Andrew
Welcome back to the Mega Hour, the latest podcast series brought to you by Energy Voice in paid partnership with video.
In this series, we'll be examining how energy storage technologies are reshaping, reinforcing and recharging energy markets in the UK and further afield.
So far in this series we've looked broadly at the ways in which we can store and use energy.
And we've already taken a closer look at battery storage.
In particular, this episode will tackle some of the other energy storage solutions available, ranging from the mechanical to the molecular, and hopefully everything in between.
I'm Andrew Dykes, an editor at Energy Voice, where we are leading the global energy conversation.
I'm joined this time by my co-host, Viran de Silva, an associate director in the corporate and tax team at BDO. Viran has a particular focus on transactions in the renewable energy sector, having advised on projects involving wind, solar, waste energy and biomass.
We are also pleased to welcome Stephen Crosher, chief executive of RheEnergise.
Steven has led a series of entrepreneurial efforts spanning wave, wind, solar and other technologies.
So he has excellent insights to offer on how these systems are influencing the need for and the take-up of energy storage.
Finally, we are joined by Sarah Kempton, vice president for Energy Transition and Innovation Development at insurance and risk management Group DNV. Sarah has worked across the group’s analysis on energy transition and has a particular focus on hydrogen.
And so we'll be exploring why this technology will play an increasingly important role.
Just to ease us into discussion for this week, I think it's worth a quick recap.
We obviously tend to understand energy storage is kind of “electricity in” and “electricity out.”
But it is of course possible to store energy in lots of different ways and convert it and re convert it into the forms that are useful.
So, Viran, do you want to maybe give us a quick recap on how we think about these other forms of energy storage. Why is energy storage important?
Viran
Without storage solutions to balance energy supply and demand, increasing renewable power generation just wouldn't be possible.
So today we're looking at the technologies, how they work, where they might be deployed and the pros and cons.
So we'd be looking at not the battery solutions that we've looked at in the previous podcast, but hydrogen storage, pumped hydro.
Andrew
Are there mechanical forms of storage?
Sarah, maybe you could give us a quick refresher on some of the other energy storage technologies that we're thinking about here.
Sarah
Yeah, I believe we've previously talked about battery storage for storing power, but there are many other methods of storing energy.
So, for example, you can obviously use pumped hydro. You basically pump water up a hill and then as you let it run down you generate electricity.
Or there's sort of kinetic energy storage or gravity storage.
And also there's just the possibility of storing heat, but the form of storage that I'm really, really interested in is the storage of hydrogen which can be used directly, or it can also be used for generating power, so it seems to me to be a very, very versatile form of storage.
Andrew
And so we we've covered some of these technologies and batteries in particular before.
Are there any reasons why we would want or need to use these other vectors other than storing electricity and kind of electrochemical forms like batteries?
Can you maybe give some idea of them?
Sarah
Well, I think customers today and industry are going to need lights and energy as much as they do now. And in terms of the domestic situation, vulnerable customers will need to be looked after, and I think at the moment you may have neglected the amount of energy that the gas networks are putting into the system.
So at peak in the winter, they're putting it four times as much energy as the electricity networks.
So if we do sort of dispense with the gas networks or go for full electrification, then we're going to need to replace that energy with power, no matter whether you go for electrification or if you retain the gas networks and start putting low-carbon hydrogen through them. You're going to need an awful lot of hydrogen storage to cover the mismatch between supply and demand because renewable energy is inherently not as predictable or not as controllable as say, for example, extracting gas from a field.
So no matter what the solution is, whether they go for full electrification or retain the gas networks and pipe low-carbon hydrogen through them.
We're going to need hydrogen storage to cover that mismatch between renewable generation and customer demand.
Andrew
So part of the idea that we've kind of touched on briefly is that we think about energy storage as a new technology, but obviously oil and gas are very good forms of energy storage.
They allow us to kind of move it around and we can store it seasonally as well, and that's kind of the incumbent problem that we're looking to overcome our mechanical types, broadly speaking, you know, do they maybe offer some of the long duration problems that we're looking to overcome?
