Hydrogen can de-risk our energy system – Daily Business Magazine

Gas is a reliable but ageing source of energy (pic: BP)

Britain has the technology to reduce its exposure to global gas markets, writes Labour peer LORD WATSON

The Iran crisis has not created a new problem for Britain’s energy system. It has exposed an old one – again – and we tend to remember it only when prices move. We remain a price taker in global fossil fuel markets. When instability passes through the Strait of Hormuz, it reaches British households and industry soon afterwards.

That is not a failure of policy. It is the reality of a system still anchored, at the margin, by gas. And it is not only about price. A large share of global oil and liquefied natural gas flows through that narrow, vulnerable chokepoint. Even with diversified imports, disruption there tightens global markets and feeds directly into UK costs.

Ministers are right to focus on immediate stability and consumer protection. But the strategic question is not how we respond to this shock. It is how we reduce our exposure to the next one. 

There is now broad agreement within government that expanding domestic generation is the right direction, even if that consensus is not yet shared across the political spectrum.

Offshore wind, onshore wind, solar and nuclear are not simply climate instruments; they are tools of economic security. By the time of the next general election, much of this infrastructure will already be contracted in the system. Whoever forms the next government will inherit a power system shaped by these choices and will have to manage the consequences.

The second phase of the energy system is less developed, and it needs to be shaped now to get ready for the next decade. A power system led by renewables still requires dispatchable capacity. That is, from sources that can be ramped up, down, or switched on and off to balance grid supply with demand.

At present, that role is performed by gas. It is flexible, it is reliable and it sets the marginal price. It also imports volatility directly into the system. As long as gas remains the default backstop, geopolitical risk will continue to translate into domestic cost.

The question, therefore, is not whether we build more clean generation. It is how we build a system that can operate reliably without leaning so heavily on gas when conditions turn against us.

There is one further consequence of delay that receives too little attention. Britain’s existing gas fleet is ageing. Those assets will need replacing or retiring within the next decade, just as the system will need reliable backup to support renewables.

That brings us to system flexibility, and to a technology that can provide it: hydrogen-to-power.

Hydrogen-to-power uses hydrogen as a fuel to generate electricity on demand through gas turbines, performing the same system role as today’s gas plants but without relying on unabated fossil fuels. When renewable generation is higher than we need, rather than curtailing it, the surplus electricity is used to produce hydrogen through electrolysis.

Hydrogen is a realistic alternative but needs investment

That hydrogen can then be stored at scale in underground salt caverns that draw on Britain’s geology and converted back into electricity when needed. Batteries play a critical role in managing short duration flexibility, but they are not designed to cover longer gaps in generation.

Hydrogen stored in salt caverns can provide energy over days, weeks, or longer, making hydrogen-to-power uniquely suited to maintaining a renewables-led system.

It is worth noting that Britain has used hydrogen at scale before. Town gas, which powered homes until the 1960s, contained a high proportion of hydrogen. We moved away from it when North Sea natural gas offered a cheaper alternative. That history matters not because we should repeat it, but because it reminds us that hydrogen is not new. Its most effective modern use, though, is in the power system, not domestic heating.

Green hydrogen supports a renewables-led system and reduces reliance on imported gas when conditions turn against us. For consumers, that means a system less driven by volatile gas prices.

There is also an economic benefit. The investment required to build out hydrogen power stations and storage at scale will create skilled jobs across the supply chain, in engineering, construction, operations and maintenance, concentrated in exactly the regions that need them most.

This is where government needs to be clearer, and faster.

If we are not expanding further into the North Sea, and are serious about reducing dependence on imported gas including LNG exposed to Middle Eastern supply routes, then ministers, and Ed Miliband in particular, need to explain how these transitional technologies will be supported at pace and at scale.

Ed Miliband needs to explain how he is supporting transitional technologies (pic: DB Media Services)

UK policy on hydrogen-to-power is starting to take shape, through initiatives such as the hydrogen-to-power business model, transport and storage frameworks, and strategic spatial energy planning.

But it is not yet clear enough to unlock investment.

Capital does not move on ambiguity – and without a clear position from government, the UK risks a real gap in its energy system. If clarity for investment comes now, it begins to solve that problem before it becomes a crisis.

If it does not, we will face a simultaneous challenge: decarbonising the power system while scrambling to replace the dispatchable capacity that gas currently provides.

That is a significantly harder task.

Government’s role is not to build these projects. It is to make them investable. That requires stable and durable revenue frameworks, and a planning and grid regime that recognises the strategic importance of hydrogen-to-power, with geological storage, to operate a flexible energy system.

None of this requires a change in direction. It requires a sharpening of focus.

The events in Iran remind us that energy policy is, in the end, about exposure to risk. We cannot control instability in global markets. But we can decide how exposed we choose to remain.

We have the technology and the industrial capacity. Capital is waiting. What’s missing is the clarity that only government can supply. Without it, we drift further from real energy security.

Lord Watson of Wyre Forest is a non-executive director of Haldane Energy, based in Edinburgh

Like this:

Like Loading…

Related

#Hydrogen #derisk #energy #system #Daily #Business #Magazine