UK Government remains cautious as it consults on future of hydrogen in heating

The Department for Energy Security and Net-Zero (DESNZ) launched a consultation on hydrogen use cases late last week. The key focus is whether hydrogen should be used in blends of up to 20% across gas distribution networks.

The consultation documents state that “the primary strategic role of blending” would not be “heat decarbonisation”. Blending “may only have a limited and temporary role in gas decarbonisation”.

Instead, the main benefit in the Government’s opinion would be stimulating hydrogen production and storage investment by giving certainty regarding demand.

The documents specifically stipulate that hydrogen blending “may have value as a potential strategic enabler for certain electrolytic hydrogen projects to support the wider energy system”.

The documents go on to state that the Government may select to jump straight to a 100% hydrogen gas network for building heating without using blends first. Exceeding a 20% blend would require changes to infrastructure, from pipes to appliances, to ensure safety and efficiency.

In any case, the Government does not want hydrogen for home heating to “’crowd out’ the supply to alternative end users who require it to decarbonise”.

MPs on the Science and Technology Committee told Ministers late last year that the most efficient uses of low-carbon hydrogen, in terms of cost and carbon benefits, are likely to be industrial. They noted that, while solutions such as heat pumps are suitable for most British homes, sectors such as industrial manufacturing and shipping will have fewer affordable options aside from hydrogen in the coming years.

This same line of argument has been taken by think-tanks including E3G and energy sector bodies including IRENA.

Taking this into account – and considering the ongoing energy price crisis – DESNZ axed plans for a hydrogen levy on domestic energy bills this summer. Energy Efficiency Minister Lord Callanan has subsequently stated that hydrogen blending “could help stabilize bills for families and businesses”.

Contracts for Difference

Should the Government decide to go ahead with hydrogen blending, it will design a financial framework modelled on the Contracts for Difference (CfD) auction scheme to support its implementation.

The framework would be called the Hydrogen Production Business Model (HPBM).

“Supporting blending through the HPBM, rather than via a separate business model, would reduce administrative burdens for producers, the government and the government appointed counterparty to manage the HPBM contracts,” the consultation documents state.

The consultations will run until 27 October.

The Government has stated that it will make a decision on hydrogen in building heating in 2026, following a series of real-world trials of increasing sizes. Matters were complicated this July when the first village-scale trial, set for Whitby, was cancelled due to strong local opposition. Ministers believe the original timeline can still be adhered to.