Energy Transition Now - Episode 33 with Jake Tudge
National Gas currently operates the UK’s 7500km national transmission system – the backbone that is responsible for keeping the lights on, business running and warming homes in the winter. Jake Tudge, Corporate Affairs Director, explains why the company believes hydrogen has a critical part to play in its future transmission network and discusses some of the initiatives it is currently undertaking to transition to hydrogen.
Jake is the Corporate Affairs Director at National Gas, responsible for the organisation’s external engagement, brand, and reputation.
National Gas formed in February 2023 following the majority sale of National Grid Gas Transmission & Metering by National Grid Group to a consortium led by Macquarie Asset Management with the British Columbia Investment Management Corporation.
National Gas is formed of three businesses. As both the transmission owner and system operator, National Gas Transmission own and operate the over 7,000km of high-pressure pipelines bringing gas to power stations, industry, and homes across Great Britain. National Gas Metering is the largest owner of traditional gas meters, with over 7 million meters in homes and businesses across Great Britain. National Gas Services is Great Britain’s trusted authority in pipeline repair, maintenance, and intervention.
Prior to joining National Gas, Jake worked in management consulting advising private sector clients and senior government officials on energy strategy and policy design, including on the important role of hydrogen in a future net zero economy.
Joyce Grigorey [00:00:00] Hello everyone. A warm welcome to all of our listeners who are joining us today on our first hydrogen podcast series. Today’s episode is focusing on hydrogen’s role in the future of the UK’s gas grid. I’d like to delve a little bit into why hydrogen is important in the context of the gas network and also explore some of the challenges that are associated with transitioning from a natural gas network to a hydrogen network. So joining me today to discuss this important topic is Jake Tudge, who is Corporate Affairs Director from National Gas. Welcome, Jake. We’re very happy to have you with us today.
Jake Tudge [00:00:43] Morning, Joyce. Great to be with you. And thanks very much for having me on.
Joyce Grigorey [00:00:46] Thank you. So firstly, I’d like to start off by asking you to give a little bit of background on National Gas and your particular role there.
Jake Tudge [00:00:56] Sure. Yeah, I think it’s very important to get an overview of the organisation because for many they may not have heard of it for many of your listeners. So National Gas is a fairly new organisation. So we were formed earlier this year in February 2023 following a sale process. So we were originally National Grid Gas and we’ve now become National Gas. We’re now 80% owned by Macquarie led Consortium with CIBC, British Columbia Investment Management Corporation, and 20% remaining with National Grid Group. National Gas is an amazing organisation because it’s a business with three main sub-businesses. So the first is National Gas Transmission. We own and operate the over seven and a half thousand kilometres of high pressure pipelines, so this is known as the national transmission system. It goes up and down the length of Great Britain and it enables us to bring gas in from the beaches. So we have gas terminals at St Fergus in Scotland and Bacton and in the south of England. It also enables us to bring in gas from the UK continental shelf to Norway, the interconnectors to the island of Ireland. So there’s one going into the Republic, one going to Northern and the two interconnectors that go after Bacton to the Netherlands and Belgium. It also interconnects with the LNG facilities that GB has at both Isle of Grain and Milford Haven, and it also interconnects with all the storage facilities right across the country. So this pipeline, this over seven and a half thousand kilometres of high pressure pipeline we like to refer to is the backbone of the country because it is fundamentally keeping the lights on because it interconnects all the power stations. It keeps business running because it serves over half a million businesses that use gas today in GB and it also keeps homes warm in winter. There’s over 22 million homes in GB that use gas to heat and fuel their homes. So that’s our first business – natural gas transmission.
A second business is national gas metering. So we operate around 7 million meters. So these are meters that could be in homes or could be in industry and businesses. So whether that be small businesses on the high street or large industrial facilities, these are traditional gas meters.
And our third business is National Gas Services and this is a very exciting business. I like to think of it as the Thunderbirds of the gas industry. So we are the UK’s emergency response and we provide maintenance services as well for the gas industry across the UK. And that means that we’re able to ensure that gas keeps flowing, but ultimately that the gas industry maintains its excellent safety record. Does that help Joyce?
