Hydrogen is already entering the energy system and appears to be a convincing pathway to decarbonise heat and transport. Its widespread use requires deliberate intervention, which includes a strategic, long-term plan to make hydrogen zero-carbon and to address challenges, including its impact on energy security.
The biggest challenges are where large volumes of hydrogen will come from and how to decarbonise it. The report highlights concerns around the associated costs and deliverability of the necessary steam methane reforming plant and Carbon Capture and Storage (CCS) infrastructure needed to handle the large volumes of CO2.
Natural gas will be used to produce a majority of the hydrogen, as it is cheaper than from electricity, but residual emissions from CCS and hydrocarbon extraction are significant and will need to be addressed. Surplus electricity from wind will produce only a small fraction of the hydrogen needed for heat: meeting this demand with electricity alone would require about 70 GW of additional nuclear capacity – seven times current capacity.
Replacing natural gas with hydrogen for heating will increase gas consumption and produce more CO2. Some of the increase could be offset by measures to reduce energy demand for heat. Blending into the gas supply provides little carbon reduction, even at high blends, and would be expensive, so switching has to be done by area and straight to 100% hydrogen.
Imports of natural gas mean most of the upstream emissions from extraction are likely to be outside the UK. This may be an issue for meeting global climate targets set out in the Paris Agreement.
Zero-carbon hydrogen could be imported from sunny regions, such as North Africa, using very-high temperature solar thermal. But these are unlikely to be available to meet early bulk demand.
Hydrogen is already playing a valuable, diffuse role in the energy system and helping to manage the electricity grid, fuel vehicle fleets and industry. These niche applications can develop without hydrogen from natural gas, but will benefit from removing regulatory and market barriers to help them become viable.
Recommendations
- Enable early, stand-alone, hydrogen technologies.
- Remove regulatory barriers to enable diffuse use of hydrogen.
- Plan for large-scale use of hydrogen to address carbon emissions and energy security implications. The following are needed if hydrogen is used widely in heat and transport:
- Long-term strategic plan for zero-carbon hydrogen.
- CCS built before 2030, to enable large-scale use of hydrogen.
- Assess energy security implications of import dependency.
- Insulate buildings to a high standard, to offset increases in gas consumption.
- Early engagement with publics will be essential.
- Evaluate need and locations of large-scale hydrogen storage.
- Clear signal to enable investment by developers and equipment providers.
- Robust understanding of safety, with meaningful regulation.
- Whole system approach to hydrogen, to evaluate potential in the energy system.
- Whole system, sustainability criteria should be used to evaluate the benefits
- Realise cross-sector benefits to reduce costs and improve efficiencies.
- Support UK industry and expertise to capitalise on emerging global markets.
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Follow-up activities
This report leads into ERP’s project on the transition to low-carbon heat.
Steering Group
- Prof Neville Jackson – Ricardo (Chair)
- Den Gamer – ETI
- Peter Bance – Origami Investments
The project consulted widely with industry and academia and draws on a large number of published reports and papers.
Further information
Please contact Richard Heap from the ERP Analysis Team.
Background
Heating buildings accounts for 25% of the UK’s energy demand and 15% of its greenhouse gas (GHG) emissions. Cost-effective GHG emission reductions are available for space heating via demand reduction and fabric energy efficiency, which reduce the residual heat demand that will have to be met by low-carbon heat sources.
High fabric energy efficiency is undoubtedly the best approach for new buildings: it maximises the time over which the measures can act, causes no disruption for occupants, and avoids the greater costs and disruption of future refurbishment. Ambitious improvements to fabric energy efficiency are challenging for many existing buildings, but should be considered wherever possible and affordable, because if major improvements are not made, the UK could be left with a residual heat demand that is too large to allow sufficient reductions in GHG emissions using available low-carbon heat sources. The UK would face an insurmountable back-log of retrofit projects, including to upgrade new buildings that have missed the opportunity to adopt leading practice from the start.
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Conclusions & Recommendations
To address the current slow rate of improvements (the “uptake gap”) the UK must aim for leading practice in new buildings, and must accelerate the deployment of retrofit solutions for existing buildings.
Increasing the uptake of improvements is not enough: experience has shown that when improvements are carried out, results are disappointing due to a combination of unrealistic expectations of the impacts (the “prediction gap”) and an under-delivery in actual performance (the “performance gap”).
New measures are needed to address these three gaps for space heating: these must be adopted in a pragmatic manner, without pursuing spurious precision or allowing “the best to become the enemy of the good”. Deployment must continue for measures that are known to bring benefits, even if exact impacts are uncertain; and early stages of deployment should be treated as a “safe learning environment”.
For retrofit quality, the Bonfield Review was commissioned to consider customer advice and protection, the standards framework, and monitoring and enforcement. For new-build, all customers already pay the costs for stipulated energy performance, but only some receive the intended benefits: the sector does not necessarily need more energy regulation, but rather more effective regulation through better use of monitoring, testing and enforcement.
