Project Summary
Drastically reducing gas leakage across gas infrastructure is a global challenge that must be addressed to achieve the Global Methane Pledge and Net Zero targets by 2030 and 2050, respectively. This project aims to use the latest digital technology and data to provide a more accurate picture of gas network leakage, enabling more efficient operational and investment decisions to reduce leakage, improve network safety, and reduce customer bills. All UK GDNs are currently required to use the SLM for emissions reporting, but this only provides a static, theoretical value of total gas leakage, and cannot identify actual leak locations or volumes.
The DPLA is an innovative approach to measuring and utilising gas leakage data. In the Discovery phase, a range of technologies for methane detection was assessed. Satellite technology, which was expected to be a scalable, cost-effective solution, was found to be unsuitable, so the analysis refocused on drone/ aircraft/ vehicle-based monitoring methods. It was determined that a mix of technologies are needed to provide a whole system view, including handheld and drone mounted sensors for above ground installations (AGIs), vehicle and drone mounted sensors for urban pipelines, and vehicle, drone and aircraft mounted sensors for rural pipelines.
By overlaying data collected by these technologies with a hydraulic model, the DPLA could allow gas networks to locate and target highly emitting assets for maintenance and repair. It was found that super-emitters (high-rate leaks) represent 2-5% of all network leaks while accounting for 20-50% of total emissions. Prioritising these leaks will allow the networks to reduce emissions faster and more cost effectively.
The project meets the aims of the Data and Digitalisation SIF Challenge through the following:
It aims to deliver a novel digital platform, developed by the UK GDNs and National Transmission System (NTS), the output of which will also benefit Ofgem, gas shippers and others which could obtain relevant data from the platform.
It aims to accelerate progress towards a full digital twin of the gas networks (another challenge area arising from the increasing complexity of the energy transition), of which the DPLA could form a building block.
It aims to improve data monitoring, availability, quality, interoperability and access by increasing the breadth and depth of leakage data available to GDNs, regulators and shippers, and improve operational efficiency and resilience by reducing gas leakage and cost to consumers, while improving safety.
The project partners from the Discovery phase (Cadent, SGN, NGGT and Guidehouse) will be joined by NGN and WWU for the Alpha phase. The participation of all four UK GDNs as well as the NTS operator will enrich the project with a complete beach to meter view of national gas network emissions.
As lead partner, Cadent is responsible for the successful delivery of the project and brings a proven track record of delivering innovation projects and managing fugitive emissions. SGN, NGN and WWU will complement this, and ensure that the platform addresses the needs of all GDNs. Their involvement will also allow for alignment on potential regulatory proposals and build a strong case for change to present to Ofgem. NGGT brings the transmission perspective as a potential future user of the platform, and a decade of knowledge from their fugitive emissions programme. As key delivery partner, Guidehouse will bring its knowledge and expertise of regulated utilities, global gas networks and other sectors, which will be vital to determining optimal solutions for the UK. Managing gas network leakage is a key challenge in achieving net zero which extends beyond the UK, hence the learnings will also be valuable to international utilities operating gas infrastructure.
Innovation Justification
The cost of shrinkage and leakage gas across the UK GDNs was £30-70M per year over the last decade and grew to £130M in 2021 due to increased gas prices. This cost is socialised to UK gas consumers, as well as having an environmental cost representing roughly 1% of total UK GHG emissions. This problem must be solved quickly and cost effectively to deliver better consumer value and to meet Net Zero targets.
As part of their licence condition, GDNs report their annual leakage emissions using the SLM, which is based on legacy methods from 1994 and 2002. Small improvements have been made over the years as the GDNs are obliged to review and try to improve the SLM. However, progress has been slow, and it has remained a static, theoretical approach which lacks the accuracy and granularity needed to inform a cost-effective, strategic emissions reduction plan. In addition, the SLM is not compatible with a hydrogen blended network, which is likely to be a major issue for all GDNs in future.
This project seeks to revolutionise the GDNs' approach to leakage by replacing the SLM with an innovative, dynamic approach. It will build on past leak detection projects such as NGN's "LeakVision", National Grid's "Monitoring of real-time fugitive emissions" and Cadent's "ThermalTrax", as well as global oil and gas leak detection projects like the Environment Defense Fund's "Methane Detectors Challenge". These projects developed and tested advanced leak detection technologies, but only for a narrow range of applications/assets. This project will go beyond this by looking at how such technologies can be combined to drive more actionable, whole system insights. This will be achieved by bringing together complementary technologies to measure leakage across GDNs and developing an analytical method and system architecture to overlay the data into useful information including leak volume, location, and intervention options.
