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How can the Spring Budget set our economy on course for hydrogen-fuelled success?

14 March 2023


Ahead of the Spring Budget, James Earl, Director of Gas at ENA, looks at what governmental and regulatory changes we need to support the development of the UK's hydrogen network infrastructure.

In Energy Networks Association’s submission to the 2023 Spring Budget, we set out the  governmental and regulatory policy changes that we think can help unlock private investment in a way that allows the UK to compete with the substantial clean energy incentives being offered across the globe.

Three of those changes concern how we develop our hydrogen network infrastructure.

First, along with the recent Net Zero Review, we need the Government to speed up the development of a business model for hydrogen network infrastructure, with interim measures introduced until that business model is finalised. This vital infrastructure, that will transport and store hydrogen, will be the foundation on which Britain’s hydrogen economy will be built. Without it, the UK won’t meet its climate emissions targets nor the government’s 2030 10GW of hydrogen production capacity target.

Second, the government should develop an accompanying business model that supports the blending of up to 20% hydrogen into the gas networks. ENA’s research show that up to 60 TWh pa of Hydrogen could be blended into the grid, that’s the equivalent of heating around 5 million homes, saving around 10m tCO2 a year.

This measure will help break the potential ‘chicken and egg’ relationship between hydrogen supply and demand, by enabling the existing energy system to unlock hydrogen demand and support hydrogen production. Blending makes hydrogen projects more investible as hydrogen producers are looking for ways to reduce the risk of there being no demand for it in the early stages of the hydrogen economy.

Third, we must encourage investment in long-term, seasonal energy storage. Recently the Climate Change Committee highlighted the need for more hydrogen storage to enable power generation; they modelled a need for 2.1-2.8 TWh of hydrogen storage by 2030, with 3.3-5.2 TWh needed by 2035 and 7.1- 11.6 TWh by 2050, which is broadly similar to the UK's current gas storage capacity. The UK benefits from massive hydrogen storage potential, with over 9000TWh of potential in depleted gas fields and saline aquifers according to research by the University of Edinburgh.  

The Government should update the British Energy Security Strategy to include a commitment to deliver an energy storage strategy by the end of 2023, which defines what business models will be developed to secure investment in that storage. This would support the economic transition of the UK’s North Sea fossil fuel production industry, as well as businesses and communities on the east coast of England, Scotland and across the UK.

All of these measures have the benefit of having little upfront cost to the Exchequer, at a time when public finances remain tight. Instead, they have the ability to unlock the private capital our economy needs to set it on course to reap the full benefits of the hydrogen revolution today, tomorrow and well into the future.

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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.

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