Hydrogen will fail to achieve a significant breakthrough as a fuel in the UK’s future low-carbon domestic heating market because it will cost too much compared with natural gas and electricity in the long term, according to green hydrogen project developer Octopus Hydrogen.

Green hydrogen production costs would need to drop to around 50p/kg (62¢/kg) even to match the UK’s long-term average gas price of 70p/th, Octopus Hydrogen’s CEO and founder Will Rowe told Gulf Energy Information’s First Element hydrogen conference in London.

Rowe puts UK green hydrogen production costs at about £10/kg based on current electricity prices, implying a 20-fold increase in household heating bills. In the long term, the lowest estimate of green hydrogen costs by 2050 is c.$1.50/kg, he says.

“I just think it is entirely unfeasible that there will ever be a long-term shift towards, be it blue or green, hydrogen for heating” Rowe, Octopus

“I just think it is entirely unfeasible that there will ever be a long-term shift towards, be it blue or green, hydrogen for heating,” Rowe says. “Most people will be better off with a heat pump and you will have a gas network that cannot be sustained because there will be so few people on it.”

Rowe, whose company is betting on mobility applications for green hydrogen, says he “certainly would not have backed” Octopus if its business model were based on using green hydrogen for heating.

Paying for convenience

Helena Anderson, COO and founder of consultancy Ikigai Capital, counters that surveys repeatedly show consumers are prepared to pay more for the convenience of keeping a similar looking boiler to run on hydrogen, rather than installing a heat pump.

“When you do the surveys of domestic consumers, time and time again they put a completely illogical premium on convenience,” she told the conference. “People will pay more just for the convenience of having a boiler that looks like the one they already have and for not having to think about how the world is changing. And so in that context, you know, maybe there is a role for hydrogen [in heating].”

But Anderson acknowledges the growing issue of fuel poverty—and its ability to change consumers’ technology choices.

“We cannot ignore in this debate the issues around fuel poverty. We cannot ignore the fact that hydrogen is significantly more expensive,” she says, drawing parallels with the commercial sector, where the cost of hydrogen still remains a barrier to fuel switching.

“Nobody in their right mind in industry will change across to hydrogen now at a significant premium to their current costs,” she says.

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Author: Stuart Penson