Sarah
I'm not sure I can answer that one actually.
Certainly the more chemical [form of] storage does overcome many of the problems, because storing molecules is inherently easier to do than storing electrons in a battery.
So I think that the storing chemical energy maybe in the form of hydrogen, or whatever, is probably going to be a solution, just the at-scale solution, for energy storage.
Andrew
Do you maybe want to give us an idea of what RheEnergise does and how it's playing in this market?
Stephen
So at RheEnergise, we're developing a form of mechanical storage based on traditional pumped hydro. Traditional pumped hydro, for those who don't know, is where you have huge reservoirs at the bottom and the top of a mountain, and when energy is abundant you pump water up the mountain, and when energy is in scarce supply or more expensive, you release it and regenerate electricity through a turbine.
Traditional pumped hydro has been around for over 100 years. It's been deployed in large volumes and across the world today about 95% of the total world energy storage is pumped hydro, and it was built to balance baseload nuclear and coal power in the last 40-50 years predominantly. And so it's a very mature, large-capacity form of energy storage.
So what RheEnergise are doing that is different is that rather than using water, we've introduced a fluid that's 2 1/2 times denser than water.
And the advantage of our higher-density fluid is one of two things. Either you can reduce volumetrically the size of the construction size of your project, so with a 2 1/2 times denser fluid, the construction size is 60% less, so the speed to build and the cost of building is significantly less.
Or alternatively you can reduce the vertical elevation that you need by again, 2 1/2 times, so we would achieve the same power energy at 20, sorry, at 200 metres, that you would with the water project at 500 metres.
Andrew
In terms of, I suppose the parameter, it's kind of what kind of capacities are you looking at in terms of megawatts and how do you kind of choose where to put these projects?
Are you building all this infrastructure or do you still rely, as natural hydro does, on a little bit of topography?
Stephen
There is a reliance on a little bit of topography, but when you reduce the vertical elevation needed by 60% then you get an order of magnitude more sites available to you.
You do have topographical constraints, but nowhere near in the same form as with traditional pump sites.
If we look at the UK alone, we've identified over six and a half thousand potential sites in the UK alone where we could install projects. So there's no real shortage of sites available to us.
And then in terms of either power megawatts or duration or megawatts out there, there's no technical constraint to it, but there probably are some practical constraints over the size of the projects that you would like to install.
If you look at traditional hydropower, then they install systems from a few kilowatts through to hundreds of megawatts, and that could be the same for us.
But we think, realistically speaking, our sweet spot is 10 megawatts to 50 megawatts.
That could be a bit bigger, could be a bit smaller, but that's where we think the sweet spot is.
And the reason for thinking that is, if you look at the gas-peaking plants that have been deployed on the grid for the last 15-20 years to provide the flexibility, they've tended to be in that scale range. And so it seems like the appropriate scale for providing the flexibility to the grid,
Then in terms of duration, today's market is seeing the need for relatively short duration, but as you increase the penetration of renewables on the grid, then you need longer durations to balance the intermittency of renewables.
So if you have a grid that's dominated by solar, you would expect that you would probably need something like 6 to 8 hours of storage to manage that overnight cycle.
Well, if you've got a grid that's dominated by wind, then you get a sort of twice weekly cycle of wind, roughly, so you would then need longer capacities, maybe in the 16 to 20 hours, to balance that.
So we see in time a typical system for us would be up to maybe 20 hours of duration, which is where we see the vast bulk of the energy storage need is going to come.
If you're trying to balance the cycles of renewable, that's where the vast bulk is going to be needed.
But we're not a solution for the very short-term frequency response type markets and that's supplied by other sorts of technologies.
And also we're not really a solution for the inter-seasonal type solution.
Ultimately that will probably be provided by green hydrogen.
Viran
Feasible is co-location; is it practically possible or…
Stephen
Yeah, it it's completely feasible. Co-location, there’s no real technical reason why you can't be either connected to the grid directly or behind a meter or either from a generator or for a large energy user.
