Learnings

Outcomes

Outcomes from the project are as follows:

Strategic Plan

Based on national and regional modelling, the Strategic Plan generated the following insights. 

Across the WWU license area, hydrogen and natural gas have changing roles through the transition to a Net Zero energy system. This project created three future scenarios in collaboration with WWU, to assess a range of futures for the energy system in Wales and the South-West of England and to consider potential gas network implications for sub-regions within them.                                                                 

The three scenarios developed and discussed in the report were:

• a high electrification scenario, similar to previous ESC analysis;
• a high hydrogen scenario; and
• a scenario which takes a balanced view lying midway between the other two. 

All three scenarios meet the current UK Carbon Budgets and the 2050 Net Zero target.

The key insights were:

Unabated natural gas use largely removed by 2050

In all three scenarios, unabated natural gas is largely removed from demand in Wales and the South-West of England by 2050, with a continued limited role in industry, both unabated and in combination with carbon capture and storage (CCS). There is a significant role for natural gas in blue hydrogen production. Hydrogen is primarily used to meet industrial and heating (commercial and residential) demands in 2050 – sub-regional differences in adoption of hydrogen solutions arise, driven by differences in population densities, geography and existing energy infrastructure characteristics. 

The number of retained non-industrial (primarily residential) gas connections are reasonably consistent across most of the WWU network in all three scenarios, but with some variation across the different sub-regions. This variation is driven mainly by disconnections related to the growth of district heating in and around urban centres, such as Bristol, Cardiff and Swansea. In these locations, higher heat density delivers lower cost of district heat networks and prompts a switch away from gas boilers and a related reduction in domestic gas network connections.

Hydrogen has an important role in energy system designs that cost-effectively meet carbon budgets and Net Zero goals for the region

The development of hydrogen networks is shown to offer system value, particularly in meeting peak heating demand and in industry. However, the transition of a natural gas distribution network to one transporting hydrogen is recognised as a complex technical, social, regulatory, and logistical challenge. Analysis of the WWU network at a strategic level, inclusive of a working hypothesis that piped supplies of both hydrogen and natural gas are required at the point of transition, have found that this practical constraint could require a significant amount of new network assets on the intermediate and high (Local Transmission System - LTS) pressure tiers. This will require a high level of investment and careful consideration of the appropriate regulatory model. The selection of this regulatory model has the potential to further impact the demand and the shape of the future network, introducing a requirement for further iterations considering these factors.

The adoption of hybrid heating systems offers significant value to the energy system

The relatively small difference in the number of disconnections across the three scenarios can be explained by the widespread substitution of gas boilers with hybrid heating systems, which combine a hydrogen boiler and heat pump. In general, these use hydrogen to meet peak demand and a heat pump to meet baseload demand. The system value of hybrid heating systems, in part, derives from the avoided electricity network reinforcement costs that this hydrogen peaking allows. As well as optimising the level of electricity network investment required to meet peak heating demands, hybrid heating systems also have the potential to retain a certain level of resilience in the energy system.

Hybrid heating systems are subject to uncertainty

There is, however, uncertainty around the deployment of hybrid heating systems. This will be driven, in part, by government policy, consumer preferences, supply chain development, and where domestic and commercial gas grid connections are retained. The extent of hybrid deployment seen in the high electrification scenario may not persist if this wider optimisation is carried out. It also does not consider the attractiveness of these heating solutions for consumers, the level of disruption and the ability of supply chains to deliver. Further research would be required to quantify these factors and to provide more clarity on the efficacy of the approach.

Hybrid heating system adoption needs to be understood to plan how gas network evolves and operation changes

Hybrid heating system installation in these scenarios is a key driver in the evolution and operation of the gas and hydrogen networks from now to 2050. A high number of hybrid heating systems requires a hydrogen network of a very similar scale, in terms of length and number of connections, to the natural gas network in operation today. However, the operating profile of hybrid heating systems, where electricity supplies much of the base load, influences the volume of hydrogen transported through the gas network. This highlights the interdependency of future home heating choices by consumers, and gas network infrastructure planning, design, operation and supporting regulatory mechanisms. 

This also highlights a need for further investigation and understanding of local energy system design and the effective operations of such systems. Specifically, with capability to optimise energy system investment options, with interdependencies between different levels of geography, across vectors and along value chains. 

Hydrogen use in industry displaces much of today’s fossil fuel use by 2050

In industry, all three scenarios see hydrogen displacing liquid fossil fuels currently used to meet energy demand. Hydrogen also displaces natural gas use, but to a lesser degree. Natural gas, unabated and in combination with CCS, is used in industry to meet energy demand throughout the entire pathway in all three scenarios. From the 2030s, natural gas use is combined with CCS in order to eliminate emissions from industry. Network planning will need to consider this ongoing demand and how a retained gas network and supply could continue providing it economically alongside the infrastructure required to support hydrogen demand.

The modelling approach adopted in the development of the strategic plans is devised to include full coverage of the whole energy system, but also provide sufficient granularity regarding energy infrastructure. However, it remains important to understand the approach’s limitations. This includes the approach taken to heating technology allocation. 

Wider energy system uncertainties have the potential to change the pathways to 2050

It should be noted that this modelling was undertaken prior to the recent geopolitical events in Ukraine and changes in natural gas market prices. The whole system techno-economic modelling will be sensitive to a sustained increase in natural gas prices and government security of supply strategy may also create other constraints. Further work will be required to understand the full impact of a sustained rise in natural gas prices on the economics and cost effectiveness of hydrogen consumption and the balance between blue and green hydrogen production to meet it. Preliminary modelling carried out by ESC suggests that the result would be a switch from blue to green hydrogen production.

