Future Fuels: Replacing diesel in power generation

We are entering an age of accelerated electrification. Around the world, countries are seeking to cut carbon emissions by moving away from burning fossil fuels to produce electricity and by electrifying key sectors of their economies such as transport, building, and heavy industry.

Furthermore, there are approximately 790 million people worldwide without access to electricity, who need a form of grid connection so we can drastically reduce dangerous emissions from cooking or heating with open fires.

So it’s no surprise that global electricity demand is predicted to rise 57% by 2050 according to Bloomberg New Energy Finance (BNEF). Other forecasts go even further, indicating an 80% or even a 100% increase.

Significant efforts are underway to decarbonize power generation. All over the globe, energy systems are transitioning to include a growing share of decentralized, digitalized, and more environmentally friendly technologies like solar or wind power.

The most efficient way to decarbonize power generation is with renewables. These already account for 28% of global electricity generation, but their intermittent nature means they’re not yet a viable option as a sole source of power - even when you factor in battery storage. This is especially the case in remote areas when there’s no or only weak grid access to balance fluctuations in demand and supply.

Using thermal or combustion power as backup is still the most flexible solution to meet the required load at any time. Diesel is today the number one fuel choice, especially for off-grid operations, where energy density, availability, and cost competitiveness are key. Finding cheap, effective, reliable but ultimately cleaner alternatives to diesel is a major priority – and this is where future fuels come into play.

They bring exciting opportunities – but also challenges.

In this guide, we’ll take an in-depth look at what the move away from diesel means for power in remote areas, and temporary power. We’ll examine what’s holding back some industries and locations from fully embracing greener power sources. We’ll also explore the most promising combinations of cleaner fuels and combustion technologies that are helping these companies shift away from diesel when renewable power alone is not a viable option now - and over the next 10-30 years.

Overview of Future Fuels

What is the future of fuel? It’s a broad question, comprising a myriad of fuel types and applications, including some that make efficient use of by-products from industrial processes.

When assessing these options, you need to consider key variables like power density, availability, and landed costs.

It’s also important to think about whether you need to upgrade or replace your existing engines in order to use these fuels.

Some fuels are qualified as “drop-in” fuels. These are completely interchangeable substitutes for conventional petroleum-derived hydrocarbons - meaning you don’t need to adapt the engine, fuel system, or the fuel distribution network. Others will only run in specially modified engines, requiring a different technology to work, or even relying on entirely new infrastructure that hasn’t yet been built. Geography also plays an important role, as some fuels or technologies are only available in specific locations.

All these factors influence whether a fuel is commercially viable - whether it’s affordable for the end-user or whether deploying it will push up the overall cost of electricity generation. In the long term, alternative (non-fossil) fuel sources will only become viable if market prices drop and they become widely available. That requires volume, the right infrastructure, access to technology, and available generation facilities.

What’s available today?

The term ‘future’ does not necessarily mean that these fuels are not available today – many are. However, there are still hurdles that need to be overcome.

Alternative fuels

The following fuels are already being applied with success across the permanent and temporary power sectors.

HVO/HEFA/Renewable Diesel

Hydrotreated vegetable oil (HVO) – also known as renewable diesel or hydro-processed esters and fatty acids (HEFA) – is the most advanced fossil fuel alternative for mobile, modular power. Primarily available in developed markets like Europe and North America, it reduces CO2 emissions by up to 85% and works with existing power generation equipment.

But HVO has its downsides. In some regions, it works out as more expensive than fossil diesel and there have been concerns about deforestation to produce feedstock. However, it’s an excellent alternative and cleaner fuel choice.

FAME/Biodiesel

Biodiesel is produced through a chemical process called transesterification, which converts fats and oils into fatty acid methyl esters (FAME). It can be made from nearly any raw material that contains enough free fatty acids. That includes raw vegetable oils, used cooking oils, yellow grease, and animal fats. Like HVO, this fuel is easier to obtain in developed markets, especially where there are incentive schemes in place to make it financially viable.

Biodiesel emits around 78% less carbon than fossil diesel. It also benefits from an established supply chain, ready availability, and, as a drop-in fuel, is compatible with existing diesel engines. That said, anything above a 20% blend with fossil diesel might require engine modification.

