New study shows significant economic, environmental and social benefits from co-development of hydrogen and district heating in the UK
The UK government’s ambition on hydrogen, could end up producing waste heat equal to the entire UK demand for domestic space heating. But the heat does not have to be a waste. If hydrogen production takes place in or around towns and cities, district heating could provide significant economic, environmental and social benefits to everyone involved – the hydrogen producer, the district heating network and consumers. This is the overarching conclusion of a study conducted by Ramboll UK on behalf of the Danish Government’s Energy Governance Partnership at the Danish Embassy in the UK. Here, we explore whether district heating is in tension with the electrification versus hydrogen debate, the opportunities for district heating from waste heat from hydrogen production, and how to actually make this work through policy and planning.
Hydrogen will be of relevance to decarbonisation of heating in the UK – one way or the other
Hydrogen is on everyone’s mind these days – at least in the energy sector. That is also the case in the UK, were the governments Hydrogen Strategy suggests that 250 – 460 TWh of hydrogen could be needed by 2050, making up 20 – 35% of the UK’s final energy demand. A key reason for these high estimates is that the UK, unlike most countries, considers hydrogen as a possible pathway to decarbonisation of the heating sector. In the UK, heating is often considered a “hard-to-decarbonise” sector alongside the more commonly agreed sectors of heavy transport and industry. Whether heating of households with hydrogen – blended or not – is a good idea, is still a highly contentious policy topic. But with or without its role in decarbonisation of heating, hydrogen looks to occupy a cornerstone position in the net-zero pathway for the UK for industrial and transport decarbonisation – and this makes it likely that huge amounts of hydrogen will be produced on land, in possible proximity to heat demand centres.
What seems to be less well-known, is that production of hydrogen itself generates heat (all processes do!) – and in this case, possibly a lot of it. By default, this heat is considered a by-product, which in most cases have no immediate use and will therefore be vented off into the surrounding environment – itself adding additional costs to the production process. For some of the most well-known and established green hydrogen technologies, as much as 20-30% of the input energy could end up as wasted energy. Even blue hydrogen production technologies (itself often consuming great amounts of heat) yield significant waste heat in its auxiliary processes – especially if combined with carbon capture technologies.
In sum, this begs the basic question; why not use this (wasted) heat for heating purposes – increasing energy efficiency, creating new revenue for the hydrogen producer and reducing the burden of generating even more valuable hydrogen for the purpose of heating?
Decarbonisation of heat in the UK – electrification vs. hydrogen discussion has slowed down district heating
Decarbonisation of the heating system is, by most, considered to be the biggest policy challenge that the UK is facing in regards to cutting CO2-emissions. In 2009, heating of buildings accounted for 23% of the countries emissions. In 2019, the UK Climate Change Commission assessed, that less than 5% of the UK’s homes are heated from low-carbon sources – with more than 85% of households connected to natural gas.
The realisation of this being a big challenge to the ambitious net zero agenda is far from new. In 2008 the UK became the first major economy to legislate on climate change – legislation that today includes a binding net zero target by 2050. But while this ambition has helped yield a great transition in the power sector – little progress has so far been made within the heating sector.
Part of the explanation is, that there has so far been little strategic agreement on the transition pathway for the sector. A long-standing debate of electrification vs. hydrogen is for example still ongoing. In the governments Heat and Buildings Strategy from 2021, a strategic decision on the “role of hydrogen” in heating, was postponed until 2026. For better and worse, this uncertainty is making it difficult for stakeholders to make long-term decisions for their business and industry.
This situation is well exemplified by district heating. The technology has been around for roughly a hundred years and is widely recognised as a low-regret policy option to decarbonise heating in densely populated areas. A central reason for it being “low-regret” is that, not only is district heating a well-established technology, providing the lowest cost net-zero option to many households – it also yields great possible synergetic benefits to both the electrification and the hydrogen pathway.
Unfortunately, this fact seems to have been drowned out amidst the discussion on electrification versus hydrogen. At least it would help explain, why district heating today still covers less than 3% of the UK’s households compared to more than 65% in Denmark. So though great policy strides are now being made, it remains to be seen if the sector will end up with those favourable, stable and long-term framework conditions, that it has been craving for so many years.
