Government urged to rule out hydrogen heating in rural areas

The government has been urged to rule out hydrogen heating in rural areas as well as technology mixes that require extensive upgrades to both electricity and gas networks.

In a new report, Citizens Advice said decisions on the future of heating should be made on an area-by-area basis, taking into account local network costs.

The consumer advocate commissioned LCP Delta to explore the costs of upgrading electricity and gas networks in four possible scenarios for heating across 12 different location archetypes in England, Scotland and Wales. In each instance, the costs were estimated for 5,000 domestic properties.

In the first scenario, domestic heating would be fully electrified with air-source heat pumps, and in the second, all homes connected to the gas grid would rely solely on a hydrogen boiler.

In the third, all homes connected to the gas grid would use a hybrid heating system combining a hydrogen boiler and a heat pump, and in the fourth, there would be an unspecified mix of all these technologies.

The base case of the last scenario assumes that electricity network reinforcement costs would be 50% of those in the first scenario. It also assumes that gas distribution and transmission network reinforcement costs would be 100% and 50% of those in the second scenario respectively.

LCP Delta found that electrification would be the cheapest option for all but two of the archetypes, the exceptions being urban housing in London and the North West of England. It found electrification would be the cheapest option for all 12 of the location archetypes when also adding in costs for hydrogen storage.

Citizens Advice said electrification was “overwhelmingly” cheaper in the four rural archetypes. It said the saving when compared to next lowest cost option ranged from 84% in the North of Scotland to 54% in the South East of England.

“These rural areas have a number of things in common, though to different degrees: relatively higher rates of already electrified heating, less gas distribution network and longer lengths of gas distribution pipeline,” the report explained.  “They therefore have the highest costs for supporting hydrogen for heat while also the lowest costs for electricity upgrades due to the lower cost of overhead network infrastructure in rural areas.”

The analysis also found that electrification would be the cheapest option in all three of the industrial archetypes. Citizens Advice said this is “particularly notable” given their “close proximity” to existing and future production sites for hydrogen and renewable electricity: “The findings indicate that for the hydrogen scenarios, being close to industrial clusters is not a key influence and that gas distribution network costs, as in other areas, remain the most important factor to cost.”

In general, Citizens Advice said the electricity network upgrade costs in the first scenario do not vary significantly between location archetypes, whilst there is significant variation between archetypes in the other scenarios. It said the differences in network upgrade costs between second (hydrogen boilers) and third (hybrid heating) scenarios are “generally small” for each archetype.

Based on the findings, Citizens Advice said ministers should rule out hydrogen heating in rural areas ahead of its planned strategic decision on the future of heating in 2026.

The charity said this is one of the “low-regrets decisions” that the government should make “as soon as possible” in areas where evidence particular options are, or are not, suitable. It said the government should publish an assessment of future wholesale electricity and hydrogen costs to help identify more of these low regrets decisions.

Citizens Advice said the government should likewise pursue the strategy recommended by the Climate Change Committee of pushing forward with electrification as the “default choice” where feasible. It said ministers should rule out options which require extensive upgrades to both electricity and gas networks as this is “prohibitively costly.”

Lastly, the organisation warned ministers against implementing a nationwide hydrogen-ready boiler mandate, saying this should be restricted only to areas where there is “clear evidence” that hydrogen is lowest overall cost option for heating.

Sam Hughes, senior policy researcher at Citizens Advice, said: “In the last few weeks we’ve seen some positive announcements for consumers on heat pumps. Grants will increase, upfront costs are being slashed, and suppliers are offering cut-price electricity tariffs for heat pump customers.

“However, there is a fierce ongoing debate about what role hydrogen can play in heating homes, and whether this potentially provides some consumers an alternative in the transition to net zero.”

He continued: “While it is necessary to explore options, this does not come without costs and risks to consumers. Every day, households have to make real-life and complex decisions about broken heating appliances.

“Mixed messaging and a lack of clarity about what the transition looks like for households in different parts of Great Britain affects these costly decisions. It also opens up risks of greenwashing, as identified in an investigation by the Competition and Markets Authority.”

“Consumers need answers and they need them as soon as possible. Between now and 2050 some consumers may only have to make decisions about heating appliances twice.”