Joyce Grigorey [00:04:09] Yes. Yes, it certainly helps. Thanks very much. I think of it as just the transmission networks. Thanks very much for expanding on all the other areas of the business. Really interesting. So obviously, National gas plays a critical role in distributing that energy all throughout the U.K., as you mentioned, you know, from the residential customers, so you and me, commercial businesses, industrial customers. And at present, that is in the form of natural gas. Correct? But there are ambitions to transition this to hydrogen. So firstly, maybe can you explain to us why we are wanting to make this transition of the gas grid? And then secondly, why hydrogen? What are some of the benefits that hydrogen brings?
Jake Tudge [00:04:57] Yes, So it’s a really good question. So I always start in answer to this question with what does natural gas do today? So this morning I looked on the app that many of us will have on our phone that shows us how much power is being used around the country and where that’s coming from. And this morning, around half of the UK’s electricity was being generated by gas. So gas has a very important role in keeping the lights on. And then when we think about all the other uses of gas, so the homes you mention, the businesses, you mention, the amount of energy that is going through the gas grid over a given year compared to the electricity grid is around three times the amount of energy. So gas plays a very important role in the UK’s economy, but it also has a very important role as not only scale but the ability to flex and the ability to respond to very large variances in demand. And what I mean by that is that in winter the gas system really comes into its own and steps up to keep UK warm, keep the lights on and keep industry running because on a very cold day, the amount of energy going through the gas grid can reach up to seven times the amount of energy going through the power grid. So it’s an order of magnitude difference. So when you think about some of those parameters I’ve described of keeping homes warm, and we know that not all homes can electrify. When you think about industry and we think many industries, those half million businesses that use gas, not all of them can electrify. And when we think about that variance in demand and that ability to respond at scale, all of those are answered by ultimately having molecules in your energy system. So having a gas that can be used when it’s required, stored and delivered into seasonal storage capability and respond when required. And that really comes on to your question around, why hydrogen?
We believe that hydrogen is going to be the most sensible option to a low carbon future when we think about the need for a molecule. So that means that for those homes that can’t electrify, those businesses that can’t electrify, the ability to have inter-seasonal long-duration, large volume storage, the ability to keep the lights on with power stations that operate, whatever weather that is going to require a gas. That gas needs to be low carbon. And we believe that’s going to be hydrogen. So we are putting a huge amount of effort into thinking about what’s going to happen to our network. So that national transmission system I mentioned this is the over seven and a half thousand kilometres of high pressure pipeline with compression. So there’s around 68 jet engines that are pushing and compressing the gas around this network. How do we convert that to hydrogen? And our vision is called Project Union. So we want to take 2000 kilometres of that network and repurpose it to hydrogen. And the reason you would repurpose is repurpose is about a fifth of the cost of a newbuild pipeline. So it represents a very cost effective route to transition to net zero and Project Union will enable us to interconnect the industrial clusters across the UK, where the probably blue hydrogen will start as green ramps up. And it means that we can create a whole UK-wide economy for the hydrogen. And it means that we can provide resilience to hydrogen supply and high extreme demand. And it means that we can create a UK-wide, hydrogen system with our pipelines. So we’re putting a huge amount of work into that, which I can talk through in a bit more detail shortly.
Joyce Grigorey [00:09:16] Yeah, that would be that would be great if you could, because obviously this is a monumental undertaking that you’re talking about here and you know, 2000 kilometres of pipeline to be converted. What are some of the, well, a) it would be great if you can walk us through what’s the plan there in terms of timing? How is that going to evolve? And then secondly, what are some of the challenges that you’re seeing around that? Well, what are you grappling with and how are you, what are you starting with? How you approaching that?