There's lots of case studies. We see mines as an attractive market. We've got a high level of 24/7 power demands. We also see that, paradoxically, EV charging at infrastructure points such as on motorways.
We see that as an attractive thing, where we sit behind batteries which provide the fast charge and we provide them the sort of the duration that is needed, and so we see lots of applications, and co-location is an obvious one.
The synergy with wind may be slightly stronger, because they tend to be built on hills rather than solar, which tends to be built on the flat. We also find even or flat ground where there are lots of things like mineshafts and, you know, other types of infrastructure that have been built over the last couple of 100 years. It doesn't necessarily exclude a flat site, but it would need more investigation.
Viran
And it's a “heavy water” that that you're using.
How easy is that to produce and how green is it?
Stephen
So we tend to try to avoid calling it “heavy water” because of the connotation with the nuclear industry. But in effect, it's a high-density fluid, and so it's a suspended solid in water.
So we use an environmentally benign mineral. We grind it up into powder, and then we add some chemistry to it and that makes the particles within the water suspension repel each other, which is how you create a stable suspension.
So it's stable over time and the minerals are environmentally benign, they don't react, they're inert. We put it in a closed-loop system rather than in a large open reservoir, and that's because we don't want contaminants in it, but also you don't want things like evaporation.
So you have to manage it; it's like another bit of the engineered solution and then in terms of whether it is available, that the minerals we use are widely available across the world, they're sort of used in commodity markets, so availability is not a thing that we're particularly worried about.
Viran
OK, so none of the environmental issues of battery minerals?
Stephen
No, not those ones particularly, but you're still moving around quite large volumes of water even at 60% less volume. You've still got quite large volumes that do not like moving around and one of the challenges is how you sort of minimise that impact of the construction of a project in the first place.
Andrew
So you mentioned there are gas peaker plants for the kind of capacity market and also I presume private infrastructure like mines?
Can you maybe give us an idea of the business model?
Where do you see yourself as an owner and operator, or also a generator? How does that work?
Stephen
Now our business model RheEnergise has a licence, so our ambition is to scale this technology incredibly fast across the world and if we were to go out and build our own projects, it would take, you know, decades to make a meaningful impact on the climate emergency, which is what we're trying to do.
So we think the solution is we should be a IP-rich business and then license that IP to customers across the world who've already got their own relationships and know the market.
So these might be project developers or EPCs or even OEMs who have sort of particular sales panels for their equipment, so we wish to license it and then build multiple projects in tandem in multiple jurisdictions. This is our ambition.
That's not to say we wouldn't own captive projects, but we see the vast bulk of our projects being licensed rather than owned.
Andrew
And can you maybe give us an idea of the market that you see for this?
Have you had a lot of interest in the UK and globally?
Stephen
Yeah, we have interest from across the world. I think it's now about 20 countries where we've had interest from, and that's without really trying to look for markets.
We've very much been in the process of technology development and those sorts of things rather than pure commercialization, and we're just in the process of switching that. We’re recruiting a larger team to then commercialise the technology and so that's one of the transitions that we have going on at the moment.
And then we'd be much more proactive in looking for customers, and customers could be from land owners or developers, in the broadest sense of the word of a developer.
So that's where we're at on the next stage on our journey.
Sarah
The demand for heat is so huge in the UK: it's about at peak, it's about four times greater than the electricity demand, so thinking about how we're going to decarbonise all of that and reduce our reliance on natural gas is going to be really, really important. And that's where I think low-carbon hydrogen comes into play, especially when it's generated from renewable power like, well, wind or solar.
And I think hydrogen has got a great role to play in there and I think we're in danger of violently agreeing! And what you were saying about pumped hydro and what I'm saying: mine's long-term duration storage and you're looking at a sort of short term, medium term, aren't you?
Stephen
Yeah, call it mid-duration, yeah, because there seems there are going to be three distinct markets.
