Options and costs of using hydrogen for heating

Options and costs of using hydrogen for heating

Dr Paul Dodds, UCL

Converting the UK gas networks to deliver low-carbon hydrogen has moved from an academic concept (Dodds & Demoullin, 2013) to become the subject of major research programmes and demonstration projects. The Leeds H21 study (Northern Gas Networks, 2016) proposed a “business-as-usual” approach in which the 85% of UK houses with gas connections continue to use boilers for heating and hobs for cooking, but with hydrogen instead of natural gas.

While straightforward in principle, understanding the implications, options and costs of gas network conversion is challenging in practice. First, would all of the gas networks be converted, as proposed, or only those parts where hydrogen is a competitive decarbonisation option? Second, would customers be expected to use hydrogen boilers, which the Leeds H21 study envisaged would be fitted to each house, or would it be better for them to instead use a different hydrogen-powered device (e.g. hybrid heat pump or fuel cell micro-CHP), or a non-hydrogen option? Third, what are the decarbonisation costs of network conversion? The costs are likely to be very sensitive to steps taken to introduce dual-fuel boilers and cookers in the period prior to conversion. Moreover, while the Leeds H21 study calculated a carbon cost as a function of the cost of conversion and future fuel costs, it did not account for residual boiler asset values (in the conversion from town gas to natural gas, the greatest paper cost was losses on the gas works that became stranded assets). Fourth, how could these costs be met, and to what extent should they be socialised across gas users or the whole population?

We have examined the first three questions using the UK TIMES energy system model. This bottom-up, least-cost optimisation model identifies pathways and technologies to decarbonise the UK economy. It represents energy service demands across all sectors of the economy, both now and in the future, and also all greenhouse gas emissions from energy and non-energy sources. It was used by the UK Government in 2017 to identify decarbonisation pathways for the Clean Growth Strategy. In that version of the model, hydrogen could only be used for heating if a new hydrogen distribution network were constructed. We have created a range of new gas network conversion options for UK TIMES that examine the implications of optional or compulsory conversion, and restrictions on heating technology choices. We have also calculated the conversion cost for several potential scenarios in which there are different levels of forward planning, and have used these to produce a range of scenario costs.

We find that hydrogen conversion is the most cost-optimal option for at least part of the UK housing stock. The most appropriate heating technology might not be boilers, however, with hybrid heat pumps and fuel cells often better options in larger houses. Seasonal variations in the electricity price affect the least-cost choice of hydrogen technologies, but capital costs are most important. These insights suggest that the business model for gas network conversion should be chosen carefully to avoid locking in more expensive heating systems for householders than are necessary.