These latest insights have been published in a report by independent research consultancy Accent, commissioned by Energy Networks Association to bring together current views from over 30 expert industry stakeholders including government and regulatory agencies, energy industry representatives, private businesses, consumer groups and academics.
It is timely that this comes as Ofgem finalises plans for the forthcoming regulatory period, RIIO2. For network companies to be able to attract investment and take important steps on decarbonisation over the next decade, key regulatory decisions need to be made today. It has even been suggested that new models for incentivising innovation may be needed within RIIO2 to ramp up existing network-led innovation.
Decarbonising heat will be no small feat. Gas is our main source of heating, with 85 per cent of UK households and 65 per cent of industrial sites using natural gas for heating. Heat is one of our hardest-to-decarbonise sectors and progress to date has been slow – as of today, less than 5 per cent of energy used for heating homes and buildings comes from low-carbon sources.
To achieve a target of net zero greenhouse gas emissions by 2050, all buildings will need to be heated by low-carbon energy sources by 2050 as well as major modes of transport such as heavy goods vehicles. Hydrogen gas is an integral part of a “whole system approach” wherein we maximise the strengths of a range of low-carbon technologies and solutions. In pursing such an approach, industry stakeholders have suggested we take account of national and regional geographies and sectors as wide-ranging as transport and water.
Beyond this, stakeholders have asked for a national conversation about the future of heat, with gas network companies seen as central to pushing the topic up the public agenda, helping the public understand the need for change and possible options, and identifying how we can maximise the immense value of our current gas infrastructure. In an increasingly decarbonised energy system, they see gas network companies as more important than ever in supporting vulnerable customers.
Another key point for the gas companies to take away from these stakeholder insights is the desire for energy networks to collaborate more closely – not only gas distribution and transmission network companies, but also gas and electricity network companies. Some industry stakeholders have suggested a new incentive mechanism may be needed to encourage this and overcome existing competition between operators, especially on innovation trials and projects.
While direction on policy is needed, gas network companies have already been leading the way in helping to identify possible pathways by providing vital new evidence and insights. Major regional projects have been carried out to trial hydrogen, synthetic gas and smart hybrid heating systems. Almost 100 biomethane plants are now connected to the gas grid. Building on this work, gas network companies have launched a major project to ensure Britain has the world’s first low-carbon gas grid. The Gas Decarbonisation Pathways project builds on work they have already undertaken to build a low-cost, low-carbon network and make the most of the technologies that can deliver low-carbon gas.
Shifting away from natural gas to lower carbon gases may seem daunting but it is not the first time we have faced such a big challenge. In the 1960s Britain moved from town gas to natural gas. As we plan for decarbonising the gas grid, we can be assured by the benefits it will deliver, including minimum disruption and a better result for the bottom line – KPMG research carried out in 2016 found it could save the public £214 billion by 2050.
Efforts to decarbonise the gas grid will need to be matched with demand-side measures such as energy efficiency. Policy will need to support the continued growth in green gasses, and government plans to extend the Renewable Heat Incentive for a further year is a positive step in this direction.
To read Accent’s full report, visit ENA’s website,
www.energynetworks.org