SGN were nominated by BEIS and Ofgem, as part of the Hydrogen Village Trial to assess the supply chain of hydrogen appliances from a network compatibility perspective. The term appliances encompassing the end user appliances such as the boilers, cookers and fires but also ancillary devices (e.g. meters), and any other necessary equipment required for a trial aiming to convert from natural gas to hydrogen. The assessment will cover both domestic and light commercial appliance. Furthermore, the program will inform the gas distribution networks on the requirements from the end users in a future with hydrogen and will help the networks identify how to this demand can be met.
Benefits
For hydrogen to become a viable low carbon heat alternative in domestic and commercial environments, there needs to be a robust and viable supply chain to support the transition. Hence, to fulfil the BEIS Hydrogen Village bid perfoma towards this aim, SGN is aiming to assess the required range and volume of appliances, ancillary devices (e.g. meters), and any other necessary installations; evidence of support from third parties who would be partners on the project to supply these elements; and analysis of any further new technology/product development work required, and associated risks.
Learnings
Outcomes
Within this project, a thorough assessment of the hydrogen appliance supply chain market was conducted for the Hydrogen Village Trial. This assessment involved a detailed evaluation of developed hydrogen appliances, equipment and material availability, and reliability, including gap analysis and RAG tables. Additionally, the evaluation incorporated survey data from existing appliances in the trial areas. The findings of this comprehensive analysis were presented in a Supply Chain Analysis Report in September 2022, which covered several components:
· Technology & Certifications – explained various development aspects such as certification, life testing, and hydrogen readiness.
· Appliance Portfolios – These portfolios provided an overview of the development work carried out on different appliances and components. They outlined critical functionality, performance criteria, and expected outcomes for the HVT in 2025.
· Gap Analysis – This involved comparing the availability of various hydrogen appliances with the natural gas appliances found in the trial area during initial surveys. Gaps were identified where certain appliance types were not yet developed, or planned to be developed (without further grant funding).
· RAG Table - This table presented the level of confidence in delivering appliances for the HVT across different categories, under the following parameters: Technology Development, Customer Choice, Reliability, and Availability.
The report concluded that the development requirements for the domestic and non-domestic portfolios are extensive and diverse. While some domestic appliances like boilers and meters have a Green RAG status, others like fires and cookers are marked Red. The assessment for non-domestic properties is also marked as Red due to the need for new development of several appliances identified in the surveys.
Due to the lack of availability of all appliances, amidst other concerns, there is an acknowledgement that the project is highly unlikely to convert 100% of the properties and appliances to hydrogen - and that some properties will in fact opt-out of the trial and require conversion to an alternative heat source (either through electrification or remaining on natural gas via a parallel network or sectorisation plan). Consequently, a ‘Hydrogen Alternative Report’ portfolio - which included a variety of appliance types that utilise an alternative heat source for the current natural gas appliance installed - was developed and submitted to DESNZ in December 2022. This portfolio outlined information around the alternative heat source methods and technology that could be utilised for customers who might prefer non-hydrogen heat sources.
The project also delivered a Development Strategy in March 2023 for appliances surveyed in the trial areas that required further development or needed to be developed from scratch. The strategy includes a detailed breakdown of R&D costs for each appliance type and Original Equipment Manufacturer (OEM). Unlike the Hy4Heat program, which only went to a certification stage, the development strategy covers the full roadmap to commercialization and accounts for costs associated with longevity, stress, and abuse testing. While the development strategy was informed by significant survey data, some uncertainty remained due to properties that were not visited during the surveys.
Lastly, the project delivered a Procurement Strategy, completed by Arup in March 2023. This strategy combined industry expertise, desk-based research, direct engagement with appliance and component manufacturers, and trade bodies to identify available consumer solutions and ensure understanding of heating technology preferences among stakeholders. The Procurement Strategy outlines contractual obligations, an outline of purchasers and suppliers, and key commercial details like warranties, guarantees, and pricing options if available.
For a trial involving approximately 1,950 homes and various non-domestic premises (20-200, dependent on trial area), a significant purchasing event would be necessary. The procurement strategy collected purchase costs from manufacturers involved in hydrogen appliance development and those willing to support the trial. For any gaps, a methodology was developed to estimate costs. Appliance costs were allocated based on the appliances encountered during in-property surveys.
Lessons Learnt
Prior to this project there was no clear understanding of the readiness of the hydrogen appliance UK market. This project helped to understand what appliances are currently available in addition to clarifying what is either in development (i.e., self-funded by OEMs), or needs to begin/resume development to meet the market needs (i.e., likely where OEMs would require grant funding as an incentive, due to the current lack of firm UK energy policy to give OEMs confidence of a long-term market).
Despite the overall competitive nature of the trial bids between NGN and Cadent - the appliance workstream and reporting is/was collaborative throughout Stage 2. A future improvement (e.g., for the town pilots) would be to have a universal/agreed format and approach to the in-home domestic surveys and the I&C surveys across both trials. Instead, slightly different data was captured in each area – and in quite different formats. There some are instances of nuanced information being recorded in one trial area but not the other (and vice versa), hence there were some inconsistencies.
During the project, a number of risks were captured which were not previously recognised. These risks included an unclear funding route for product development, the timescales for development conflicting with the intended trial deployment date (of mid-2025, as some appliances are not likely to be available until mid-2026), and a lack of clear market indicators for hydrogen appliance OEMs that would encourage research and development.
Mitigations were identified for each of the risks, and strategies were developed over the course of the project - which ultimately culminated in the development of an AWG-led Business Case for Hydrogen Appliance Development. This will justify why public funding is required to support a hydrogen appliance development programme that will enable the Hydrogen Village Trial (HVT) to be delivered with the desired outcomes set by the Department for Energy Security and Net Zero (DESNZ).
