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#H2Explainer: What are the costs of producing hydrogen for our home heating?

06 October 2021

Press contacts for journalists

Ed Gill

Communications Lead, Gas Goes Green

+44 (0)20 4599 7684

ENA Press Office

How can the UK produce enough hydrogen at the right costs in the future? We look at what the data tells us so far...

When it comes to understanding what role hydrogen can play in reducing our carbon emissions, our Gas Goes Green Pathway identified homes and businesses’ heating, hot water and cooking as the UK’s single biggest use of energy in 2050, requiring 298TWh each year.

To put that in context, that’s the equivalent annual electricity output of nearly 12 Hinkley Point C nuclear power plants, which cost about £25bn each to build.

In that Pathway, we set out the role that hydrogen, biomethane and electricity have to play, finding that using a mixture of low or zero carbon energy sources to reduce our carbon emissions will save the UK economy £13bn a year, compared to the alternative of just using electricity by itself.

So, can we produce enough hydrogen for it to play its part, and what are the costs and benefits of doing so?

Let’s take the first question.

We believe that the UK can, setting out in Britain’s Hydrogen Network Plan how and when gas network companies can deliver the infrastructure required to do so.

Important progress is now being made on the technical engineering elements of this work, through progress on hydrogen blending and hydrogen village trials, as well as our gas network innovation projects, which will deliver jobs and investment around the country.

Which leaves the second question – what are the costs and benefits of producing enough hydrogen to do so?

We’ve used a wide range of independent, industry leading data sources to look at this question, including information from the Department for Business, Energy and Industrial Strategy, the Committee on Climate Change, National Grid and Bloomberg, amongst others.

In addition to the £13bn a year saving identified by the Gas Goes Green Pathway, our research found that investment in building the hydrogen production capacity that we need to for us to hit our Net Zero emissions target will unlock a total of £116bn of savings for billpayers by 2050, compared to the alternative of continuing to use natural gas.

In particular, green hydrogen produced from excess renewable power is expected to become rapidly cheaper. Towards the end of this decade, we expect to see the costs of it falling to around the same as using natural gas, because of drops in the costs of building infrastructure and falling electricity wholesale prices, due to increased levels of renewable electricity generation.

Crucially, we think that Government support for green hydrogen will ensure that the long-term cost benefits of it are achieved. Our research shows that the costs of producing it can fall in a similar way to the costs of electricity produced from solar and offshore wind, which have reduced dramatically over the past decade. And under this scenario, methods for producing both blue and green hydrogen become cost-competitive with natural gas (plus the cost of carbon) by 2035.

So, when it comes to using hydrogen in our homes to help people reduce their emissions, we’re optimistic about the future ahead. We’ve got the world-leading technical expertise and know-how to ensure that’s delivered safely and securely, and it’s clear from the data in front us today that that UK can produce the hydrogen needed o turn that into a reality, at the right costs, demonstrating how tomorrow’s heat is today’s opportunity

Notes to editor

Gas Goes Green #H2Explainers are a series of blogs setting all the key information you need to know about how Britain’s gas networks are working to deliver hydrogen to our homes, as part of our 'Tomorrow's Heat, Today's Opportunity' campaign. Check out the ENA Newsroom to find other articles and updates from both gas and electricity network companies.

About Energy Networks Association

Energy Networks Association (ENA) is the industry body representing the electricity wires, gas pipes and energy system in the UK and Ireland.

ENA helps its members meet the challenge of delivering electricity and gas to communities across the UK and Ireland safely, sustainably and reliably.

Its members include every major electricity and gas network operator in the UK and Ireland, independent operators, National Grid ESO which operates the electricity system in Great Britain and National Gas which operates the gas system in Great Britain. Its affiliate membership also includes companies with an interest in energy, including Heathrow Airport and Network Rail.

What are energy network operators?

Energy network operators manage and maintain the wires, pipes and other infrastructure which delivers electricity and gas to your home, business and community. They are private companies which are regulated by Ofgem and employ around 40,000 people in Great Britain.

More information

Press contacts for journalists

Ed Gill

Communications Lead, Gas Goes Green

+44 (0)20 4599 7684

ENA Press Office