Hydrogen is a key energy source for the Net Zero transition and is being considered as an alternative to natural gas. Over the next 5 years there is an ambitious work plan within the UK’s gas transmission and distribution industry to prove the viability of blending hydrogen into the UK’s existing gas networks.
This project seeks to explore and recommend adaptations to the existing commercial frameworks to enable hydrogen blending into the UK gas networks from industrial clusters.
Separate projects will explore the adaptations necessary to commercial frameworks in other blending scenarios, and the functional requirements for plant and infrastructure necessary to physically introduce and manage the hydrogen molecules into the networks.
Benefits
Over a third of the UK’s carbon emissions are generated by the 83% of domestic homes currently using natural gas for heating and cooking. The UK is committed to reaching net zero emissions by 2050, so the gas we use needs to change. This project will support the transition towards net zero.
Learnings
Outcomes
The 5 funding Gas Transporters now have a comprehensive and agreed view of a workable operating model and the associated changes to commercial frameworks necessary to enable hydrogen blending from industrial clusters. The key takeaways from this project are that:
· Enabling hydrogen blending from clusters can be done in a pragmatic way, with limited need for change to existing gas frameworks.
· Where frameworks do need to change, the changes are incremental rather than involving overhaul of existing frameworks, and are highly workable.
· While there remain uncertainties as to the nature of blending at each cluster (e.g. the volume and profile of hydrogen injections), in general the changes required to commercial and regulatory frameworks are the same, implying that they are low regret.
Going forward, some policy decisions are required:
· Funding. BEIS will need to provide hydrogen producers in clusters with clarity around the nature of funding for blending into the gas networks, and conditions attached to it (e.g. whether funding will only be provided for hydrogen blending in a ‘backstop’ role, where producers are supported to inject hydrogen into the gas networks only when demand from industrial users is low). This clarity is needed before producers can make their final investment decisions.
· Protection of hydrogen blending access. BEIS will need to decide if the business model supporting hydrogen blending will protect producers against potential inability to inject hydrogen as a result of network blending constraints. If it does not, changes to the regulatory framework can do so (see 7 below).
· Responsibilities for sensitive users. There is currently technical work ongoing to understand whether certain users (e.g. some large industrial users or CCGT power plants) could be detrimentally impacted by receiving a blend of hydrogen.4 If this is the case, the approach to managing this will need to form part of the overall 2023 policy decision on blending and changes to GS(M)R (the Gas Safety (Management) Regulations).
Lessons Learnt
· The “Value for Money” evaluation criteria, proposed by NGG, worked well in demonstrating the ‘cost of quality’ when evaluating the competing tenders.
· The work done up front on clearly defining scenarios and research questions worked well and created useful boundary conditions during stakeholder engagement sessions.
· The importance of ensuring key GSG messages reach the appropriate working groups was highlighted by the project.
· The makeup and composition of stakeholder groups is important; on reflection the Gas Goes Green Advisory Group didn’t yield as much useful data as hoped.
· Clusters should be represented on the project team.