Future whole energy system scenarios consistent with Net Zero ambitions can be translated into local gas network infrastructure designs

The sub-regional planning approach adopted in this work is applicable across the UK for strategic planning of gas network transition to hydrogen networks. This has a role that sits above network modelling and network strategic optioneering that could be developed to take into account further technical, economic and social elements.                    

Conceptual Plan
 The Conceptual Plan augments the whole system modelling outputs derived from the Strategic Plan, with an engineering and technical perspective to develop a gas network plan and assess the potential locations within the region for hydrogen production and likely demand forecasts. 

Repurposing the Gas Grid is Essential to Delivering Net Zero
To deliver net zero, we need to fully decarbonise the UK’s existing energy systems – addressing present day petroleum (40%) as well as electricity (18%) and gas (34%) demand.  (BEIS Figures for 2019).  Even with the potential for demand reduction due to energy efficiency, demand side management and transition to alternative supply arrangements. Based upon the modelling undertaken in this study, a role is envisaged for a low carbon gas network, even in a High Electrification scenario, which would involve retention and repurposing of the vast majority of the existing network infrastructure to realise hybrid heating systems. Any uncertainty is therefore more over the extent and utilisation factor for a future hydrogen gas network, than whether it is required.

Initial Projects will be Industry Focused
Reflecting the present UK and Welsh Government’s policy and funding approach, initial decarbonisation initiatives will be led by industry.

South Wales Presents a Strategic Location for the Initial Implementation of Net Zero in the UK
The LNG import terminals in South Wales and associated pipeline transportation system connecting to the rest of the UK offers a strategic location for initial production of blue hydrogen at scale, and the ability to use LNG as a feedstock to provide an effective hydrogen ‘storage’ capability.

South Wales is Likely to be a Net Exporter of Hydrogen
South Wales is presently a net energy producer, with capability to export both electricity and gas to the rest of the UK.  

An Energy System (Including A Gas Network) Transition Sequencing Programme Is Needed
No energy transition sequencing philosophy present exists for the UK and not all regions will necessarily transition to net zero over the same timescales:  If there are areas which will be net producers of hydrogen (e.g. South Wales & the North West), then they arguably will need to decarbonise first so that ahead of other areas (e.g. North Wales & the South West) which can then be transitioned to net zero afterwards.  This would mean Net Zero in South Wales needs to be achieved earlier than 2050 – possibly by 2040 or even sooner.

Parallel Natural Gas and Hydrogen Networks Will Be Needed in South Wales
To manage the transition to a future 100% hydrogen network while maintaining security of supply, natural gas importation operations at Milford Haven will need to continue during the energy transition period to provide security of supply to gas consumers in parallel with establishment of a 100% hydrogen grid network.

The UK Government Needs to Provide Long Term Project Development and Route to Market Certainty
The British Energy Security Strategy published in April 2022 echoes similar previous plans for major new CCUS and nuclear power infrastructure projects which have largely remained unrealised.  In addition to development of a transition sequencing programme, to deliver the individual projects within such a programme, and also the associated supply chain capability and skills required to deliver Net Zero by 2050, industry and academia need greater medium to long term policy and development funding programme certainty.

Repurposing Existing Gas Network Infrastructure
The majority of WWU’s LTS system in Wales and the South West was constructed from pipe material strength grade of X52 (L360) and below. These pipe materials are suited to the transportation of hydrogen. 

There are a number of sections of the LTS network in South Wales which are over fifty years old and may potentially reach the end of their useable life shortly. Where these pipelines are to be replaced as part of a planned programme then it is recommended that they are replaced with pipelines suitably oversized with a pipe material grade which will be suitable for hydrogen service.

The TRL of the project moved from 2 to 3

Lessons Learnt

A close collaboration was established between WWU, ESC and Costain via frequent (weekly) progress meetings to:

Refine the scope of work based on:

• The availability of data, methods and tools
• The assessment of the work that would provide more value at the early feasibility stage, aligned to the overall objectives of the study

 Review study progress, provide feedback/input and agree basis and methods:

• Agree on assumptions and methods across the project partners.
   

This collaborative approach allowed the team to tailor the study, based on discussions which provided benefits to deliver maximum value. The study was innovative in being a first piece of work to examine in detail the potential role for the gas network to deliver Net Zero.

This is one of the first projects to address the analytical gap to enable a plan to be developed which is consistent with a wider UK decarbonisation picture. 

The project could have been more efficiently executed by concentrating on one particular region (Wales or the South west) and completing the full set of deliverables for that area first. This would have reduced the amount of rework which was required by completing the work for both areas at the same time.

Collaborative working benefited by capturing two different and complementary perspectives – ESC’s national and regional modelling expertise and Costain’s technical and engineering expertise. The collaboration included a review of ESC’s outputs by Costain – feedback was incorporated back into the modelling. The result is a more robust and more comprehensive analysis which adds confidence to a single-perspective study. 

Sub-regional (ITAM) modelling – a change in sub regional modelling methodology provided additional benefits but delayed delivery. Additional effort was spent to develop the modelling software to provide additional capability and a superior solution to that proposed at the outset. The outcome was a superior solution which supported Costain’s analysis and provided greater confidence in the project outputs. 

Compiling an integrated joint report was challenging and affected delivery. After the individual partner’s reports had been delivered, significant effort was required to integrate the two reports for consistent style, formatting, and alignment. Whilst this resulted in a more integrated and coherent report, the effort in doing this delayed final delivery and should have been accounted for at project outset. 

The delivery of separate reports prior to integration also added challenges in terms of a thorough review, and meant more time was required to review the reports. This delivery sequence also meant that a second review period was required. More time should have been allowed to address and surmise the volume of comments received as part of such a technically detailed project.