Your opportunity to create fair billing for a greener future

By James Whitmore, Innovation Manager at Cadent

We are all aware that to hit net zero by 2050, a range of low-carbon technologies will be required. Currently, heat accounts for around 40% of the UK’s emissions and approximately 85% of households use natural gas to heat their homes. Therefore, to achieve net zero, there will need to be significant changes to how we heat and power our homes and businesses.

The good news is that green gases such as biomethane are already forming part of the mix and hydrogen blending trials are well underway. For instance, our HyDeploy programme is demonstrating that up to 20% hydrogen can be blended into the existing gas network with no customer disruption. This blending trial is producing important learnings, providing a feasible route to gas decarbonisation in the near-term that can be rolled out nationally, with the potential to deliver significant carbon savings.

The UK’s gas networks have fuelled businesses and kept people warm for over 200 years, and the UK government recognises the potential of gas as part of the fuel mix as we transition to net zero. Its Ten Point Plan sets out a commitment to complete testing of up to 20% hydrogen blend into the gas grid by 2023.  Meanwhile, the Hydrogen Strategy outlines the potential value of blending as an early use case to  support the confident creation of a hydrogen market. Both initiatives are crucial in determining the long-term future of the gas industry and moving from a series of trial programmes to decarbonisation at scale.

However, before we move to wider scale rollout we must ensure that consumers continue to be billed fairly for the energy they consume. The current gas billing methodology does not allow for varying energy contents – measured in calorific values (CVs) – of different gases. To give context, natural gas has a CV of around 39 MJ/m3, versus 37MJ/m3 for biomethane and 34MJ/m3 where 20% hydrogen is blended with natural gas.

As a result, customers would use different volumes of  gas to fulfil the same energy requirements. This means that when higher volumes of biomethane and hydrogen blends come into the live system, there could  be a disparity in consumption volume between those customers using higher proportions of renewable source gases and those using natural gas.

Urgent action needed to develop a future billing method that is fair to all

Therefore, as we transition to a greener gas system, we need to work together to ensure customer bills remain fair and equitable in the face of a changing gas mix.

However, to do this, we need to take action now. This is why Cadent has launched an industry consultation to identify the most cost effective solutions to ensure that the processes underpinning CV allocation support billing that is clear, effective and fair during the low-carbon transition. It’s vital that we work together across the gas industry to identify the best way to tackle this challenge together.

As part of this process, we have already developed five options to consider and debate, which are outlined in full detail within our consultation documents.

A successful solution needs a whole industry approach

While all of the options we have listed above have their advantages and limitations, we believe they provide the basis for a meaningful discussion to determine how a future billing methodology can best allow for variable CVs of different gas mixes.

This is a crucial piece of the puzzle when it comes to making the low-carbon transition a reality, which is why we need the whole of the gas industry – network operators, shippers, suppliers, metering partners and beyond – to work together.

The consultation opens on 31 January 2022 and the deadline for responses is 28 February 2022, Have your say here.