National Infrastructure Commission: UK should rule out hydrogen for home heating
The UK Government should back electrification as “the only viable option” for decarbonising building heating at scale, setting hydrogen aside instead for the decarbonisation of heavy industry and to be used as a strategic energy reserve.
That is a key recommendation from the National Infrastructure Commission (NIC), which has today (18 October) presented its National Infrastructure Assessment to policymakers.
The Assessments are produced every five years. This edition places much focus on the transformation the nation’s energy systems will need to undergo to align with the nation’s 2050 net-zero goal and interim carbon budgets in an affordable manner.
At least £20bn and as much as £35bn will need to be spent each year between 2025 and 2050 on the energy transition, per the NIC’s estimates. These figures cover not only scaling up renewable and nuclear generation in line with Government targets but also building out electricity networks; decarbonising heating; scaling batteries and other sources of energy flexibility; developing hydrogen networks and infrastructure for carbon capture and storage (CCS).
CCS and hydrogen networks “will need to be up and running well before 2035”, the Assessment states.
On flexibility, the Assessment states that short-term flexible energy capacity will need to quadruple on current levels by 2035 as the UK works to remove unabated gas-fired electricity generation from the grid, and as electricity demand increases.
As expected, the NIC is highlighting that more funding is not all that is needed. The Government will also need to reform its approach to planning to reduce delivery timelines for major energy projects, which grew by 65% between 2012 and 2021.
Hydrogen cost conundrum
The NIC emphasizes that the transition should be “both affordable and fair”. The lion’s share of the cost burden should fall on large private sector players and the government, who should not lean too heavily on households or SMEs.
A key point of contention in recent months regarding the affordability of the net-zero transition for homes has been domestic heating. Last month, Prime Minister Rishi Sunak watered down plans for an outright ban on fossil fuel boilers for homes by 2035. He also increased the maximum each home can claim for a heat pump through the Boiler Upgrade Scheme from £5,000 to £7,500.
This came after then-Energy Secretary Grant Shapps cancelled plans to impose an annual levy on home energy bills to fund the development of low-carbon hydrogen. Opponents of the hydrogen levy plans pointed not only to the likely unpopularity of adding to energy bills during or right after a price crisis, but to research indicating that using hydrogen in harder-to-decarbonise industrial sectors would reap greater cost and carbon savings.
The Government is yet to make a strategic decision on whether hydrogen will have a major role to play in replacing gas in home heating. It is set to make that choice in 2026, following a series of local trials of increasing size.
Gas networks are pushing hydrogen blending as a key option. The NIC’s new Assessment comes down staunchly against hydrogen for home heating on efficiency and cost grounds, and recommends that the Government backs electric heating as “the only viable option for decarbonising buildings at scale”.
The Commission has taken a thinly-veiled dig at Sunak and his Government by emphasising the importance of policy stability in galvanising economic support for emerging low-carbon technologies such as heat pumps.
The NIC is recommending that the Government fully subsidises heat pump installation costs for one-third of homes, based on income. All others should benefit from a £7,000 grant to switch to a heat pump or heat network.
Subsidising the heat transition in this way would cost around £3.2bn per year through to 2035.The Government could then start to scale back support as heat pumps and heat networks become more affordable, benefitting from economies of scale and technology advancements.
This, combined with the other energy transition measures in the Assessment, would result in an annual energy bill savings for each average British home exceeding £1,000.
The NIC emphasises that electrified heating works best in energy-efficient buildings. It calls on the Government to increase annual investments in energy efficiency and low-carbon heating across social housing and the public sector to £3.2bn per year through to 2035.
The NIC states that better uses of hydrogen than in building heating would be for heavy industry and for a new strategic energy reserve. The NIC believes hydrogen would be the best storage medium for the energy reserve in the long term. Such a reserve would store enough energy to power the country for two weeks by 2040 and could help to maintain energy security in any future crises.
In addition to this, the NIC sees a need for 30TWh of long-term flexibility to be provided by hydrogen power stations, or gas power stations with CCS, by 2035. This would be to replace and upscale the existing gas peaker plant capacity.
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