(Bloomberg) -- Centrica Plc said hydrogen storage can help cut UK electricity bills, even as the economic viability of the technology is questioned elsewhere in Europe.
The owner of British Gas said large-scale hydrogen storage, such as its Rough facility in the North Sea, could reduce energy costs by £1 billion ($1.3 billion) a year by 2050. That’s the equivalent to an annual saving of £35 per household, Centrica said in a report published on Thursday with FTI Consulting.
The plea for hydrogen to have role in the UK hitting net zero targets comes as the government ramps up support for electric heat pumps, a key technology to cut the country’s dependence on natural gas. Centrica’s case for boosting storage capacity also coincides with widening premiums between gas prices in Europe and the UK, reflecting the nation’s vulnerability during cold weather in the absence of large sites to stockpile the fuel.
Hydrogen’s role in decarbonizing heavy industry in Europe has come under scrutiny due to the high cost of building infrastructure in countries like Germany. Centrica said hydrogen storage can help offset swings in renewable power generation, but to proceed with a £2 billion redevelopment of its Rough facility, the company needs some kind of cap and floor pricing model.
“By providing a way to store excess electricity, hydrogen will be crucial to managing more intermittency,” Centrica’s Chief Executive Officer Chris O’Shea said in a statement. “We need to be agnostic about the technology; there won’t be a single silver bullet that delivers this crucial change.”
Centrica has been seeking UK government backing, including consumer-funded minimum revenue guarantees, for a plan to convert its Rough gas storage facility to hold both methane and hydrogen.
The Centrica report comes a day before the UK regulator Ofgem announces changes to the price cap, which could boost annual energy bills for British households.
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