National Hydrogen Strategy Issues Papers

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Miyuru Ediriweera

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Public Interest Advocacy Centre (PIAC)

Issue 6: Hydrogen in the gas network

1. Which existing gas distribution networks or stand-alone systems are ‘hydrogen ready’ and which are not? What safe upper limit applies? Does this readiness include meters, behind-the-meter infrastructure, and appliances?

Which existing gas distribution networks or stand-alone systems are ‘hydrogen ready’ and which are not? What safe upper limit applies? Does this readiness include meters, behind-the-meter infrastructure, and appliances?
Determining safe upper limits must include consideration of meters, end-use appliances (such as burners) and other consequential changes required at the customers' premises (such as conversion of exhaust systems or addition of hydrogen sensors).

It must be noted that, even though many end use appliances may be rated for up to 13% hydrogen blend, this rating is for a momentary mixture of hydrogen and natural gas rather than for a continuous hydrogen blended fuel. Further, we note that the costs of any necessary end-use conversions, upgrades or replacements are often left out of the cost-benefit analyses for hydrogen.

Please see the attached submission for more details.

2. What is the potential to have a test project of 100% hydrogen use in a small regional location and where?

What is the potential to have a test project of 100% hydrogen use in a small regional location and where?
Please see the attached submission for more details.

4. What roles should government and industry play in addressing any consumer concerns and building social acceptance?

What roles should government and industry play in addressing any consumer concerns and building social acceptance?
Inherent to any transformation is the costs, including for the necessary infrastructure to build, transport, store hydrogen as well as consequential costs at the end-use stage where burners or other appliances may require conversion. These are discussed in further detail in the next section.

There are potentially other costs in the form of missed opportunities. In the case of hydrogen, this is primarily the costs to consumers and the environment from continuing to use gas (with or without hydrogen blending) rather than switching to electricity where it is more economical to do so.

We refer the Taskforce to two reports produced by the Alternative Technology Association (now Renew) assessing the economic trade-off between electricity and gas for consumers in different situations.

PIAC recommends that the National Hydrogen Taskforce consider the issues of appropriate risk allocation and cost recovery as part of its investigation of hydrogen as a fuel source.

PIAC recommends that the National Hydrogen Taskforce apply a beneficiary-pays principle in creating frameworks for risk allocation and cost recovery for any move towards hydrogen in the energy system.

Please see the attached submission for more details.

5. How could the actions included in Table 2 be improved? Are there other actions that should be added?

How could the actions included in Table 2 be improved? Are there other actions that should be added?
The benefit of hydrogen, and indeed any energy source or device, is in relation to its alternatives to achieve the same end.

It is essential that the full range of consequential costs are included in any assessment. Equally, it is important that the resultant economic case for hydrogen is compared against an appropriate counterfactual without hydrogen use.

Using a counterfactual that 100% of current natural gas use is substituted with electricity is neither appropriate nor realistic. This artificially inflates the cost of the counterfactual case and does not reflect what would likely happen in the real world. It would be more appropriate to use a case where, for instance, 80% or 90% of current natural gas is substituted with electricity. This would be a more accurate reflection of real-world responses as the individual cost to convert different customers or uses may differ based on a number of factors.

Please see the attached submission for more details.