New report urges Ofgem to allow more flexibility in next price control period in wake of government electrification plans

Ofgem should give utilities flexibility to adapt to the upcoming transformation of the UK’s gas grid when it publishes its next set of price controls for the sector, a new report has urged.

The report from the Carbon Connect think tank examines the next steps for the UK’s gas supply network following the government’s plans to electrify heating.

It has urged Ofgem to incorporate flexibility into the next round of RIIO GD-2 price controls, which will run from 2021 to 2029, in order to allow for decisions on the long-term future of the gas grid.

The report says that while it is “feasible” and safe to inject bio-synthetic natural gas (bioSNG), which is produced from waste gasification plants, into the grid, it is not yet being produced at a “commercial scale”.

It recommends that the government explore bioSNG’s “significant potential” to support decarbonisation. This could include extending its Renewable Heat Incentive subsidy scheme to support bioSNG if there is convincing evidence that the technology will become “sufficiently low-cost to deliver affordable decarbonisation”.

The report says that blending hydrogen with natural gas has a proven track record, but work is needed to confirm the safe upper limit that can be used in the existing grid and appliances.

Furthermore, the safety of introducing pure hydrogen into the gas grid would need to be proved. Carbon Connect recommends comprehensive testing of 100% hydrogen in the grid, buildings and appliances to back up research showing that the low carbon gas can be used safely in polyethylene pipes.

Given that the existing gas network health and safety regime does not cover hydrogen, the report also recommends that the government should ensure the ‘timely’ delivery of a new regulatory framework for the gas.

It says that using hybrid gas/electric systems could enable suppliers to cope with seasonal heat fluctuations and reduce the burden on the electrical system, but that more work is needed on technologies and how commercially viable they are.

According to the report, if these low carbon gas options cannot be deployed at scale, the extensive gas grid that currently supplies 23 million homes runs the risk of being severely underutilised or having to be decommissioned.

It adds: “This would involve significant cost, and the capacity to transport large volumes of energy through the gas grid would need to be replaced. Work is needed to reduce uncertainties around the costs and implications of decommissioning.”

A substantial fall in the greenhouse gases from heating, which currently makes up around one third of the UK’s total emissions, will be required in order for the UK to meet its goal of reducing emissions by 80% by 2050.

Welcoming the report’s findings, Isaac Occhipinti, head of external affairs at Energy and Utilities Alliance, said: “The gas network is already carrying low carbon bio methane and is physically able to  carry huge quantities of other gases, including hydrogen, meaning it can play a key role in enabling us to meet our carbon reduction goals. Making efficient use of the gas network available to us, would allow for an affordable and practical solution to the issue of heat decarbonisation.”

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