March 20, 2019 - Decarbonizing heat presents gas-dependent energy systems with a huge challenge if climate change commitments are to be met, Centrica CEO Iain Conn said Tuesday at the Aurora Spring Forum in Oxford.

The forum heard that hydrogen, heat pumps and energy efficiency can play a role in moving heat markets away from fossil fuels, but there was no silver bullet technology and the size of the task was likely to result in a strong increase in winter peak electricity demand.

"I do not believe in the mass use of pure hydrogen. I think it highly unlikely that would be practical," Conn said.

"I do believe in injecting 9% of hydrogen into reticulation systems. That is how the coal gas business started. I also believe that heat pumps will ultimately start to take homes off the gas grid," he said.

To align with the Paris climate accord, Centrica customers "need to reduce their total emissions by 15% by 2022, and 25% by 2030," Conn said. "We have barely scratched the surface on energy efficiency."

E.ON CEO Johannes Teyssen said engaging customers in innovation was the biggest challenge for the German utility, and acknowledged there was a risk of over-selling the benefits of the energy transition.

"There are vulnerable customers and France has shown us you need a social perspective. If we move too fast, and the transition is too costly you risk a backlash like the yellow vest movement," Teyssen said.

Rather than fixate on unknown solutions to distant inter-seasonal storage problems, he said there were major gains to be had in grid integration using digital technologies.

While optimistic on renewable power and to some extent low carbon transport, the CEO of UK energy regulator Ofgem, Dermot Nolan, said he was "far more nervous" on decarbonizing heat.

"Some 83% of our population gets its heat from gas and we have to meet 2050 carbon targets. It seems to me to be intrinsically hugely difficult," Nolan said.

One option was the creation of some form of hydrogen system from scratch, involving installation of entirely new heating systems in houses that have to some extent been resisting installation of smart meters, he said.

Then there was electrification, delivering a tripling in winter peak electricity demand and redundancy of a gas network with a regulated asset value around GBP40 billion, he said.

"There are significant and difficult decisions to be made, and then transmitted to the public in a way that will also be intensely challenging," Nolan said.

Aurora's Richard Howard said getting UK emissions down to a low-carbon level of 25 gram CO2 per kWh by 2050 was possible using current technologies, with 50 GW to 60 GW of back up thermal capacity (mainly gas peakers) supporting a 91% decarbonized energy mix.

"This produces an odd price profile over the year, with solar crashing prices to below GBP10/MWh for over 77% of half hours during the summer, while winter prices with thermal backup are much higher [at around GBP60/MWh]," he said.

Getting to zero carbon by 2050 in the UK, meanwhile, required an as-yet unavailable technology that could provide 60 TWh of inter-seasonal storage and/or flexibility.

"Possible candidates are some form of power-to-X technology like ammonia or hydrogen storage, or thermal storage, or vast levels of demand flexibility. This is crux of the problem if you want to run a high renewables, net zero emissions system," Howard said.