Jake Tudge [00:09:50] Sure. So timing is a very interesting one because we will be dependent on quite a few external factors for development of Project Union. So as you can imagine, if you’re going to convert 2000 kilometres of pipeline to hydrogen and these are because they’re very large pipelines, it means there’s going to be a very large volume of gas. You’re going to need to be very clear where the hydrogen is coming from and where it’s going to be used. So we’re working in very close collaboration with the wider industry to think about where those production centres are going to be, but also where the hydrogen is going to be used. We’re fortunate in that we have most of the major industry, energy industry players as our customers or connected to our network. So we’re working very closely with our teams to think about timing. Our initial view is that Project Union will start in the Northeast, so it will start around the Teesside and Humber region and we’re beginning to think about phasing and sequencing and which pipelines start the, or start the conversion process, because many people will think of our network as a single infrastructure. When you see the map, it’s lines. But sometimes those lines have multiple pipelines. So you can begin to think about conversion strategies for particular regions. We are aiming to start in 2026 with the initial conversion plans, with an aim to have pipelines in a phase of operational capability by 2028. And then we aim to have the 2000 kilometres of pipeline operational in the early 2030s. So it’s a very short timeline.
It’s a very, I would say, it’s not really that it’s challenging, but it’s very ambitious. But the reason you would term it challenging is that point I mentioned – the external factors and those factors include the timing of the industrial clusters and how government is going to support those clusters to get on line. The timing of the hydrogen production facilities coming online and then some of the immediate decisions that government is going to make, such as where hydrogen is going to be used in industry, power homes and storage.
And to answer your second question around some major challenges, sort of just bringing ourselves a bit more, we are ultimately having to work very closely and we’re delighted to be working very closely with the government on this about how hydrogen is going to be used in our pipeline and what that looks like and what the data and the evidence case begins to form as part of the evidence for the decision. So we have a brilliant facility, absolutely brilliant, called Future Grid. And I went up earlier this year, it’s in Cumbria and it’s at an RAF site called Spadeadam. And Future Grid is a test facility that replicates the national transmission system. So what I mean by that is where we have parts of the national transmission system that, as you can imagine, over time we’re replacing, we’re upgrading, we’re extending, we may be pulling it back in certain areas. We are taking bits out of our system that we no longer need, we have taken them up to Cumbria, installed them at a site and we’re running natural gas through the system. So it’s running exactly like the national transmission system does day to day. And last week we had a very exciting announcement, in that, Future Grid started blending 2% hydrogen into the pipes, which meant that we had delivered a UK first. Hydrogen is being blended into a high pressure national transmission system pipelines, which is absolutely fantastic news. And over the coming weeks and months we’ll go from 2% to 5%, 10%, 20%, and up to 100%.
Joyce Grigorey [00:14:10] How long do you think that transition, or that testing process would actually take?
Jake Tudge [00:14:16] The testing process for the?
Joyce Grigorey [00:14:19] For the blending, increasing the blending?
Jake Tudge [00:14:21] So that would be over the next 4 to 8 weeks.
Joyce Grigorey [00:14:24] Okay, that quick? Okay.
Jake Tudge [00:14:25] Oh, yes. And as we as we go through that, you can imagine that we’ve got the engineers and partners at that site evaluating that. And so part of this is about forming it as a physical representative system. And we’ve built the models, we’ve built, well, we’ve done the mathematics and the engineering to assess what that looks like. And now this is about demonstrating at scale. So it will be fascinating over the coming weeks and months for, and I’m so excited to see what comes out of it because it’s a great news story to see how that grows.
Joyce Grigorey [00:15:02] What are they measuring for? Are they testing for things like leakage? Because that seems to be a topic that the people are worried about, the safety aspect.
Jake Tudge [00:15:11] Exactly. So part of developing the safety case with the HSE, or the Health and Safety Executive, and our other partners up there is it’s all about looking at the engineering parameters of the system. So as you just correctly describe, leakage is a great example. So when I was there, I was shown these sensors and detectors that sit above the pipeline and they can measure the atmospheric content. So you can understand if there is a leak around the pipeline. So just like many of our assets do today, measuring for methane leakage, which of course you and I both know is incredibly important because of the global warming potential of methane as a gas. And we’re doing exactly the same for hydrogen, but also starting to look at how our assets respond. So most of our assets are made of steel, and it’s about looking at those materials and understanding how they respond to hydrogen and the material properties, but not just the materials and the response to hydrogen, but actually things like valves and compressors and all of the kit that enables the pipelines to work. How will they function with hydrogen? So what will come out of Future Grid will be world-leading test results. And that’s why we’re working with international partners like Fluxus, so that they can understand the data that comes out of Future Grid, too.
