UK homes heated by just hydrogen could be everywhere by 2050

[LONDON] Heating UK homes with just hydrogen could be mainstream in a few decades as the government expect technology costs to plunge just like they have for wind energy.

To accelerate the shift away from fossil fuels, the government will help fund the first British homes warmed entirely by the nascent energy source, Energy Minister Anne-Marie Trevelyan said in an interview.

"Hydrogen is critical in so many ways," she said, adding that the Department of Business, Energy and Industrial Strategy will "imminently" publish its strategy for decarbonising buildings and heat.

Hydrogen emits nothing but steam when burned, making it a much cleaner alternative to gas. As a first step, regional pipeline managers Northern Gas Networks Ltd and Cadent Gas Ltd. will build two demonstrator houses heated by the fuel at a cost of 750,000 pounds (S$1.32 million). A third of that funding will come from BEIS.

Prime Minister Boris Johnson has already said he wants hydrogen to heat an entire town in a decade.

But even if many analysts, including those at BloombergNEF, are expecting prices for the technology to plunge, it's a risky strategy to put so much faith in a technology that's as yet commercially unproven. It's not just the UK though, others from European Commission to Germany, are also developing national strategies for how to utilize hydrogen in their energy transitions.

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Buildings account for a third of the UK's greenhouse gas emissions. With more than 23 million properties connected to its gas network, making the sector greener is critical to tackle climate change.

The hydrogen homes will be built in Low Thornley near Newcastle, northeast England, a region that was once at the center of the steel industry. A mile down the road, Northern Gas Networks and Cadent are also running a project that will provide 670 houses in the village of Winlaton with a blend of hydrogen and gas from this year.

As well as heating homes, hydrogen is expected to help to decarbonise heavy industries from steel to cement making.

The UK has also set a target to develop 5 gigawatts of electrolyser capacity by 2030, but at this stage the fuel is too expensive to be rolled out widely. Trevelyan expects that costs will fall in the same way they have for offshore wind power in the past decade. That will happen once the technologies of hydrogen production and carbon capture and usage have been proved at scale, she said.

Globally, offshore wind power costs have plunged by almost 60 per cent since 2009, according to BNEF. The firm also predicts that electrolyser prices may fall by 90 per cent to US$115 per kilowatt by 2030, making green hydrogen at US$2 per kilogram a reality in many countries.

"We will see a tipping point which will absolutely bring the price down and make this a mainstream part of our future world," Ms Trevelyan said.

However, she refused to be drawn on whether the government will ban gas boilers in new homes from 2033 - a policy that the Climate Change Committee says is key for the UK to compel people to instead choose a greener source of heating, like hydrogen. She highlighted instead the lack of a skilled workforce as one of the industry's biggest challenges.

"We're absolutely ready to take on this journey and one of the challenges is up-skilling," she said.

BLOOMBERG