By rolling out a 20% hydrogen blend across the UK gas grid, 6mn tonnes of carbon dioxide emissions could be saved every year, according to research.
On 22 September, Cadent published a report from Frontier Economics, as part of the Energy Networks Association (ENA)’s Gas Goes Green programme, in which it stressed the need for a new hydrogen target to ensure that Britain’s gas grids are able to deliver on the country’s zero carbon ambitions.
As it stands, network companies can only have a 0.1% mix of hydrogen in the gas grid, whereas a 20% blend would deliver significant emissions savings and could serve as an “important stepping stone” during the transition to a sustainable, net zero system. Outcomes would include: a significant, reliable source of demand for hydrogen producers, supporting the investment case for hydrogen; providing learning and incremental change towards what could become a 100% hydrogen grid; and the immediate decarbonisation of a portion of gas flowing through the grid.
To enable hydrogen blending, however, changes will have to be made to managing blend and gas quality, distribution and transmission, and to deliver a level playing field.
To manage blend and gas quality, it recommended a pre-connection impact assessment is undertaken by the relevant network operator to determine a hydrogen producer’s likely impact on the ability of other hydrogen producers to inject. Once connected, producers should be subject to constraints on their rights to inject gas into the grid.
On distribution and transmission, it explained that the current distribution charging framework was designed for a system where gas entered from the national transmission system. Hydrogen blending, along with ongoing biomethane development, could lead to a larger number of distribution entry connections. This would mean both the cost reflectivity of the overall distribution charging regime and impact on effective competition will need to be revisited. It recommended adjusting the connection boundary from a “deep connection boundary” to a shallow one, as well as replacing the Local Distribution Zone System Entry Commodity Charge with an entry capacity charge based on long-run marginal cost, applied to entry injections at the distribution level.
Elsewhere, to deliver a level playing field between distribution and transmission-connected plant, the report recommended adopting a common charging methodology across gas distribution networks to facilitate effective competition between network users connected at different networks.
With the Committee on Climate Change (CCC) earmarking a requirement of 270TWh of low carbon hydrogen by 2050, early deployment projects must get off the ground within the 2020s to ensure it is the viable option envisaged by the CCC. For this policy aim to be achieved, then it is key that the commercial framework does not act as a barrier. This means that Ofgem and industry need a clear signal they can prioritise work to ensure this does not happen.
Should hydrogen blending prove technically feasible – something industry is seeking to show through initiatives such as the HyDeploy project – then government should look to make clear that it is seen as an important transitional option while also offering clarity as to when it hopes early low carbon hydrogen projects will be connected. This would ensure early action can be taken on tasks that have a longer lead time, while also allowing more time for considering options and building in learnings from other areas of work – including biomethane. This would mean the development of the commercial framework for low carbon hydrogen can be properly aligned with the work on biomethane where industry discussions are ongoing.
Once a high-level policy direction has been given, the report said government can also work with Ofgem to ensure this priority is reflected within Ofgem’s regulatory framework and forward workplan.
It noted that in the RIIO-2 price control framework, Ofgem is introducing a Strategic Innovation Fund for projects which focus on achieving net zero targets. Ofgem has said it will collaborate with organisations such as BEIS and UKRI to set innovation challenges. The report recommended that through this channel, government should provide clear direction that enabling hydrogen blending should be a key focus for the Strategic Innovation Fund.
