Future of Gas II – Keynote

Professor Mark Taylor FIMA

Deputy Director, Energy Innovation

Science and Innovation for Climate and Energy

… innovation is difficult to get right …

… it doesn't just happen …

… or at least …

… not what you need …

… when you need it …

… at a cost you can afford …

… for a price your customers will pay …

BEIS Energy Innovation Portfolio

Nuclear

Driving down costs and building

new UK supply chains and skills

£180m

Renewables

Driving down the cost of low carbon electricity at scale

£15m

Industry

Low carbon options for

industry, lowering energy costs

£100m

Built Environment

More cost effective energy

efficiency and low carbon heating

£90m

Smart Systems

Scaling up flexibility and

looking for new storage options

£180m

Cross Cutting - £50m

Supporting disruptive innovations (particularly for SMEs), including using innovative finance.

To accelerate the commercialisation

of innovative, cheap, clean, and reliable energy technologies by the mid 2020s and 2030s

Public sector challenges …

… innovative ideas from industry

… innovating with the public sector …

… driving improvement in achieving government operational and policy objectives …

… supporting companies to generate economic growth …

… development of an innovative process, material, device, product or service …

… that cannot be met by solutions already available in the market …

… to address the strategic challenge …

Heat

(Natural Gas) Transport

(predominately oil based)

Electricity

‘Beast from the east’ – 1 March 2018

3.5 times the daily energy demand of electricity

UK dependent on gas

… for heat … inter-

seasonal demand /

peaks … but also

~40% of electricity is

generated from gas

… through … Clean Growth & Innovation …

“Clean fuels such as hydrogen and

bioenergy could be used for transport,

industry, and to heat our homes and

businesses.

We need to test how they work in the

existing gas network, whether they can fire

industrial processes, and how they could be

used in domestic appliances.”

Clean Growth Innovation Challenges - Clean Growth Strategy

… policy drivers and context …

Assessing heat decarbonisation approaches to meet 2050 targets HEAT STRATEGY

• Electrification (heat pumps, hybrid heat pumps with gas boilers);

• Decarbonisation of gas grid (hydrogen, biomethane, heat networks)

• Not clear which approach(es) will work best at scale and offer the most cost effective long term answers. Likely a range of approaches will be needed to meet diverse consumer needs.

Exploring pathways to deploy CCUS at scale in 2030s CCUS

• HMG wants the UK to become global CCUS technology leader and work internationally to bring about global cost reductions

• Ambition is to have “the option of deploying CCUS at scale during the 2030s, subject to costs coming down sufficiently’’

• Interest in broad role for CCUS including low carbon hydrogen production at scale

Developing a strategic approach for UK HYDROGEN ECONOMY

• Improved understanding of potential to meet Clean Growth goals, with appropriate time horizons

• Whole system perspective – starting with detailed understanding of potential in each sector

• Building relationships and identifying opportunities to unlock deployment of low carbon hydrogen in UK context

… long term options for decarbonising heat …

Electrification

• conversion to electric heat

pumps or other electric

technologies

• particularly useful for buildings

not on the gas grid

District heat networks

• cost effective where

there is sufficient density

of heat demand

• likely to be an important

part of the mix in the long

term

Decarbonising the gas grid

• using hydrogen or biogas

• more work is needed to

assess cost and feasibility

Hybrid solutions

• two different heating

technologies and

energy sources

working together

9

~100

TWh

Biomethane

~550* TWh (*~400 TWh

imported)

Biomass/waste

~900 TWh

Heat

~350 TWh

Power

~180

TWh

Transport

(air/maritime)

Current

demands

Best case

scenarios

in 2050

Biofuels

EfW/ACT

Even reducing demands and maximizing

efficiency of transformation bioenergy

cannot cope with energy demand

Scope for H2

from

SMR/Electrolysis

… while fixing the problem …

‘Decarbonising heat is arguably

the greatest

challenge in meeting UK climate

change targets’

Can we learn any lessons from

previous transition / conversion

from Town’s gas to natural gas?

