ADVANCED REVIEW On the long-term prospects of power-to-gas technologies Amela Ajanovic | Reinhard Haas Energy Economics Group, Technical University of Vienna, Vienna, Austria Correspondence Amela Ajanovic, Energy Economics Group, Energy Economics Group, Gusshausstr.25-27/373, Vienna 1040, Austria. Email: ajanovic@eeg.tuwien.ac.at Electricity generation from variable renewable energy sources such as wind and solar has grown in some countries at such a high rate that long-term storage becomes relevant. The main rationale of power-to-gas (P2G) conversion of excess power is that the capacity of the gas pipelines and gas storage is much higher than that of the electricity transmission lines. This paper investigates the market pros- pects of hydrogen and methane from P2G conversion as a long-term electricity storage option. Of specific interest is the future development of investment costs, economies-of-scale, the impact of the electricity price, and its distribution as well as possible locations. We conclude that from an economic point-of-view, the future prospects of all P2G technologies are much less promising than currently indicated in several papers and discussions. It will become very hard for P2G to compete in the electricity markets despite a high technological learning potential. However, for both hydrogen and methane, there are prospects for use in the transport sector. Already today compressed gas vehicles are by and large competitive. This article is categorized under: Concentrating Solar Power > Economics and Policy Energy Systems Economics > Economics and Policy Energy Systems Analysis > Systems and Infrastructure Energy and Transport > Economics and Policy KEYWORDS costs, hydrogen, methane, renewable energy, storage, transport sector 1 | INTRODUCTION One of the major targets of the European Commission's energy policy is to increase electricity generation from renewable energy sources (RES-E), and indeed, due to supporting policy measures, the amount of RES in the total electricity supply has increased substantially. The almost exponential growth of photovoltaic (PV) and wind in the EU-28 in recent decades is shown in Figure 1. In some countries, such as Germany and Austria, excess electricity generation from variable renewable energy sources such as wind and solar has led to calls for additional long-term storage capacities, for example IEC (2011). One of the most considered options in this context are so-called power-to-gas (P2G) conversion technologies. A major argument for this is that the capacity of gas pipelines and gas storage is much higher than that of electricity transmission lines where bottlenecks 1 can occur in the electricity transmission grid, for example, in Germany. Hence, if we are comparing the ability to transfer power (energy) from A to B, the idea is that energy can be transported much easier and in much larger amounts via the gas grid than the electricity network. 2 In principle, P2G encompasses the conversion of electricity into gases, into hydrogen and finally into methane. Figure 2 depicts the basic principle of this process. With increasing variable electricity in mind, academic investigations on gas-based electricity storage for stand-alone power supply systems were conducted already as early as the 1990s (Enea, 2016). Such systems involved hydrogen production with water electrolysis from wind and solar energy, hydrogen storage, and conversion back to electricity with a fuel cell during Received: 24 April 2018 Revised: 1 June 2018 Accepted: 2 June 2018 DOI: 10.1002/wene.318 WIREs Energy Environ. 2019;8:e318. wires.wiley.com/energy © 2018 Wiley Periodicals, Inc. 1 of 16 https://doi.org/10.1002/wene.318