Joyce Grigorey [00:16:41] That’s really interesting because obviously, you know, there’s many countries, you know, if you just look at Europe, they’re building the entire European hydrogen backbone to connect countries across Europe. And one of the challenges – every country is seeming to do their own testing – is being able to share the results that you’re finding and what, you know, the Netherlands and Germany is finding. I’m just wondering whether or not there is that cross-communication, that collaboration among companies such as yourselves and other countries in Europe?
Jake Tudge [00:17:16] Yeah, we work very closely with European TSOs (Transmission System Operators). So our, one of our executive members was out with the former Secretary of State, Grant Shapps, for the European North Sea Summit earlier this year where we signed an agreement with the other European TSOs to continue to collaborate, share and ensure that there’s a kind of a European-wide approach to the development of hydrogen. So many of your listeners will be aware that Europe and the TSOs out on the continent have ambitions to start blending hydrogen into the transmission system. So that’s looking at present to be around 2 to 3% by 2024, which is only a few months away. But, you know, probably some sometime next year that they’re going to look to start doing that. Now, that’s, of course, going to depend on the business models, the economics, the availability of hydrogen, the business case, etc.. But what it starts to indicate for us is that because of the interconnection out of Bacton, and the fact that we have the two interconnectors that are connecting from Bacton to Belgium and the Netherlands, you need to ensure the interoperability between GB and the continent to ensure that you are raising the blend the same both sides of the Channel. So that is incredibly important. But also it’s incredibly important because we believe that, particularly in GB, there’s a very compelling case for blending hydrogen into the NTS for both the economics, for blue hydrogen. So having that offtake of last resort model, which means that if your local network or your local demand point or storage is suddenly full or no longer requires the demand for hydrogen, you have an offtake in which for us would be the national transmission system. So you have a continued revenue stream and the green hydrogen business sent an incredibly compelling business case for the UK due to the fabulous wind capability that we have here. That as wind ramps up and we continue to put more wind on the grid when the wind is blowing, but when we don’t require the power we can generate and create hydrogen and blend into the national transmission system, meaning that we’re capturing every gust of wind. And that was actually one of the messages that was shared at the North Sea summit. We are going to capture every gust of wind in the North Sea and ensure that it’s not wasted.
Joyce Grigorey [00:20:00] Mm hmm. I mean, that, just touching on that point there. So, I mean, if you’ve got the national grid, but you also need other aspects of that to make the system quite resilient. So you said a little bit around, you know, storage there. And just maybe can you touch a little bit on that? So what other elements are critical to get it, making sure that the system is quite resilient? And how are you working with those organisations? Because they also need to, kind of, connect with your system.
Jake Tudge [00:20:35] Yeah. So and as you correctly pointed out, there are a number of players in the system who contribute to security of supply. So we own and operate the national transmission system and therefore our primary responsibility is ensuring that that asset will be a platform for moving gas around the country is available so that those power stations, industries, the interconnectors, the gas terminals, that the LNG facilities can all get their gas on or off our system. And over the past three years we’ve achieved 100% reliability and availability of that asset, which is testament to the hard work of many teams in our company and also our partners.
So what does that mean for us? Well, it means that we know security of supply means having the most diverse range of sources. So I think last year UK gas supplied about 38% of total gas used in this country. But we also have gas coming in from Norway. The LNG facilities, storage, the European connectors. So we work with all of those partners to ensure that gas is being made available to the demand points across the UK, and that’s particularly important as we go through winter. And many of your listeners will know that we share and publish a winter outlook every year and that will be coming out later this month. So in late September 2023, I would hope that will be published alongside the ESO’s Winter outlook. So the ESO will look at the electricity side and we will look at the gas side. So you referenced the National Grid, National Gas, National Grid and National Grid ESO, which will become the FSO, work very closely to ensure that we have robust plans and an aligned set of strategies to ensure that ultimately the lights stay on in GB and the wider UK.
