A decision on 100% hydrogen for heat is not contingent on the implementation of blending, the government has stated.
Many supporters of hydrogen for heat see blending as a stepping stone to reaching full coverage.
While the government agrees that “there may be value in having blending available to support the early development of the hydrogen economy”, it does not see it as a deal breaker for the hydrogen for heat market.
The statements are made within a consultation, Hydrogen Blending into GB Gas Distribution Networks, launched by the Department for Energy Security & Net Zero. It is seeking views on all aspects of hydrogen blending, from its impact on customer bills to potential support mechanisms.
Hydrogen blending refers to the blending of low carbon hydrogen with other gases (primarily natural gas) in pre-existing gas network infrastructure and appliances. Government is aiming to reach a strategic policy decision before the end of the year on whether it should support the blending of up to 20% hydrogen by volume into the gas distribution networks.
The consultation document adds: “We believe an appropriate strategic role for blending, if blending is supported and enabled by government, is to act as a reserve offtaker, to support the growth of the hydrogen economy whilst ensuring it does not ‘crowd out’ the supply of hydrogen to alternative end users who require it to decarbonise.
“Additionally, it may have value as a potential strategic enabler for certain electrolytic hydrogen projects to support the wider energy system.”
However, the government consultation document adds that blending is not the end goal and “should only be a transitional option”.
It adds: “It relies on an extensive natural gas network being available to blend into, which will reduce as we progress to net zero. For this reason, it may only have a limited and temporary role in gas decarbonisation as we move away from the use of natural gas.”
The document adds that if the government does decide to proceed with blending then it does not anticipate it to be implemented at a commercial scale before 2025-26, at the earliest.
Should it decide to go ahead with blending, the government has also thrown its weight behind a Contracts for Difference-style framework to support its implementation. It is one of four commercial models being consulted on, which include:
- No government commercial support provided
- Provide government commercial support for blending through a new framework to succeed the current Green Gas Support Scheme
- Design a new business model to provide government commercial support for blending
- Incorporate blending as an eligible offtaker into the Hydrogen Production Business Model (HPBM)
The fourth model, the HPBM, is government’s preferred model and is likened to the current CfD auction process which supports renewable energy schemes.
The consultation document adds: “The HPBM has been designed to provide revenue support to new low carbon hydrogen production projects and is based on a Contracts for Difference-style framework. 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.”
Energy minister Lord Callanan added: “We want to capture the full economic potential that comes with using hydrogen as a cleaner, reliable energy source – with the opportunity to create tens of thousands of new skilled jobs.
“Blending hydrogen into our gas supply – through existing gas infrastructure – would open the doors to an expansion of its use as a fuel, one which could help us cut emissions and stabilise bills for families and businesses.”