectivity on cost and location of green ammonia production: Australia as a case study

Abstract

Green ammonia is a promising derivative of hydrogen with the capability to decarbonise the fertiliser and maritime industries, and to supplement clean energy supply in nations where renewable energy potential cannot satisfy demand. However, green ammonia production requires significant hydrogen and electricity storage infrastructure in order to convert variable renewable energy supply into a stable production process, which can meaningfully increase project costs. Here, we explore how a connection to the electricity grid may reduce these additional infrastructure costs. While previous authors have considered green ammonia plant optimisation without a grid connection (islanded production), or a grid connection with a fixed electricity price, this work considers the possibility of using both variable renewable energy and variably priced grid electricity for a large number of locations. Using Australia as a case study, we use a MILP model to optimise the production cost of green ammonia at a 1° spatial resolution, where the model can both buy and sell electricity from the grid if the connection costs are economically justified. The minimum Levelised Cost of Ammonia (LCOA) achievable when a grid connection is possible is almost 11% lower than if no grid connection is used, which amounts to savings of 2.5 USD GJ⁻¹. Benefits from the grid are most significant in the state of Tasmania; although it does not have the cheapest power on average, it provides the best opportunity for green ammonia plants to exploit low prices when they occur. We demonstrate that where an ammonia plant is both a consumer from and supplier to the national electricity network, it is robust to price fluctuation in the grid. Although no Australian electricity market is yet decarbonised, only a small fraction of total power supply for green ammonia production (<15%) comes from the grid, meaning that production using a semi-islanded approach can still be considered green in most Australian locations; in some cases, where power is sold back to the grid, the emissions avoided from electricity sale may be larger than the emissions generated from electricity purchase.