Fortune 100 response to DE&I pressures - Q2 2025

A Model for Cost-Efficient Renewables Asset Sizing
According to the IPCC, even in scenarios where the 1.5°C target is achieved, molecules will continue to play a significant role in the global energy system. E-fuels present a sustainable alternative to fossil fuels in sectors where electrification is difficult, such as aviation, shipping, and heavy industry. These synthetic fuels are produced using electricity from renewable sources like wind, solar, or hydropower, making them a carbon-neutral alternative to conventional fossil fuels. E-fuels offer a promising pathway for decarbonizing hard-to-abate sectors while utilizing existing transport and storage infrastructure, thereby minimizing the need for major modifications to current energy systems.
In Europe, regulatory frameworks and ambitious climate targets are shaping the future of e-fuel production and adoption. The European Union has introduced key legislative initiatives to drive the development and offtake of Renewable Fuels of Non-Biological Origin (RFNBOs), a category that includes e-fuels. Under the Renewable Energy Directive (Art. 2.36), liquid fuels, such as e-ammonia, e-methanol or e-kerosene, are considered RFNBOs when produced from renewable hydrogen, which is produced by feeding renewables-based electricity into an electrolyzer.
Despite their promise, the production of e-fuels faces significant challenges, including infrastructure needs, and regulatory uncertainty. However, the primary challenge remains the cost gap of renewable hydrogen compared to fossil-fuel-based hydrogen. On the one hand, geographic location of the production facility is critical. Placing assets where renewable resources are abundant and their Levelized Cost of Energy (LCOE) is low is essential for minimizing production costs. On the other hand, the sizing of the production assets, particularly the electrolyzer and associated renewable generation capacity, plays a crucial role in cost optimization. Navigating the complex interplay between location, renewable resource variability, technology options, and asset sizing requires sophisticated analysis and appropriate modelling tools.
In this context, Sia has developed a solution to minimize e-fuel production costs by determining an optimal mix of renewable energy sources (balancing onshore/offshore wind and solar PV), properly sizing the electrolyzer, and optimizing grid interactions (buying and selling electricity on the wholesale market), while adhering to regulatory constraints.
Sia’s optimization model is designed to determine the optimal investment and dispatch of upstream assets in e-fuel production to achieve the lowest levelized e-fuel cost. By leveraging industry-standard linear optimization techniques, the model minimizes total system costs while meeting a stable production target.
Covering the entire e-fuel production value chain (see Figure 1), the model ensures cost-effective decision-making by balancing asset sizing and dispatch operations.
Figure 1: E-fuel production value chain covered by Sia's optimization model
The model outputs include among others a breakdown of the levelized cost of e-fuel and an in-depth view of the hourly energy balances (both electricity and hydrogen), highlighting how assets are dispatched.
The model was used to determine and understand the drivers behind the cost of production of e-methanol for four locations in Europe, namely France, Belgium, the Netherlands and Denmark. The analysis reveals that:
At Sia, we combine our renewable energy expertise with data capabilities to help your organization successfully navigate the complexities of e-fuels adoption. To do so, Sia provides: