Techno-economic and climate finance assessment of a methanation plant with green hydrogen production and CO2 recycling in Italy

Power to Methane (PtM) represents the production of natural gas starting from renewable energy, to store the latter in a chemical way. This paper discusses the implementation of a PtM plant in Italy from a technical, economic and climate point of view. The study can help stakeholders to take a decision on whether to implement the production of a Substitute Natural Gas (SNG) also considering climate parameters and targets regarding the climate finance. A benchmark analysis was carried out to understand the usual composition of PtM plants and to assess the technology choices. A carbon footprint estimation for SNG production was addressed, along with European Union (EU) Directives and Regulations. Moreover, the economic methodology used to estimate plant costs was analysed, as well as the levelized cost of energy (LCOE) of SNG. Thanks to a scenario analysis, a final scenario was set with its main figures. Results show that, considering climate finance initiatives, LCOE goes down to 70 €/MWh, demonstrating that an integrated techno-economic and climate analysis can improve renewable SNG production costs.