The only emissions reductions levers in the SLM are system pressure management, MEG treatment and replacement of metal pipes with plastic. The GDNs have largely exhausted system pressure management opportunities and the impact of MEG is relatively small, therefore there will be no further incentives to reduce emissions once all metal mains have been replaced. Asset replacement is currently done based on age and convenience rather than leakage prioritisation. The SLM does not allow GDNs to benefit from reductions in AGI leakage or venting, while own use gas and theft of gas are fixed by a formula. Without this project, the GDNs will therefore have very limited scope to reduce emissions in the future. The DPLA will unlock new options for emissions reduction and allow the real value of such measures to be accurately measured.
This project requires SIF funding because GDNs aren't incentivised to push for large advancements in emissions monitoring as part of their BAU activities. The risks associated with developing such an ambitious concept are significant. Some of the technologies considered are not yet mature and new algorithms are likely to be needed to analyse the large quantities of data. The phased approach of the SIF will allow the GDNs to build confidence in the technology, the expected returns and that greater emission reductions can be achieved. Regulatory and policy risks, including uncertainty around regulation timelines and incentive durations, the future of hydrogen and whether the cost of carbon will be monetised, also mean that GDNs cannot justify this project as BAU.
The project team have considered whether NIA funding would be applicable, however concluded that it doesn't meet the NIA governance criteria. Specifically, the requirement to provide benefits to customers in vulnerable situations is not addressed in the DPLA project.
Benefits
This project will deliver benefits directly to consumers by decreasing the cost of shrinkage and leakage gas which is passed on from GDNs to consumers' bills. This is even more relevant as gas prices have increased by more than a factor of 5 from 2020 to 2021. It will also indirectly benefit consumers by reducing greenhouse gas emissions, and therefore the environmental impact, of the GDNs. Natural gas (methane) has a global warming potential of 25 kg CO2e/ kg CH4, significantly higher than carbon dioxide, and these emissions must be curbed rapidly. This project will also be important as GDNs begin to incorporate hydrogen into their networks, as hydrogen has been shown to leak more readily than natural gas (Fugitive hydrogen emissions in a future hydrogen economy, Frazer-Nash Consultancy, BEIS, March 2022) and to also contribute to the greenhouse effect with a global warming potential of approximately 11 kg CO2e/ kgH2 (Atmospheric implications of increased hydrogen use, University of Cambridge, University of Reading and NCAS, BEIS, April 2022).
In the Discovery phase, a detailed cost benefit analysis was carried out. Two significant benefit streams were quantified assuming all UK GDNs were to implement the DPLA:
Avoided loss of natural gas and/or hydrogen (benefit to the end consumer) was found to be 7,831 GWh by 2050
Avoided greenhouse gas emissions (benefit to the environment and society) was found to be 10,790 kt CO2eq by 2050
This amounts to net cumulative discounted financial benefits of £542 million by 2050, accounting for the total costs of deploying the solution and assuming a representative forecasted cost of natural gas/hydrogen and carbon dioxide equivalent (see Business Case Appendix for trends and full list of assumptions). The expected decrease in emissions from 2020 to 2030 was found to be greater than 30%, which supports the government priority to tackle methane emissions as a Participant of the Global Methane Pledge. The avoided loss of natural gas/hydrogen and avoided equivalent greenhouse gas emissions will continue to be used as the metrics to track benefits as the business case is further refined in the Alpha phase.
