Exploring the Feasibility of Low-Carbon Fuel Blends in CCGTs for Deep Decarbonization of Power Systems

Anas Abuzayed, Michael G. Pollitt, Mario Liebensteiner and Simone Hochgreb

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: Retrofitting gas-fired power plants to accommodate low-carbon fuel blends offers a promising pathway to achieving deep decarbonization while leveraging the existing infrastructure and maintaining electricity supply reliability. This study presents a comprehensive techno-economic assessment of low-carbon fuel options for decarbonizing combined cycle gas turbines (CCGTs), evaluating both fuel switching and blending strategies using green hydrogen, green ammonia, and biomethane. We estimate capital investment requirements for retrofitting existing fleets and building new CCGT capacity in Germany and the UK, featuring a case study case of retrofitting a relatively new CCGT power plant (Keadby2 in the UK). Our findings reveal that retrofitting increases the levelized cost of electricity (LCOE) by about 6–13 €/MWh, with storage infrastructure representing a key cost driver. Fuel blending enhances operational flexibility but raises retrofitting costs. Biomethane emerges as the most cost-effective option due to its compatibility with existing infrastructure and negligible retrofitting needs, potentially cutting capital investments by up to €16.5 and €12 billion in Germany and the UK, respectively. However, even under the most favorable conditions, the marginal cost of electricity using low-carbon fuels exceeds 120 €/MWh, leaving natural gas more competitive at current market conditions. Strategic retrofitting decisions must be pursued selectively, considering plant age, proximity to fuel supply, and storage infrastructure. Policy frameworks ensuring simultaneous supply and infrastructure development are critical to realizing the potential of fuel blending and retrofitting strategies.

Keywords: Deep Decarbonization; Low-Carbon Fuels; Fuel-Blending; Combined-Cycle Gas Turbines (CCGT) (search for similar items in EconPapers)
JEL-codes: Q42 Q48 (search for similar items in EconPapers)
Date: 2025-09-24
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