Joyce Grigorey [00:22:38] And then you mentioned because, you know, we needed to import more gas from Norway. That was the point that you made there earlier if I’m not mistaken. What happens then if we’re trying to transition to hydrogen? And at the moment there, we’re still trying to scale up the production. Does that, how do you see the balance between that if you can’t, the reliance on natural gas supplies coming in from other countries and and yet you’re trying to transition your hydrogen network if you need the additional hydrogen, but it’s not available from, you know, exporter. How do you balance that?
Jake Tudge [00:23:25] Yeah, no, it’s a good question. So on the point around Norway, so this applies to Norway and all sources of gas. They will go up and down throughout the year. So our responsibility as a network is to ensure that our network is able to accept whether Norway is putting in, for example, more or less hydrogen on any particular at any particular given point in time. With regards to hydrogen production, the hydrogen production is likely to start in the industrial clusters, so these major industrial demand centres across the UK, and that will predominantly be driven by initially blue hydrogen. So natural gas, reformation and sequestering the CO2 and then pushing the hydrogen into local demand points in those clusters and then interconnecting with Project Union. So we’re beginning to work and we’ve worked quite extensively with a number of the blue hydrogen producers to think about where that hydrogen is going to be generated and then ultimately what the use case about hydrogen is going to be. And as you know, the government is working very closely with those producers to think about the business models for that hydrogen production. And similarly with green hydrogen that will ramp-up over time to support the government’s ambition for a twin-track approach.
The important point here is that the cost of hydrogen is going to be driven by a number of factors, and for blue hydrogen, that will predominantly be the price point of natural gas and what that means for the price of the hydrogen. And we know that natural gas is a global and local market where the price fluctuates. And for green hydrogen, it will be the cost of the electricity itself. But then all of the supporting costs around the cost of the electrolyser, the cost of securing additional inputs such as water, the land, skills, supply chain, etc.
When we think about the development of a hydrogen economy, I think it’s important to look at past reference points and for where energy technology prices have gone and costs have gone. And one of the ones that we think about quite a lot is offshore wind. And we know that offshore wind was a very successful market development owing to the implementation of CFDs, or Contracts For Difference. And this drove the price point down of the electricity by around 80%. We are very supportive of the Government utilising a CFD model for the hydrogen production across the UK because we believe that that will see cost and price point reductions as well, which will ultimately deliver the choice for consumers across the country, because we believe, going back to your point on security, if we are going to ensure that there is continued power provision, fuel for industry and energy for homes, this is going to be about choice and electricity will work for many. But the those it does not work for homes, businesses, power generation, etc., and the storage, we are going to need molecules and that is going to be hydrogen.
Joyce Grigorey [00:27:03] Okay. Okay. Fantastic. And maybe just we can circle back a little bit because we went a little bit off-piste. It was a very interesting discussion from you, the Future Grid project. It would be great to hear, what are the next steps then? So you’re starting with 2% blending. You want to get up to 100%. You’ll get some results that will help you validate that in the Future Grid project. What then? How do you take that forward? When can we start blending or when can we start to see blending in the UK gas network?
Jake Tudge [00:27:39] Great question. So Future Grid, I would encourage everyone to keep up to date with what’s happening there through our social channels and what you read in the industry press, because we will be sharing the progress as we get towards 20 and 100% hydrogen because it is a world-leading facility and that will provide us with the data to support government with future decision making.
So Future Grid has a number of partners. We’ve got DMD, Fluxes, the HSE, Northern Gas Networks, Durham University and others who are supporting us with the development of this facility. And when we’ve got this data, we can then think about what that means for real world implementation. So we know that the government later this year and in 2023 is going to take a decision on blending, at a distribution level. So this is in the gas distribution networks and we know that the gas distribution networks, through projects such as how you deploy, can blend up to 20% today with little to no modification required and very wide consumer acceptability. So we are aiming to blend up to 5% in the national transmission system, but that will require a similar positive decision from government at a transmission level, which we would hope to come very soon from government. And part of that decision making process will involve us working very closely with government to ensure that they’re aware of the data and they have access to the information they need to take that decision.