On the negative side, product quality can vary due to the variety of sources used, and it can’t be used in low temperatures, which hinders its use in many worldwide locations.

Liquefied natural gas

Liquefied natural gas (LNG) has been cooled to a liquid state (around -162°C), for shipping and storage. This allows you to store around 600 times more gas in the same tank space. LNG is then transferred to a regasification plant where it is heated back into a gas and transported via pipelines to customers.

LNG is suitable for projects where it needs to travel over shorter distances (up to 1000km). It works well on mining or utility projects that can build dedicated infrastructure, facilitating long-term usage. It also has short-term applications, such as providing emergency power for a few months, commonly in the Oil and Gas sector, and we are increasingly seeing it used in other sectors.

LNG’s main advantage is its full compatibility with natural gas engines. It provides a way to use natural gas in remote locations or other places without a pipeline and is rapidly gaining traction around the world.

However, LNG availability relies on port / LNG facilities and supply logistics. Transport and storage are also expensive. It is an important alternative, particularly in developing countries, but using LNG alone will not achieve Net Zero.

By-products from industrial processes

The following fuels are not strictly ‘future fuels,’ but rather by-products of industrial processes that would otherwise be released into the atmosphere. By capturing these gases and using them as fuel sources, companies can power their own operations while cutting net carbon emissions and boosting operational efficiency.

Biogas/landfill gas

Biogas (methane gas) is released as microbes digest organic waste. The remaining waste can then be converted into biofertilizers, while the gas is used as a natural gas alternative. It is often found as a by-product of industrial processes, such as landfills. Capturing it and using it as a fuel can help reduce a project’s overall carbon footprint.

Biogas is particularly attractive as the technology to produce it is relatively cheap and can be easily deployed in domestic settings. It can be used alongside natural gas fuel and has a zero-emissions production process. Using biogas can save up to 240% of greenhouse gas emissions compared with fossil fuels.

However, the production process can be inefficient and there are no new technologies to simplify it. It is not suited to every location, as it relies on the abundant supply of manure and crop materials, or municipal waste in the case of landfill gas.

In other words, you can only use biogas if you have the facilities onsite to generate it as a by-product of other processes. If you want to go down this route, Aggreko can help.

Associated petroleum gas (flare gas)

Flare gas is a by-product of numerous industrial processes. Typically, it is emitted and burnt when unwanted or excess gases and liquids are released during normal or unplanned over-pressuring operations in industrial processes, such as oil-gas extraction, refineries, chemical plants, the coal industry, and landfills.

Many companies have pledged to end flaring by 2030, so they will need to find a use for this excess gas. Harnessing it as a fuel cuts their overall carbon footprint. Any surplus can be sold to generate additional income.

As well as being readily available at facilities that conduct gas flaring, you can also collect it for free - or at a low cost. Usually, no significant engine modification is needed to use it.
The key constraint of this fuel source is that on occasions the gas might need to be treated and cleaned before you can use it. You may also need to invest in equipment to capture it and to reduce flaring in the long term.

The Mid-term picture

Let’s take a look at how existing technologies will be developed over the next 5-10 years.

Bio-methanol

Today, most methanol is produced by steam reforming natural gas to create synthesis gas. It can also be used as a sustainable fuel when produced, from biomass (bio-methanol) - and, in the longer term, from green hydrogen (green methanol). This turns it into a very clean-burning, carbon-neutral fuel. Using bio-methanol can cut greenhouse gas emissions by around 200% compared with fossil fuels.

In its liquid state, it is cheap to transport and store. If it is produced from green hydrogen it can also overcome the storage constraints associated with pure hydrogen.

To make it fully viable, there are still obstacles to overcome. Firstly, it’s corrosive. To convert it to electricity, you need either a dedicated engine or reformers and fuel cells. Secondly, by volume and mass, bio-methanol has less than half the energy density of diesel.

Infrastructure limitations mean that, for now, this fuel is best suited to short-term projects. Longer-term viability will depend on better storage facilities for hydrogen. This will help unlock the potential of this fuel, as green hydrogen is the starting point for green methanol production.

