One size fits all? Questions for the National Infrastructure Commission on plans for decarbonisation.

It won’t be a surprise for people to read that I wasn’t cheering with enthusiasm at the recently published NIC’s report on national infrastructure. I know it’s obvious, that a gas network wouldn’t be thrilled with an assessment that concludes the gas network should be all but decommissioned by 2050. We have vested interests etc etc… 

But let’s be clear, this is a very important assessment and the recommendations are hugely significant. Followed to the letter, there are huge consequences and huge costs. For homes and families paying for this, for businesses, and for people’s livelihoods. And of course for the delivery of net zero. Government will need to be absolutely certain that full electrification of heat is affordable and deliverable in its entirety before considering removing the insurance policy. The insurance policy is a 285,000 km world class gas network that already exists, that folk have largely already paid for, that safely and efficiently delivers natural gas today and can be reused more cheaply than it can be decommissioned to deliver green gases in the future. I would want to be crystal clear on the impact and cost of full electrification with no holes in the assessment.

At Cadent we have always been advocates of an evidenced-based approach to planning the energy transition, we are supporters of the right technology in the right place and this includes heat pumps, district heating, hydrogen, biomethane, hybrids and many others too. And before people criticise for any heat pump questions below - all these come from a place of wanting to understand. We need a huge amount of heat pumps in the UK for a successful delivery of net zero, but given what happened in Germany with the backlash against heat pumps because of its assumed ‘one technology’ approach we need to consider this carefully.

So we put just some of our questions of the NIC report out here (there are more!) and will be picking these up with the NIC in due course.

1. The assessment around heat isn’t quite a whole systems assessment in the truest sense - it doesn’t appear to take account of the impact of heating choices on energy demands both in the home and in the wider system including balancing the needs of seasonal variations and resilience, managing flexibility and cost.  We can’t see where the costs of managing resilience, system flexibility and demand side response is included. We see this as crucial for a future electricity system dependent on intermittent renewables. We think much is missed here that would impact on the equation.
2. What about all the businesses and industries that are connected to the gas network outside of industrial clusters? There any many industries that cannot electrify that will need a solution. The assumption that you can simply switch it off  and industries ‘have to move’ is highly implausible. There are plans for large scale hydrogen production and industrial use currently not included on this map including in the East Midlands, Thames Estuary and Southampton. Similarly the Bacton hub could be part of the planned EU hydrogen network.
3. The costs of decommissioning the gas network are covered in a report by ARUP and total £74bn. It does not include any asset repayment or pension costs. It also assumes empty distribution pipes are then largely left in situ, which may not be practical / allowed in some areas. The number is probably a lot larger than this. Even so, in their electrification scenario, the NIC only use £15bn for decommissioning? It would be good to know what this is based on - why so low?
4. The assessment assumes homes have a 5kW heat pump - yet the average being installed today in the Boiler Upgrade Scheme is 8 to 12 kW. This under sizing reduces the capital cost, and makes the heat pump scenario cheaper.  It’s not clear what this drop is based on.  It could leave many homes cold.
5. The modelling assumes all hydrogen for heating is green hydrogen, the price for hydrogen appears very high versus other projections, including the government’s. A focus on green hydrogen only will inevitably lead to higher hydrogen prices in the near term. Blue hydrogen infrastructure is being planned and produced in the UK to support industry, so why not make this available to homes too? We agree green hydrogen is a good destination, but blue can do a lot to reduce emissions in the near term if implemented.
6. The electricity price assumes 13p/kWh in 2035 against todays price of 27p. This is a huge drop of which it’s not clear what this is based on. It does not align with government projections. Assumptions that REMA reforms are made and that policy costs are met by the taxpayer perhaps?
7. They say heat pump conversion is no more disruptive and complicated than hydrogen conversion, yet the trials on this aspect are yet to be completed. Hydrogen ready boilers, and plastic mains replacement (which is already at 70%) will make in home disruption minimal in comparison to heat pumps. No discussion is made of the in home impact of internal pipe work replacement for some heat pumps, when it is raised for hydrogen. On conversion or decommissioning, the assessment fails to recognise it is likely you will need a mass, street by street conversion event to heat pumps on the day you turn the gas network off – just as with hydrogen.
8. The NIC say heat and EV demand is not expected to have more than " a minor impact" on the need for power system upgrades based on a report from 2014, but this is not borne out by experience since then or other reports on the subject. It is not clear on first reading what assumptions they have made for the costs of upgrading the power system to handle peak heat demand. How many new kilometers of cable is needed, where will the new pylons go, how will substations be upgraded with land constraints? How long will this take? etc. Without this, how can the hydrogen counter factual be accurately compared?
9. The assessment assumes heat pumps operate at an average COP of 325%, yet the recently published Electrification of Heat report found that COP’s were closer to 280%. Improvements can be made perhaps but is this expected across the board? Would be good to understand the assumption here.
10. The solution proposed for homes which can’t have a heat pump is resistive electric heating. The impact of grid capacity here will be significant and the cost to consumers will be high also. We can’t see the impact of this in the electricity network costs.