Post - Blog
At a crossroads: Unpacking the potential and roadblocks of hydrogen blending
- 2 months ago (2024-02-15)
- Junior Isles
By Victoria Mustard , Decarbonisation Strategy Lead at Xoserve
EM-Power 2024
On 14th December 2023, the UK government’s Department for Energy Security and Net Zero (DESNZ) provided guidance on low-carbon hydrogen with a host of new publications. This included some important announcements on transportation and storage, as well as a strategic policy decision to support the blending of up to 20 per cent hydrogen by volume into Britain’s gas distribution networks.
These announcements represent a significant step in scaling up the UK’s hydrogen economy – speeding progress towards the government’s ambition to deploy up to 10 GW low carbon production capacity by 2030. It is believed that they will provide a much-needed boost to the hydrogen industry, putting the UK back at the forefront of innovation in this area.
Even with these milestone announcements, there is a long road ahead for establishing a functioning hydrogen economy. The gas industry is preparing for an energy future that includes hydrogen in some capacity, but there are significant obstacles that the industry must overcome to guarantee hydrogen’s place in the sustainable energy future.
Hydrogen has an image problem
Hydrogen’s ‘Marmite’ image has largely stemmed from differing views around the efficiencies of using natural gas alongside carbon capture or renewable energy to generate low-carbon hydrogen. There have also been questions raised about its safety, due in large part to its reputation as a combustible gas.
The success of the HyDeploy trial in the North East of England serves as a testament to the potential of hydrogen as a viable alternative to natural gas. Over 10 months, 668 homes, a school, a church, and several small businesses were supplied with a 20 per cent hydrogen blend, all under the approval of the Health and Safety Executive (HSE). This trial has demonstrated that hydrogen can be used safely and at scale in the gas network and within homes. DESNZ has also been keen to stress that the implementation of hydrogen blending will depend on the outcome of safety trials, expected this year.
Conversations exploring the pros and cons of each energy source are important, especially when regarding safety. However, if the energy industry and policymakers are unable to agree on an energy mix, even if it’s only a temporary transition phase, we could inadvertently find ourselves bringing our net zero progress to a halt.
Hydrogen as a commercial market
The UK has slipped six places in the International Hydrogen Progress Index due to slow progress and uncertainty around legislation. Although the government is starting to introduce policies, it is important not to lose momentum and to keep up the pace, as there is still a lot of work required if the end goal is to establish a functional hydrogen market.
To achieve this, the energy industry needs to collaborate and work together. While hydrogen blending is not the final solution, it is a necessary step towards meeting the government’s targets and delivering its UK Hydrogen Strategy. Hydrogen may not be the solution for every circumstance, but neither are heat pumps nor district heat networks. Hydrogen and hydrogen blending could play a crucial supporting role in the future energy system, whether it’s for hard-to-abate industries, energy storage, transport, or heating the UK’s ageing housing stock.
Pricing is also a consideration when it comes to hydrogen blending because hydrogen has different volume and density characteristics as compared to natural gas. If, in the future, end users are given the option to go for ‘100 per cent hydrogen’, they will require more guidance on expected costs to give them the confidence to switch to hydrogen. Currently, hydrogen is more costly to produce than natural gas or renewable energy. Therefore, there needs to be a significant decrease in its price or incentives such as a contract for difference equivalent to make switching economical.
A step towards decarbonising the gas network
Introducing the blending of up to 20 per cent hydrogen by volume into Britain’s gas distribution networks could result in a 7 per cent decrease in CO2 emissions when compared to natural gas alone. Although this percentage may seem small, it is still a step towards creating a successful hydrogen economy and bringing us in line with our EU neighbours on the Hydrogen Progress Index. Implementing hydrogen usage could also promote a holistic approach to energy, with green hydrogen producers utilising excess renewable energy that would have otherwise been wasted.
The government’s support of blending confirms that hydrogen is set to play a role in our net zero transition, giving businesses the confidence to invest in hydrogen projects in the UK. This is a significant step forward, providing certainty to help the gas industry prepare for its low carbon future.
Further policy decisions are needed
If hydrogen blending of up to 20 per cent goes ahead, it will require a change in current legislation. For example, current legislation limits the amount of hydrogen in the mix to 0.1 per cent. Regulations need to be considered to incentivise the production of green hydrogen over blue hydrogen, which is generated from natural gas and carbon capture.
The gas industry also needs a decision on hydrogen for heat, which at the moment is due in 2026 so we can start to ensure the necessary infrastructure, systems and codes are in place to support an initial hydrogen market that has the potential to grow as needed to support renewable energy. In addition, the government will also need to introduce policies that make the energy transition affordable – this doesn’t just apply to hydrogen but all low-carbon options. It is also important to ensure that those still using natural gas for heat won’t be left without facing astronomical costs to move away from fossil fuels.
At the centre of the gas and electricity systems is the FSO (or NESO as it will now be known), which has a crucial role in decarbonising energy and to take a whole system approach, which will hopefully end siloed thinking and help us reach net zero on time.
Firm policy decisions, investment and public engagement with hydrogen will be critical to the creation of an effective hydrogen economy decarbonisation of our nation’s energy system; particularly energy-intensive, hard-to-abate industrial sectors. The government’s announcement, published on December 14th last year, hopefully signals the beginning of a new, more certain era for the gas industry with more announced in future Hydrogen Strategy updates.
For more on hydrogen blending and decarbonising heat, visit https://www.xoserve.com/