Around the world, more and more electricity is being generated from the sun and wind. The technology has advanced massively over recent decades and the price of renewable power is plummeting.

Read more: Green growth: Africa chooses between renewables and fossil fuels

But if we look beyond the power sector at our overall energy consumption, renewables are still only a bit player. Heating, transport and industrial processes are still dominated by fossil fuels, and many of these systems can't run on electricity; they need fuel.

That's where power-to-X (also referred to as P2X or PtX) comes in. An umbrella term, it covers various processes that turn electricity into heat, hydrogen or synthetic fuels, meaning that ever-more of our energy system might say goodbye to coal, oil and natural gas.

Turning power into hydrogen

Power-to-X could also solve another of the energy transition's biggest hurdles: storage. At the moment, wind turbines in northern Germany, for example, sometimes produce so much power they have to be disconnected from the grid to prevent it from overloading.

Difficulties storing energy from solar and wind has held back their deployment

Read more: German renewables deliver more electricity than coal and nuclear power for the first time

Instead, that excess power could be used to split water into oxygen and hydrogen, through electrolysis. Not only can hydrogen be stored and saved for less blustery days, it can be used to heat buildings, manufacture steel, or go into fuel cells for trucks and ships.

Read more: Hydrogen and wind: Allies for sustainable energy

… and hydrogen into fuels

Once you've got your hydrogen, in fact, the possibilities go on. Through a process that adds carbon dioxide, you can then produce synthetic kerosene, petrol or diesel. "Power-to-liquid," as this is known, can also be used to manufacture various chemicals.

The technology itself is actually nothing new — during the Second World War, Germany produced large quantities of synthetic kerosene for its air force. Now, as we look for ways to do without fossil fuels, it's having a renaissance and several demonstration plants have been built, mainly in Europe.

The CO2 needed to make these fuels can be filtered from the emissions from coal-fired power, cement, or biogas plants — or, better still for a carbon-neutral world, direct from the air.

In 2017, Swiss company Climeworks opened a commercial plant with huge absorber fans that suck around 900 metric tons of CO2 from the air every year. The company says this currently costs around 550 euros per metric ton of CO2 — though experts say with greater demand, prices could fall as low as 50 euros per ton by 2050. There are now 14 such plants in Europe, and more on the way.

Bringing down costs

Right now, high costs are probably the biggest barrier to power-to-X covering ever-more of our energy needs. Most hydrogen is still produced from crude oil and natural gas, which is a good deal cheaper than getting it from wind power.

Still, Michael Sterner, professor of energy economics at Regensburg University of Applied Sciences, points out that if the costs of climate damage were factored in, "hydrogen would quickly establish itself as an alternative."

Sterner is a pioneer in the technology, and says we've reached a stage where costs could start falling. "We are now starting to enter industrial production," he told DW.

He points out that 20 years ago, photovoltaic (PV) solar power still seemed prohibitively expensive but, with state support, demand soared, the technology improved and economies of scale helped costs plummet.

Read more: How to make the world affordably carbon-free

"There was no mass production and only a few saw the potential," Sterner says of PV. "Now solar power is incredibly cheap and is becoming the most important source of energy."

Giving off heat

High costs aren't the only limit to power-to-X's potential. There are also limits to its efficiency; when one kind of energy is converted into another, some is always lost along the way.

Christian Breyer, professor of solar economics at LUT University in Finland points out that the combustion engine in a car actually only converts around 20% of the energy in fuel into motion — the rest is lost as heat — and power plants only turn, on average, around 40% of the energy in coal into electricity.

Because power-to-X generates heat too, Breyer says using electricity in a battery gives you more kilometers per kilowatt than converting it into hydrogen for a fuel cell.

Read more: Japan gets serious about hydrogen fueling stations

If you synthesize the hydrogen into gas or diesel, still more energy is lost, and that's before the inherently inefficient combustion engine gets to work. Meaning that, filling your family runaround with synthetic diesel doesn't make much sense.

Still, these fuels are useful for cutting the carbon footprint of ships and aircraft already built to run on the fossil versions of these fuels — vehicles that could still be in operation for another 30 years, by which time, it's hoped, our economies will be carbon-neutral.

Read more: EU leaders agree to 2050 carbon neutrality deal without Poland

Read more: Net-zero by 2050: What does it mean?

Soaring power demand

The German Aviation Association is keen to promote power-to-X fuels, as are other industries with little other prospect of surviving without fossil fuels.

Read more: Germany unveils plan for climate-friendly aviation

Read more: When will flying turn green?

The German Chemical Industry Association says carbon-neutral chemical production could be possible by 2050 if the government does enough to support power-to-X and, of course, it can access "large quantities of renewable electricity at low cost."

According to a study commissioned by the chemical industry, switching to power-to-X would mean that 15 years from now, the German chemicals sector would need as much electricity as the country as a whole consumed in 2018.

In a different study looking at how to reach the Paris climate targets, Breyer estimates that ditching coal, oil and gas for power-to-X fuels would quadruple Europe's power demand.

Yet he insists that this extra demand can be covered by wind and solar — meaning an entire energy system powered by renewables is not only technically possible, but also affordable. "What we need is a massive expansion of renewable energy, to stop putting the breaks on and offer security for investment in new technologies," Breyer told DW.