… energy system is becoming more complex …

• Many options and pathways

for the future energy system

• Likely to involve a variety of:

• primary energy sources

• energy carriers

• local and distributed energy

transformation

… need to address …

Strategic case for major UK scale up still developing

Cost – particularly production, but across value chain

Availability of low carbon hydrogen

Coordination of wide ranging activity

Safety case

Understanding and awareness of hydrogen is low

… conceptual hydrogen energy system …

End-use Distribution Transmission Production

Storage

Hydrogen pathway …

BEIS: £54m funding for CCUS

• £20m for CCU Demo

• £24m CCUS Innovation Programme

• £10m CCUS International

Collaboration

BEIS: Hy4Heat (£25m)

BEIS: Hydrogen supply

(£20m)

BEIS: Industry Fuel

Switching (£20m)

includes hydrogen

DfT: Hydrogen for

Transport (£23m)

Ofgem/Industry:

HyDeploy (£7.3m) Ofgem/Industry:

H21 / H100 (~£10.3m)

Hydrogen for Heating - Co-ordinated innovation

Hydrogen for Heating Innovation Programmes

HyNet

• End to end demonstration

H21

• North of England feasibility study

U D T P

S

Hydrogen for Heating Innovation Programmes

HyNet

• End to end demonstration

H21

• North of England feasibility study

HyDeploy

• Hydrogen blending

U D T P

S

Hydrogen for Heating Innovation Programmes

HyNet

• End to end demonstration

H21

• North of England feasibility study

HyDeploy

• Hydrogen blending

H100

• Hydrogen end use (new build)

U D T P

S

Hydrogen for Heating Innovation Programmes

HyNet

• End to end demonstration

H21

• North of England feasibility study

HyDeploy

• Hydrogen blending

H100

• Hydrogen end use (new build)

Hy4Heat

• Hydrogen end use

U D T P

S

Hydrogen for Heating Innovation Programmes

HyNet

• End to end demonstration

H21

• North of England feasibility study

HyDeploy

• Hydrogen blending

H100

• Hydrogen end use (new build)

Hy4Heat

• Hydrogen end use

H21

• 100% hydrogen in the distribution network

U D T P

S

Hydrogen Supply Competition - BEIS

• £20 million

• Identify how to supply low cost, low carbon hydrogen

at scale

• Reduce costs by accelerating development of low

carbon bulk hydrogen supply solutions

• Targeting supply for industry, power, buildings and

transport

• Phase 1 competition

• £5m; initial design & engineering study

• closed December 2018, results announced

Spring 2019

U D T P

S

Industrial Fuel Switching Programme - BEIS

• £20 million

• Innovation competition to stimulate early investment in

fuel switching processes and technologies

• Ensure a range of technologies (including hydrogen,

biomass and clean electricity) are available by 2030

• Phase 1

• Focusing on market engagement and understanding the

scope for fuel switching in industry

• Phase 2

• Applications for funding for feasibility studies – closed 4

February 2019

U D T P

S

Hydrogen for Transport Programme – DfT

• £23 million

• Funding to accelerate the uptake of hydrogen

vehicles

• Funding both refuelling stations and the vehicles to

use them

• Stage 1

• £8.8 million awarded April 2018 brings 200 new

vehicles and upgrades / new refuelling stations

• Stage 2

• £14 million competition underway to fund up to

ten new refuelling stations and associated fleets

U D T P

S

Hy4Heat mission

To establish if it is technically possible, safe and convenient to replace natural gas (methane) with hydrogen in residential and commercial buildings and gas appliances

This will help enable the government to determine whether to proceed to a community trial of hydrogen

Hy4Heat programme work packages

Hy4Heat programme overview

Hy4Heat – growing profile

Industry Fuel Switching - Aim

To stimulate early investment in fuel switching processes and

technologies - ensure a range of technologies (including

hydrogen, biomass and clean electricity) are available by 2030

Timelines to develop technologies

Summary

The UK is …

• undertaking a range of practical trials, tests and demonstrations

• delivering ‘no regrets’ projects today

• de-risking investment

• engaging with consumers

• informing policy

• looking to share this knowledge and collaborate with countries around

the world