Scaling up existing technologies

In the mid-term, as infrastructure develops and alternative fuels become more financially viable, we expect to see many of these existing technologies scaled up - HVO and biofuels in particular. We also forecast virtual pipelines developing to deliver these new fuels.
Virtual pipelines deliver gas to customers whose projects are not connected to any existing gas distribution infrastructure. Distribution companies replicate a gas pipeline by using road, rail, waterways, or sea transport, which provides a flexible, adaptable alternative gas distribution channel. Key drivers for virtual pipelines range from the absence of a local gas network to aging infrastructure and pressure to decarbonize fuel usage.

There are also direct advantages to the end-user, in the form of cost and emissions savings. Virtual pipelines enable the use of gas rather than diesel, which is generally cheaper and less polluting.

Long-term trends

Looking further ahead, the research and development of new types of fuel is opening up exciting possibilities. Ultimately, the timeframe will depend on how quickly barriers to widespread adoption can be overcome. It may be 20-30 years before these fuels are widespread.

Green hydrogen

In hydrogen fuel cells, hydrogen reacts with oxygen across a battery-like electrochemical cell to produce electricity, water, and some heat. Hydrogen can also be combusted in suitable engines.

Currently, over 95% of hydrogen used as fuel is derived from fossil fuel feedstocks through reforming, while the other 5% is produced through electrolysis. Green hydrogen refers to hydrogen produced using an electrolysis process powered by renewable energy.

Green hydrogen generates zero carbon emissions, either in its production or when used to generate electricity. It’s highly versatile and can be transformed into electricity and synthetic gas, diesel, and so-called “hydrogen carriers” such as methanol or ammonia.

Unfortunately, there is no significant green hydrogen production and storage infrastructure in place today, making it expensive to produce.

It’s vital that companies continue to invest in improving hydrogen storage and transport facilities so that they are positioned to seize the benefits as they emerge.

Additional applications for hydrogen

As well as a fuel source in its own right, hydrogen is also used to produce a range of synthetic fuels, outlined below. As with methanol, the viability of these fuels relies on the right infrastructure for storing hydrogen.

Powerfuels, e-fuels, Power-to-X

Powerfuels, also referred to as e-fuels, are renewable electricity-based fuel sources. These include synthetic natural gas (SNG), liquified natural gas (LNG), Fischer- Tropsch diesel (FT/e-diesel), methanol or ammonia. They all require green hydrogen made from renewable energy and will play an important role in decarbonizing the temporary power and off-grid sectors in the long term.

When combined with efficient, emission-controlled engines, powerfuels like e-diesel or SNG provide carbon-neutral solutions in cases where energy requirements are high but logistical and application requirements render hydrogen unviable.

These fuels are all drop-in alternatives, compatible with existing infrastructure and equipment. They have the additional advantage that they can be used as a form of energy storage for intermittent renewable energy technologies.

For now, what holds them back from being produced at scale is that they all require a low-cost source of green hydrogen. They also need a carbon source at the point of production. Currently, these fuels are expensive, needing further investment.

Final thoughts: It’s all in the mix

When it comes to decarbonization in the temporary power and off-grid sectors, no single fuel will be a ‘silver bullet.’ It’s about getting the right balance of fuels and technologies, carefully tailored to specific locations, sectors, and customer sites.
 
At Aggreko, we’re continually investing in and developing new ways of generating power. We’ve also created a roadmap for decarbonization, factoring in new and emerging fuels and cutting-edge advancements in technology.

Over the next decade, our priority will be to switch from diesel to gas and alternative drop-in liquid fuels – in fact, we’ve already started using HVO for some of our customers. We’re also implementing low emission equipment, like our Tier 4 Final / Stage V generators. We’re integrating renewables and battery storage into our mobile and modular fleet and are continuing to fine-tune the way we right-size generators.

Ultimately, companies must strive for integrated, digitally controlled, hybrid systems that provide low-carbon, low-cost, highly efficient energy. As infrastructure and production processes for low-carbon fuels improve over time, these will also become more affordable at scale.

When they do, we’ll be poised and ready to incorporate the best of these into our offering, working with customers to figure out the ideal fuel mix for their logistical and carbon-reduction needs – as well as their budget.

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