We recommend actions to provide ambition and certainty in regulations for the building industry, new approaches to increase the appeal of retrofit to leverage customer interest, research to improve understanding of heat use in buildings, and better quality control and enforcement to deliver performance in practice.
- To guide buildings’ energy policies and regulations to be commensurate with the UK’s Carbon Budgets, a cross-departmental group should be established with membership from DCLG, BEIS, and relevant organisations (e.g. National Infrastructure Commission), aided by the establishment of an expert advisory panel.
- To provide ambition and certainty for the building industry, DCLG should produce a regulatory trajectory for building energy regulations that reaches leading performance in fabric thermal efficiency, and should maintain this trajectory.
- To leverage customer action on energy efficiency, DCLG should improve its use of light-touch regulations: Display Energy Certificates (DECs) should be applied to all public buildings and promoted for private buildings; Energy Performance Certificates (EPCs) should be promoted more effectively as an important part of purchase and rental decisions.
- To increase uptake of retrofit solutions, product manufacturers and installers should better promote retrofit options and should develop more appealing products, installation methods and “retrofit packages”, with support from heritage groups for older buildings and with engagement from government for the development and implementation of policies.
- To increase understanding of thermal performance in buildings, the Energy Systems Catapult (ESC) should expand its network for access to test facilities and expertise to include tests of thermal performance, and should maintain its buildings trials as a longitudinal study and control group for other studies.
- To improve thermal performance in practice, product manufacturers should take a greater role in training and quality control in installation, and the building inspection regime should improve its use of tests and enforcement (better regulation, not necessarily more regulation) including conducting truly random spot checks of energy performance.
Follow-up activities
The report includes a number of actions that can be taken in support of the recommendations, and we will work with relevant organisations to identify opportunities to advance these actions.
The ERP’s Low-carbon Heat event on 11th October 2016 presented the ERP’s reports on Heating Buildings and The Potential Role of Hydrogen in the UK Energy System, and will introduce the ERP’s new project on Low-carbon Heat. This project is building on conclusions about heating options from the Buildings and Hydrogen projects to understand implementation issues for customers and utilities, and implications for energy systems. The event included perspectives from guest speakers and opportunities for attendees to contribute views on the priorities for the Low-carbon Heat project.
Steering Group
Project Chair:
- John Miles, Arup / Cambridge University
Steering Group (please note that some members have since moved from these organisations):
- Ron Loveland, Welsh Government
- Simon Hancock, Atkins
- Rufus Ford, SSE
- Simon Hyams, ETI
- Ben Westland, Scottish Enterprise
- Hunter Danskin, DECC
- Ken Bromley, DCLG
- Jeff Hardy, Ofgem
- Ute Collier, CCC
Further Information
Please contact Dr Simon Cran-McGreehin from the ERP Analysis Team.
Meeting the 2050 targets means the UK energy system will need to transition to low-carbon heat. Changes will be needed to how we heat our homes, buildings and industry. Supplying natural gas or oil directly into homes will need to be replaced by a decarbonised gas or by electric heating or heat network.
But it is not a simple choice: each option has challenges that could limit their deployment. A combination of options is likely to be required; no one option may not dominate, as natural gas currently does. Demand reduction will be an essential part of a cost-effective transition.
The scale of the challenge should not be underestimated. The social aspects are as challenging as the technical. The capital investment means the cost of heating will rise during the transition.
Timing is crucial. Preparations need to begin now, to inform the long investment cycles over the next 30 years.
Several low-carbon heating options need to be pursued in parallel now. Early in 2020s, critical actions and decisions will need to be taken, by Government, to avoid closing-off options, undermining their potential, or increasing their costs.
- Determining the extent to which hydrogen could be used to decarbonise the gas system, is critical. Carbon Capture and Storage (CCS) will be essential.
- Government support for trials of key technologies is needed now.
- No and low-regrets options should be supported now.
- High efficiency standards for new-buildings need to be set and enforced.
- A robust retrofit energy efficiency programme for existing buildings.
Addressing the social aspects of the transition needs to be a priority and requires early engagement with the public, alongside the development and coordination of financial policies, incentives, regulations and business models.
- Engagement with the public will be crucial and needs to start now.
- A new narrative for heating and hot water, to recognise that costs will increase.
- Energy efficiency should be pursued to reduce the costs.
- Decide how to address the distributional impacts.
- Prioritise new financing mechanisms and market structures.
A long-term strategy to manage the transition, which engages with the public and coordinates the diverse range of parties, with a clear decision-making framework.
- Integrate decisions on heat with transport, industry and power generation.
- A heat delivery body to facilitate national, local and commercial decision making.
- Early engagement with the public will be crucial – as will a clear narrative
Project Events
The project’s report was launched at an event in October 2017. For more information, please contact Richard Heap.
A workshop on 18 July 2017 tested the analysis on the deployment potential and challenges of the various low-carbon heating options. Details of the workshop can be found here.
