SMEs in the Hot Seat for Gas Network Debate

The UK is at a crossroads when it comes to a major aspect of its energy future. Jon Butterworth, the man responsible for the country’s gas networks, has expressed concerns about the National Infrastructure Commission's (NIC) proposal to scrap support for hydrogen boilers and instead focus on electric heat pumps.

While the NIC believes electrification is the ‘only viable option’ to decarbonise at scale, SMEs must carefully consider the implications.

The Challenge

National Gas supplies power to a vast array of SMEs, from industrial units to hotels. These businesses depend on the existing gas infrastructure, and according to CEO Butterworth, electrifying these businesses would be impractical due to their high thermal energy requirements. This issue raises questions about the alternative solutions should the current gas system be decommissioned.

As well as businesses, 23 million homes (around 85%) in the UK rely on gas for heating, with the NIC's recommendation to focus on electrification posing a challenge for hard-to-heat properties. It won’t be straightforward to make sure homes and business premises are both energy-efficient and adequately heated, particularly in the context of the Government's climate goals.

The Criticism

The GMB, one of the UK's biggest unions, has been critical of the NIC's proposal, going as far as describing it as ‘expensive stupidity’ that also puts jobs at risk. The union argues that hydrogen offers a realistic solution for heating without overloading the energy network.

The UK's current plan to shift away from hydrogen as a fuel source is at odds with recent investments made by the European Union and the United States.

The Support

On the other hand, Octopus Energy’s Rachel Fletcher said: “Heat pumps already cost less to run than a gas boiler, and the recommendations from this report clearly show they are the key to unlocking a cheaper, cleaner energy system when supported by the right policy.

“By committing to the NIC’s suggestions, we can attract billions in investment to this country, use tech and flexible consumer demand to drive down costs and create more savings for both homeowners and taxpayer.”

Liam Hardy of Green Alliance believes the report got the balance right by backing hydrogen for heavy industry but not for home and office heating.

He said: “Hydrogen will play a key role in decarbonising several areas of the economy, particularly in industry and the power sector. But it has downsides, being limited in supply at least in the short term, and if it leaks it has a warming impact. Heat pumps are the cheaper, safer, cleaner option for heating.”

The Situation

The debate between hydrogen and electric solutions is pivotal, with far-reaching implications for the UK's energy infrastructure, climate goals and SMEs. The Government is targeting a 10 gigawatt hydrogen generation by the end of the decade, but the NIC suggests directing this towards heavy industry and manufacturing rather than heating.

In the context of this debate, it’s important to acknowledge that the UK has some of the least energy-efficient buildings in Europe. The Government recently increased subsidies for heat pumps and extended dates for the transition from oil and gas-powered boilers, highlighting its commitment to greener alternatives.

The Solution

As the Government deliberates on its response to the NIC's assessment, the future of the UK's gas networks remains uncertain. The potential shift towards electrification and heat pumps will have implications for SMEs and millions of homes.

Striking the right balance between environmental goals and the practical needs of businesses and households will be crucial. The decision must be made with a clear understanding of the implications for businesses, jobs and the environment, ensuring a sustainable and secure future.

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Sam White