Chemical industry in bid to harness Germany's green power overload

FRANKFURT, Jan 18 (Reuters) - Evonik has become the latest German chemical maker seeking to convert excess renewable power into chemical building blocks that would normally require oil, harnessing erratic flows of wind and solar power in the country.

The maker of clear acrylic sheet, rubber chemicals and feed additives, will work with engineering giant Siemens to electrolyse carbon dioxide and water into hydrogen and carbon monoxide, using electricity generated from green energy.

Evonik will run a bioreactor to ferment those gases into industrial alcohols butanol and hexanol for possible use in plastics and dietary supplements.

Germany's chemical industry lobby VCI said in a September report that so-called power-to-X technology - converting green power into fuels or chemicals - could become of "foremost importance" in stabilizing the grid and replacing oil as a feedstock.

Companies in development ventures similar to that of Evonik include BASF and Switzerland's Clariant, capitalizing on their position as major producers of process catalysts that speed up throughput in petrochemical reactors.

Like Evonik, they are relying on electrolysis to produce hydrogen. With the help of catalysts, this can be combined with carbon dioxide from flue gases to yield synthetic fuels or raw materials.

Years into Germany's energy transition away from fossil and nuclear power, almost half of the nation's installed power capacity now comes from renewable sources, mainly solar and wind. But the inability to store excess electricity remains a major drawback.

As a result, its gas-to-power plants need to be ramped up and down to accommodate the fickle supply from renewables, which enjoy priority access to the power grid.

Households and companies are paying more than 20 billion euros a year in surcharges on their utility bills to uphold the system, which sees some wind parks taken off-grid during storms but operators still getting guaranteed pay.

BASF's Chief Executive Kurt Bock, however, has voiced some caution over power-to-X technology.

"There are still some daunting tasks ahead in terms of costs and technology," he said, adding more government backing was needed for it to go mainstream.

But power utilities such as Uniper and even carmaker Audi are seeking a head start, working on pilots that process renewable electricity into methane that can be fed into any natural gas transmission pipeline.

The pilot plant for Evonik and Siemens's initiative is scheduled to go on stream at a site in Marl, Germany by 2021.

If successful, the two companies' Rheticus alliance could follow up with a site producing 20,000 tonnes of basic chemicals a year, about one fifth of the average capacity of a petrochemical plant serving world markets.

The new technology "not only enables chemicals to be produced sustainably, it also serves as an energy store, can respond to power fluctuations and help stabilize the grid," Evonik and Siemens said in a statement.

Rheticus will for now receive 2.8 million euros ($3.4 million) in government funding over two years, with the companies contributing roughly the same amount. ($1 = 0.8167 euros) (Additional reporting by Christoph Steitz; Editing by Adrian Croft)