January 2017 ERP convened an industry workshop to explore the challenges of deploying heat pumps (see project outputs for a note of the meeting).
The low-carbon heat project was launched in October 2016 (more information is available on the event page).
Steering Group
- Carl Arntzen, Bosch Thermotechology (Steering Group Chair)
- Chris Jofeh, ARUP
- Steven Cowan, Atkins
- Olivia Absalom & Andy Davey, BEIS (observer)
- Joe Cosier & Simon Messenger, Energy Saving Trust
- Jeff Douglas, Energy Systems Catapult
- Sarah Deasley, Frontier Economics
- Mark Thompson, Innovate UK
- Janet Mather, National Grid, Gas SO
- Rufus Ford, SSE (seconded to BEIS)
- Kathleen Robertson, Scottish Government
- Keith MacLean, Independent / UKERC
- Ron Loveland, Welsh Government
- Amber Sharick, UKERC
Additional Sponsors
We would like to thank the following organisations for providing additional funding that allowed the project to run to completion. They also provided additional technical input and advice.
Bosch
Energy Saving Trust
Innovate UK
Cadent
Energy & Utilities Alliance EUA
BEIS
SGN
Institution of Gas Engineers & Managers IGEM
Background
Within its latest work, ERP considers storage as a system-wide service for the storage of energy in multiple forms. The financial, legal, political, commercial and regulatory barriers to electrical, thermal, gas, hydrogen and transport storage are addressed.
ERP’s work in 2011 highlighted that Energy Storage is not a panacea – there are other competing options (e.g. Interconnection or Demand-Side Response). Under the right conditions however -where the system shows a clear need, or a market-pull – Energy Storage has the potential to provide multiple benefits to the energy system.
ERP notes that Energy Storage capabilities are already at the heart of our energy system – in the form of fossil fuels which currently provide large volumes of long duration storage over a period of months. Economic as well technical solutions are therefore already in existence. However, new challenges are being created by changes to our current system e.g. renewable technologies, electrification of heat and transport, the phasing out of coal, discussions over the future role of gas, and alternative options using Hydrogen (e.g. for power-to-gas, storage and transport). A key challenge is therefore to replace the current high value, low cost solutions that are already offered and provide storage that accounts for daily fluctuations, as well as variations over several weeks and months or seasons, in a cost and benefit-appropriate way.
It has long been recognised that more modern Energy Storage applications have a role to play in the future success and management of energy systems. This is particularly the case with pledges from a number of countries internationally (e.g. at the recent COP21 talks in Paris, December 2015) to limit the rise of global warming; resulting in commitments to further increase penetrations of renewables within the global energy mix. Alongside this increase in renewables, Energy Storage is deemed a valuable and complementary solution for storing electricity that is generated variably and intermittently, dispatching it as needed to meet demand.
The use of Energy Storage alongside renewables is not the only area where storage can potentially add value though. Energy Storage provides a complex field for analysis, with an array of possible technologies and applications, with many locational and temporal considerations. These wide-ranging applications provide storage with the potential to compete in a variety of energy markets, plus markets for energy services.
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Aims & Objectives
ERP’s work on Energy Storage (2016) will provide a system-wide overview of the current financial, legal, political, commercial and regulatory challenges for Energy Storage deployment to 2030 with a “light-touch” focus on the technical challenges.
The work will begin looking at the whole system need for Energy Storage and potentially competing technologies before moving ahead to:
- Identify system-wide barriers to Energy Storage & possible ways to overcome them
- Provide clarity for: policy-makers, regulators, network operators, customers, investors & ES developers (tech & supply chain developers) to:
- Help catalyse & mobilise an ES supply chain of value to the UK, stimulating investment.
This last aim will be achieved by enabling collaboration of the parties and actors that are key to the system-wide development and deployment of Energy Storage.
In relation to step 1, an ‘inputs and scoping’ workshop was held in April 2016 to facilitate discussion amongst attendees and representatives from across the energy system, and to gather first-hand knowledge and experience of the barriers faced. In addition to interviews with relevant contacts from the wider energy community, the workshop has helped to inform ERP’s project work and the examples or case studies referred to.
Following the above analysis, ERP’s project will highlight significant barriers identified and put forward recommendations for how energy storage applications can be enabled and utilised across the UK.
Conclusions
TBA
Follow-up activities
TBA
Steering Group
Steering Group Chair:
- Peter Bance, Origami Energy Ltd.
Steering Group Members:
- Keith MacLean (UKERC)
- Craig Edgar, Atkins
- John Tindal, SSE
- Sally Fenton, DECC
- Judith Ross, Ofgem
- Martin Southall, GE
- David Butler, Scottish Enterprise
- Stephen Marland, National Grid
- Allen Creedy / Andrew Poole, FSB
- Andrew Lever, The Carbon Trust
- Nick Heywood, Origami Energy Ltd.
Further Information
For more information about the project, please contact ERP .
