Synthetic Methane as a Renewable Energy Enabler: Economic Insights and Challenges

The hybrid AC/DC grid, with its increasing share of renewable energy sources (RES), is emerging as a cornerstone of modern energy systems. The intermittent nature of RES generation, coupled with the variability and challenges of controlling consumption, highlights the critical need for capital-intensive energy reserves and storage solutions. This paper explores how hydrogen, carbon dioxide and synthetic methane can support an economically viable, zero-emissions energy supply and consumption. The conversion of hydrogen and carbon dioxide into methane offers a pathway to extend the lifespan of existing, costly gas transmission and storage infrastructure, as well as district and building heating and hot water supply systems. The paper’s main contribution is to demonstrate that synthetic methane is a highly promising solution for energy transition in regions with abundant renewable energy resources and advanced gas transmission and storage infrastructure. Using a model of the Baltic power system and the Nord Pool electricity market, we demonstrate its potential and the associated costs of achieving a carbon-free energy supply.