The customers’ choice
The heating solution of tomorrow cannot risk leaving more consumers at risk of fuel poverty.
21st February 2017 by Networks
Determining how we heat the homes of tomorrow is no easy task. We need an energy supply that is clean and meets the UK’s 80% carbon reduction targets for 2050. But it also has to be affordable: network costs represent a fifth of customers’ gas bills.
Currently gas meets about 80% of total UK peak energy demand and is reliably transported to homes by the distribution networks. For the immediate future this doesn’t look like changing, although gas consumption across the UK has fallen slightly, and is forecast to continue to do so. This can be put down to more economical appliances and a generally warmer climate. In contrast, the number of properties connecting to gas supplies continues to grow, with developers and investors still wanting gas supply installations for newly built developments.
For now gas remains the fuel of choice. Without the gas networks we simply wouldn’t have the means to transport the energy that homes and businesses need at peak times.
Daily heat demand peaks on a cold winter’s day at 8am and again at 6pm. The gas networks can ramp up to over 130GW in just an hour – no other fuel can offer this. To put that into context, peak UK electricity demand is less than 60GW – four times more energy flows through the gas networks than electricity, and over the course of a year three times as much energy is transported.
Since 2002 billions of pounds have been spent on upgrading all existing cast iron and ductile gas mains within 30 metres of properties with new and more durable polyethylene pipes. This 30-year planned replacement policy ensures the UK now has a gas network supplying almost 85% of the population and one that will be largely plastic by 2032. The changeover of the gas infrastructure from metallic to plastic not only offers a safer and more reliable way to transport gas, but also the opportunity to transport more than just natural gas. What we’ll be transporting remains to be determined, but there is the potential for a bright future for a strong, flexible UK gas industry.
There is a heavy focus on a low-carbon and secure solution, but the third part of the trilemma – affordability – cannot be overlooked.
With 17% of the population living in fuel poverty, we must ensure our solutions do not place more people at risk of living in poverty. Currently gas is affordable – customers pay a third of the price per unit for gas than they do for electricity. Future sources must be as cost-effective as gas or cheaper still.
Gas networks are working hard to reduce what the UK spends on nitrogen ballasting liquefied natural gas imports. The project to open up the gas market by harmonising gas quality requirements across Europe is now complete, and allows the UK to source gas from more diverse and competitive sources. Ultimately, it will allow a far wider composition of gas to be transported through the gas networks, drive potential annual cost savings of £325m, and increase security of supply.
One longer-term option is to convert the gas network to carry 100% hydrogen. Sourcing hydrogen could bring a mutually beneficial opportunity with the renewables industry to use power produced when production exceeds demand. At the moment wind generators are compensated for this power, but it could be used to split water into oxygen and hydrogen through electrolysis, with the hydrogen injected into the gas network.
Green hydrogen can also be produced from natural gas by reforming it with steam while capturing and storing the carbon, which may be a cheaper long-term volume solution.
By adding more biomethane, hydrogen or biosynthetic natural gas into the gas mix, we can make reasonably cost-effective carbon reductions with minimal impact, while allowing customers to continue using their existing gas appliances.
Other options are under consideration. The one touted more than any other is complete electrification. But electricity networks would have to be significantly upgraded if everyone heated their homes using an electric heat pump. The cost would ultimately fall on customers through their energy bills. What isn’t known is the cost and whether customers even want it.
Biogas, hydrogen, liquefied natural gas, compressed natural gas and blended gas are all being explored to see if they can provide a cleaner, low-risk, low-cost, high-benefit heating solution. We also have potential solutions through wind, solar, heat pumps and heat networks.
But which is the right answer? Or is it a mixture of all of them, or something else entirely? And do consumers get an opinion? Solving the issue of a reliable heat source that is clean, cheap and secure is only part of our challenge.
Consumers like having a choice of energy and energy supplier and the ability to swap when they’re not happy, and are already concerned by their energy bills. However, many are not well informed and trust experts (industry) to find the right solutions on their behalf.
The decisions we make now about the future are important to customers even if they don’t know it yet. So any decisions have to be underpinned by strong, focused stakeholder engagement. As industry experts we’re best placed to help identify potential solutions, but investment should occur only when we know it’s going to be widely supported by customers and consumer groups.
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