Energy Transition Outlook 2021

ENERGY TRANSITION OUTLOOK 2021

Figure 16: Source of energy for electricity supply from 19 May to 23 May

At the same time, using and embedding hydrogen in our systems will require changes to asset configurations and safety processes. Work is already underway preparing gas pipe networks to accept hydrogen by replacement of iron mains with UPVC, but a key element of scaling hydrogen is how the transmission system can contribute in the UK and more widely in Europe. This is the source of several research and development projects that are ongoing. Hydrogen is made either through reformation of methane (with carbon capture), also known as ‘blue’ hydrogen, or through electrolysis, also known as ‘green’ hydrogen. Both processes result in the loss of some of the content of the original energy source (around 30 per cent in the former). This means that the benefits of hydrogen in terms of flexibility and energy/mass characteristics will need to offset these transformation losses. Although blue and green are different technologies, they are compatible in the sense that each will support the developing demand for hydrogen as an energy alternative and, for example, spread the costs of distribution infrastructure. This is relevant regardless of the nature of the production technology. Most analyses consider that for the UK and other countries with a substantial natural gas sector blue hydrogen will initially develop more rapidly with green hydrogen expanding later as global markets develop based on the growth of renewable energy sources across the world. Creating resilience in the energy system As noted, one attribute of gaseous fuels is the resilience they add to the overall energy system. This is demonstrated in the chart showing the complementary nature of existing gas generation with renewables during the period 19-23 May 2021, when renewable generation reached record levels. This also highlights the intermittency of renewable energy, reinforcing a need to supplement these sources with other alternative energy sources.

40,000

35,000

30,000

25,000

20,000

15,000

MW Generated

10,000

5,000

0

CombinedCycle GasTurbine

COAL

NUCLEAR

WIND

PumpedStorage

HYDRO

OpenCycleGasTurbine

OTHER

BIOMASS

IC

Source: Elexon BM reports

The integration of hydrogen into the wider energy system serving heat and transport requirements, alongside electricity, therefore provides low carbon solutions to many areas where we currently use gases and liquids. The potential for Hydrogen also comes from the fact that energy has different values depending on when and where it is produced and available. So even though costs per unit may be higher in terms of the “levelised cost of energy”, this may be more economic if it is available when needed.

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