As well as these two significant benefits, several additional benefits were identified. These were not quantified in the Discovery phase to give a conservative estimate of benefits and to avoid overstating the economic value, but include:
Health & safety: reduces the risk of accidents by reducing the number of site visits required
Reputational: sends a strong message that GDNs are doing the right thing in terms of leakage and sets an example for other networks and even other countries to do the same, paves the way for best-in-class approaches to regulatory and operational methane emissions reduction
Operational: improved certainty on operating conditions and modelled outlooks
Reduced disruption: less noise and time taken when fixing leaks thanks to better localisation, improving public confidence and social acceptance
Leak prevention: in future, the platform could be developed to perform predictive leak prevention as well as leak detection
Fire hazard prevention: allow networks to take immediate action to prevent ignition by providing real-time alerts
Impacts and benefits
Environmental impacts
Key quantifiably evidenced benefits from DPLA implementation will be the 1) avoided gas loss and 2) avoided Greenhouse gas emissions. The Project performed a detailed cost benefit analysis in the Alpha phase, building on work in the Discovery phase with updated assumptions and more accurate costings. Assuming all GDNs were to implement the DPLA, updated values were:
12,435 GWh of avoided natural gas and/or hydrogen loss volumes by 2050 (benefit to the end consumer)
14,856 ktCO2e of avoided greenhouse gas emissions from distribution network shrinkage and leakage by 2050 (carbon reductions)
DPLA will reduce Greenhouse gas emissions from two gases with far greater global warming potential (GWP) than CO2: methane (GWP of 25 kg CO2e/ kg CH4) and hydrogen (GWP of approximately 11 kg CO2e/ kgH2). The DPLA will therefore continue to have a significant carbon reduction impact as GDNs begin to incorporate hydrogen into their networks, particularly since hydrogen has been shown to leak more readily than natural gas.
The avoided loss of natural gas/hydrogen and avoided equivalent greenhouse gas emissions will continue to be used as the metrics to track benefits as the business case is further refined and realised in the Beta phase.
Cost reductions in operating the network and wider energy system
Accounting for the total costs of DPLA deployment and assuming a representative forecasted cost of natural gas/hydrogen and carbon dioxide equivalent (see Appendix for trends and full list of assumptions), the above avoidance figures amount to net cumulative discounted financial benefits across GB of up to £2.86 billion by 2050 for our core modelled scenario in the Alpha phase. This is a fivefold increase on the initial financial benefits value calculated during the Discovery phase, largely due to the sustained long-term increase in forecasted gas prices.
The benefits are dominated by the cost of avoided emissions (~90% of the £2.86B), given the high GWP of the gases whose leakage is being minimised.
The precise magnitude of the benefits will depend on the future evolution of gas and carbon prices, the exact technology mix used for the remote leak sensing, and the pace of DPLA rollout across gas networks nationwide. The core assumed technology mix combines Picarro for rural and urban pipelines with SeekOps for large AGIs. The core scenario pace is that Cadent starts to test and deploy first, with other GDNs following a year later. Across three assumed paces and three technology options, the cumulative discounted net financial benefits range from £0.8 billion to £3.2 billion. Almost all combinations of the four factors listed above lead to the project breaking even by 2027.
Cost savings for network services users
The avoided volume losses could feed through as direct customer benefit by decreasing the cost of shrinkage and leakage gas which is passed on from GDNs to consumers' bills. At the very least, the DPLA will result in no net impact on customer bills, and could even lead to reductions in bills if less in-field monitoring is required as part of the DPLA's realisation, or if the baseline of methane emissions is found to be higher than the current modelled amount (through the SLM).
Impacts on consumers (individual and collectively) of the whole energy system
Further benefits to energy system consumers include:
Reduced carbon costs, representing a further environmental benefit to customers
Improved health and safety, with DPLA reducing the number of site visits required and thus also the risk of accidents
Lower fire risk, as DPLA allows networks to take immediate action to prevent ignition by providing real-time alerts.
Reduced disruption, as better localisation of leaks reduces the noise and time taken to fix them. This will improve public confidence and social acceptance.
Economic benefits to users and any other parts of the supply chain, broader (UK) economy
DPLA will provide improved certainty on operating conditions and modelled outlooks, resulting in gas shippers having to build less risk into their pricing strategies. This will lead to a narrower spread of prices which can feed through to consumer bills.
Impacts on government priorities
The estimated decrease in methane emissions from pipes and AGIs between 2020 to 2030 via DPLA is up to 58%, which supports the government priority to tackle methane emissions as a Participant of the Global Methane Pledge which was committed to at COP 26 in November 2021.
DPLA sends a strong message that GDNs are doing the right thing and sets an example for other networks and even other countries to do the same. It paves the way for best-in-class approaches to regulatory and operational methane emissions reduction.
Expected regional or wider energy supply resilience benefits
In future, the platform could be developed to perform predictive leak prevention as well as leak detection. This would further improve energy supply resilience by minimising system losses.