The study to investigate possible synergies between hydrogen and district heating in the UK context
In an attempt to highlight the “low-regret” nature of district heating, the Danish Energy Governance Partnership at the Danish Embassy in the UK together with Ramboll UK, decided to launch a study in early 2021. The study was set to investigate possible synergies between “the hydrogen pathway” and district heating and drew inspiration from some promising cases coming out of especially Denmark and the Netherlands.
In order to capture the particular circumstances of the UK, the study focused its inquiry on case studies and stakeholder engagement with actual “clusters” in the UK, where hydrogen production and district heating were understood to be rapidly evolving in tandem . Across each case, planned and potential hydrogen production and district heating network developments were identified and mapped, and a technical assessment was undertaken to shortlist the most promising of these cases.
South Humber was eventually selected from the shortlist for further economic modelling and assessment. This case was particularly interesting, because it included three ambitious hydrogen projects; two very substantial (2 x 100MW) green hydrogen projects, and another large (700 MW) blue hydrogen project. In addition, the region has several district heating projects under consideration, which had been subject to previous feasibility studies, and identified as potentially viable.
Significant economic, environmental and social benefits
The study concluded that it was not only technically possible to recover heat from both green and blue hydrogen production without negatively impacting production, but it actually provided great potential gains in system efficiency, especially for some green hydrogen technologies (14-32% for electrolysers considered). The temperature of the captured heat also proved to be highly suitable – especially to newer networks – providing temperatures of between 40 and 70 degrees.
For the financial aspects it was even more encouraging. Even without an existing district heating network in place (the case in South Humber), the case still proved financially attractive for both the hydrogen producer, the heat network operator and the heat consumers – compared to the best green heating counterfactual (air source heat pumps).
Table 1 – Key results from financial assessment
|Hydrogen producer||14% IRR, positive NPV|
|District neat network operator||>4% IRR, positive NPV|
|Heat consumers||20% reduction in heating cost*|
Based on these results the study yielded the overarching conclusion that significant economic, environmental and social benefits are associated with heat recovery from hydrogen production, and its auxiliary processes.
How to reap the benefits?
To seize the opportunities that this analysis points to, hydrogen production and heat demand centres would have to be in proximity to one another. As heat demand is already fixed, the key would thus be to influence the placement of hydrogen production facilities. This is not a novel undertaking. Most stakeholders across the world are currently contemplating to the same end, trying to ensure that this emerging technology, and the ensuing investments, falls in their geography – be that region, nation or local authority.
In Denmark, one of the contributing factors for recent success in attracting hydrogen investments have been the opportunities to sell of waste heat. Major projects developing in Esbjerg, Fredericia and Copenhagen are today all integrated parts of local heat plans – planned to deliver large shares of heat to district heating networks. This synergy yields additional revenue and branding for the hydrogen producer, low cost green heat for the district heating network as well as potentially important gains in efficiency and integration of the energy system as a whole – of particular interest to national authorities.
In the UK, national governments are working to introduce a new tool, that could provide similar opportunities for its local authorities and other stakeholders. Local energy planning or zoning, as it is called, is a planning tool meant to allow local authorities to identify and designate areas where district heating is the lowest cost, low carbon solution for decarbonising heating. The tool is still under development and its methodological and regulatory reach is thus still somewhat unknown. That said, it is standard that any heat planning process includes assessment of existing waste heat sources in the area, and it could include possible future waste heat sources – by for example assessing or designating suitable hydrogen production sites.
If this process was integrated into the future UK zoning framework, it could attract interest from hydrogen producers – most of whom would themselves likely not concern themselves with opportunities for heat recovery. And through their local knowledge and position, local authorities could be the ideal stakeholder to promote this sector integration and ensure that great synergies are realised between two key energy infrastructures of the future.
 Cases included: Aberdeen City; Leeds City; the Humber Region (split into Beverley, Hull and South Humber)
 The Danish projects are not only producers of hydrogen, but also other e-fuels or power-to-x products