UW: Could you explain how much of Uniper’s energy generation in the UK/around the world uses natural gas, and how this is likely to change over time.
Uniper is an international energy company. We’re active in more than 40 countries worldwide, with our core markets in Europe and Russia. We are one of Europe’s largest gas storage operators and manage a diverse portfolio of pipeline gas deliveries into Europe, and we have a global LNG portfolio.
We own and operate around 37GW of power generation assets across Europe and Russia, comprising gas, hydro, nuclear and coal. Half of our capacity uses natural gas. We expect to see gas use grow as coal is phased out across Europe and is replaced, largely with gas and wind; with gas generation providing the flexibility to back up the growth in renewables.
UW: There would appear to be a limited future for natural gas in a low-carbon UK?
In the UK, gas-fired generation is going to be needed at least until 2030 and for some years after. We expect to see the same or even more gas generation capacity on the system over this period, but it will run less often.
The Committee on Climate Change’s recent net zero report indicates that there will be a role for gas-fired generation with carbon capture and storage (CCS) by 2050.
It may be possible to fuel power stations on alternative low-carbon fuels such as hydrogen in that time frame. Having power stations in strategic locations, close to potential CCS or hydrogen production infrastructure, and ready to switch from natural gas to a low carbon alternative in the future will help the country meet its climate change goals.
UW: Do you expect that the UK will have a reliance on gas for some time to come, and if so do you think the policies are in place to encourage investment?
As the energy mix becomes more weatherdependent, both the flexibility and efficient baseload capability that CCGTs provide will continue to be an essential part of the mix, but gas plant will run infrequently and for shorter periods to cover gaps in wind and solar output.
Paying for capacity to continue to be available is crucial; the capacity market provides for a cost-effective way of buying that capacity.
UW: Do you have any views on the future of hydrogen or biogases as a replacement for natural gas?
Gas will have a role to play in decarbonising heat, transport, industry and power generation, providing gas itself can decarbonise. And hydrogen has great potential across all of these sectors.
However, hydrogen needs a market framework including policies that will stimulate demand growth, differentiate between and reward sustainable low-carbon hydrogen production methods, such as power-to-gas technologies that take renewable electricity and convert it to produce green hydrogen.
UW: Is there one thing you would like to see in the forthcoming energy white paper to do with gas – or more generally?
Alongside examining investment models for nuclear and CCS, there also needs to be consideration of how to pay for capacity that provides the optionality for longer-term availability of baseload capable plant that runs on hydrogen or uses CCS.
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