Joyce Grigorey [00:29:17] So they haven’t formally come out to say that we will make a decision by ‘X’ time.
Jake Tudge [00:29:24] No. So the government has come out with a decision on the distribution, which will be later this year. I did see an email come through this morning, but a consultation has come out on that blending literally as we joined this call, Joyce. So exactly. So maybe something is in that document. Unfortunately, in the 30 seconds before joining, I was unable to control transmission quick enough. But we we will have a look into that document. We will have a another conversation with government. But we would like to see a decision as soon as possible following the distribution, one which we hope will be positive to enable blending at a transmission level.
Joyce Grigorey [00:30:09] Okay. Okay. And just, you know, obviously are waiting for decisions from the government. Are there any other things that are factors that you think would help speed up this process? Or if you look at it another way, or are there any things that, if it didn’t happen, would really hinder your progress? Or is it really resting on the government just giving you the thumbs up?
Jake Tudge [00:30:34] Staying focussed and one so. There are there are few things that will support the development of a UK wide hydrogen economy. So the first one is this approach to power decarbonisation in the UK. So the government has set the 2035 target for a net zero power system. That is going to require a mix of power generation technologies, including wind, solar, other renewables, nuclear. But at the moment, as I mentioned earlier, 50% of our power this morning was coming from gas. So a positive set of decisions on net zero power technology, whether that be gas, CCS or hydrogen, and those are part of a cluster decisions will be extremely, I think, positive in terms of a signal that hydrogen is coming.
With regards to industry, the continued application of fuel switching, so going from natural gas to hydrogen and the government’s doing some fantastic work looking at fuel switching and we’ve had real demonstration projects in the UK where that’s been successful, such as in cement, continued use there will be incredibly supportive of the decision in the development of hydrogen.
And then thirdly, another big one is hydrogen in homes and the use of hydrogen in homes. So the government is due to take a decision in 2026, which will be a strategic decision on heat in homes and what that future looks like with regards to hydrogen. So we believe that it should be a positive decision because this is about choice for consumers and this is about ensuring wider system resilience. It’s also about the fact that we have a fantastic set of infrastructure in this country, in the distribution networks and the transmission networks that the nation should be incredibly proud of because they provide reliability, they provide resilience, and I like to think of them as the hidden hero of the energy system because they are the pipes underground, not the pylons on the surface. And it’s funny, when I speak to friends, I promise I don’t speak to my friends about gas too much, but when I explain what the national transmission system does and the fact that we have almost 300,000 kilometres of pipeline distribution level sitting under the roads and pavements and lanes across the country, they’re always very surprised because it’s this idea of I’ve always wondered where, where sort of industry got its gas from, or where the power stations were getting it, was getting the gas from and homes, etc. And it’s almost one of those, it’s a set of infrastructure that I wouldn’t say is taken for granted, but people forget it’s there and that is a good thing. And that is providing a service to the country and keeping people warm and keeping the lights on and keeping industry running. But we need to do more to share the fantastic story of the gas networks to ensure that people continue to appreciate and recognise the role it plays. And that’s a lot of what we’re doing with hydrogen, because the industry stands ready to repurpose and convert the system to hydrogen so that we can continue to do what we do today of natural gas, but do it with hydrogen tomorrow.
Joyce Grigorey [00:34:10] I love that. I love that statement. Thank you. Thank you very much. The industry stands ready and we’re ready for for hydrogen, for that to be hydrogen. So thank you very much. I think we’re almost at the end of our half hour slot. So I’d just really like to thank you for a very insightful look into National Gas’ plans and also just highlighting the critical role that the company is playing in delivering this cleaner, more reliable energy system. So we wish you the best of luck in those plans. Keep us up to date on how the progress is going. And we’re really looking forward to tracking your success. So and we just wanted to say thank you to all of our listeners as well. We hope that you found this discussion insightful and we hope that you subscribe and we will see you next time.
Jake Tudge [00:35:04] Joyce, thank you so much. It’s been a pleasure.
Joyce Grigorey [00:35:07] Thank you very much, Jake. Take care, everyone. Have a good day.
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