Cornwall Insight has released a new report indicating that under the UK Government’s current plans for hydrogen, fuel bills could increase by 70% to 90% more than gas on average.
According to the data, hydrogen will be a much more expensive option to heat homes in the future as opposed to natural gas. It is suggested that it would be best to prioritise other technologies to decarbonise domestic heating, like heat pumps.
“While hydrogen does have a part to play in the decarbonisation pathway, through for example use in the industrial sectors and in the use of surplus electricity, current and forecast costs all show it is simply uneconomical to use a 100% hydrogen fuel for heating our homes,” said Jitendra Patel, senior consultant at Cornwall Insight and an author of the report.
“We do however see benefits in accelerating the roll out of renewable generation to help bring down generation costs and we predict a near cost parity between green and blue hydrogen production methods by 2030 when using surplus electricity.”
Hydrogen blending has been a hot topic for both projects across the UK and the government. In 2021, HyNet North West received almost £33 million funding for two projects that look at capturing and storing carbon emissions from the operations of a low carbon industrial cluster and the creation of a hydrogen economy in the North West.
The project will reduce carbon dioxide emissions by a million tonnes a year from 2025, which will then increase to 10 million tonnes by 2030 and beyond. Local homes and businesses will benefit from green energy via blending hydrogen with natural gas.
The government itself is preparing to decide in 2023 whether to allow blending of up to 20% hydrogen into the gas network and is due to make a decision on rolling out hydrogen for home heating on a mass scale in 2026.
“We are in a cost of living crisis caused by exposure to international fossil fuel markets. In order to bring down bills permanently, we need to invest in solutions which permanently get us off gas – such as home insulation, heat pumps and renewables,” said Juliet Philips, senior policy advisor at E3G.
“In contrast, blue hydrogen, produced using fossil fuels, further weds us to volatile international gas markets. And as this new research shows, it could also hike up consumer bills. We urge the government to listen to the economics and the science ahead of making big decisions on hydrogen for heating – or it will be consumers who end up footing the bill.”
Despite the negative outlook on hydrogen being utilised as a heating source, the renewable gas could be used across a range of different sectors to decarbonise. One of these could be the decarbonisation of steel plants in order to produce green steel.
Transportation has also been touted as a viable option for the clean energy carrier, with fuel cells being able to increase the range of zero-emission vehicles for extended distances. This would be a perfect complement to electric vehicles (EV) by creating a competitor and another range of vehicles to drive innovation.
“This is an extremely timely and significant report, sending the clearest possible signal to Ministers that using hydrogen to replace natural gas for domestic heating is an unwise and potentially dangerous distraction,” said Jonathon Porritt, founder and director of Forum for the Future.
“Future supplies of green hydrogen must be prioritised for the hard-to-abate sectors, and blue hydrogen looks more and more unviable given astronomically high gas prices persisting well into the future.”