Gas and electricity policy decisions need to be firmed up ahead of the next RIIO network price controls, due to the long term nature of network investments.
Adapting the existing gas network to hydrogen or biogas is the cheapest way to decarbonise heat by 2050, a report by KPMG for the Energy Networks Association has found.
The report compared four different scenarios and found that evolving the gas grid was the cheapest way to meet 2050 decarbonisation targets.
Under the ‘evolution of gas networks’ scenario, the target was met under the following conditions:
- Gas remains the main heating fuel for the majority of customers.
- Heat is partially decarbonised. The majority of customers convert to Hydrogen gas, derived from natural gas with CO2 permanently stored (sequestered) under the continental shelf.
- Transport is mostly decarbonised.
- Gas distribution networks are mostly used for hydrogen gas across the country.
This scenario would cost £104-122bn incrementally, with low/medium practical obstacles.
The other scenarios looked at were:
- Diversified energy sources, where a mixture of different technologies is used in different areas of the country; heat is partially decarbonised with a mixture of biomass sourced heat networks, gas and electric heating; transport is partially decarbonised and gas distribution networks are only used in half of the country. This scenario was projected to cost £156-188bn, with medium to high practical obstacles.
- Prosumer, where self-generating heating and energy solutions develop, but only provide minority of energy, the rest use electric heating. Heat is decarbonised with a mixture of self-generating heat and storage, and electric heating. Gas distribution networks are not used. The majority of transport is decarbonised. This scenario was projected to cost £251-289bn, with very high practical obstacles.
- Electric future, where heat comes from electric systems, with assumption that power generation is completely decarbonised by 2050. The majority of transport is decarbonised and gas distribution networks not used
The report recommended that the government set a firm gas and electricity policy for heat ahead of the next RIIO network price controls, due to the long term nature of network investments. It also recommended that transport decarbonisation policy needs to be integrated with power and heat decarbonisation policy and more detailed assessment needs to be done consumers’ acceptance of major change, with regard to both policy and practicality aspects.
ENA Chief Executive David Smith said, “Heat accounts for 45% of the UK’s energy needs and this report demonstrates the scale of the challenge facing the UK as we look to decarbonise the sector in a secure and affordable way. This analysis places important emphasis on the customer and shows that making efficient use of the extensive gas network available to us in the UK offers an affordable and practical solution to this challenge.”
Robert Hull, Director at KPMG and author of the report comments “Gas currently delivers an essential service, providing heat for UK consumers and businesses. This new KPMG report analyses four scenarios to explore how the UK can meet its 2050 decarbonisation ambitions, and helps set out the benefits and challenges for each. Important strategic choices lie ahead for the industry and this report can help inform the debate.”
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