There's going to be the short-term sort of frequency-type response, react fast, reaction type markets and then there's going to be the bulk of that, the shifting of the energy, and then there's going to be the stuff that is into seasonal or, you know, into monthly type storage that needs to do the rest.
Viran
Can I just ask, Sarah, do you have much interaction with heat storage solutions?
Sarah
No, not really. My focus is mainly on how we decarbonise the gas networks, because they're producing like 900 terawatt hours of energy, which is a huge thing to decarbonise, so that's what I've been focusing on. I was going to ask Stephen.
Stephen
Not particularly heat network. I mean, we do have an opportunity to store low-grade heat within the fluid, as long as we don't boil it, we don't really care. OK, so yeah, there is an opportunity to do that. Yeah, it's something that we see it as an opportunity, but not on every site.
So, we're very much more focused on the electricity side, but if there are opportunities at specific locations for sort of storage of low-grade heat, yeah, and that could be done for over longer periods of time. But you know that there is an opportunity that not a core part of our business.
Sarah
OK. Our increasing reliance on water is really, really interesting because Stephen is talking about you pumping an aqueous solution, whatever it is, to create pumped hydro. But then we're looking at using water to split it into, you know, separate it into hydrogen and oxygen.
This is really interesting, especially, you know, now since we've had that very dry period when there's a shortage of water.
So I'm just wondering how that would impact on all our energy system and storage in particular.
Stephen
I mean, I think that is absolutely a thing that we need to be mindful of.
I think what we find in lots of countries is that the total amount of rain may change a little bit, but what changes more is when you get it. So we'll shift from in the UK, where you have the rain spread out much more evenly over the year, to a climate where the rain is heavier and shorter, which creates a different set of problems, especially in storing it; you get much more runoff and it gets flushed out to sea, etc.
So your ability to capture the rain that you get and use it is more of the problem rather than the total amount of rain is how I think that's probably different if you're in somewhere like Shell is in sub-Saharan Africa. I think that's probably a different, different problem. But in Europe I think our climate is probably moving a little bit more to like Southern France has been, where you get incredibly heavy rain but for quite short periods of time, and that's what we're going to increasingly experience. So the infrastructure challenge is how you capture that.
And I also believe that even in places like the UK, which is thought of as wet, that somewhere like the South-East is probably going to need to think about desalination of seawater, and use energy for that.
Water will become a greater challenge than we currently think.
Most of the UK will be fine, but I think that where you've got high intensity of population and relatively low rainfall, I think that desalination is probably going to be an answer, even for the UK.
Andrew
I think that's interesting, in that we tend to think of a lot of these sections of the energy market as islands and they kind of deal with their own thing but obviously everything is connected and you know supply chains and resources down to the water level, you know, are things that we are going to seriously need to consider on this net-zero journey.
I think it's a great place to pause before we return to talk a little bit more about hydrogen storage.
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Andrew
So say I'm going to throw to you: can you maybe give us a broader idea of what hydrogen can perform in terms of its storage function and why we need it so badly?
You alluded earlier to the kind of the gas networks, but yeah, could you give us a broader idea?
Sarah
The gas networks are sort of the unsung heroes of our energy system. They are running 900 terawatt hours of energy into industry and business and commerce.
So replacing that amount of energy, you can either do it two ways: you can either replace it with another low-carbon molecule, or you could electrify everything. Either way, I think you're going to need hydrogen storage.
So if, for example, you electrified everything that currently uses natural gas, you're still going to need dispatchable power.
That could either be natural gas with carbon capture and storage, or it could be hydrogen. Both are low-carbon solutions.
But obviously if you start running a natural gas and carbon capture plant at some sort of thermal generation facility, then that's actually less efficient than now. And you've also got to make sure you've got the carbon capture infrastructure in place or if you burn hydrogen directly in the peaking plants.
You're also going to need hydrogen storage for that, so either way, I don't see how you're going to get away without having some kind of hydrogen storage or to replace the massive loads that the natural gas networks are pumping around the country at the moment.
Andrew
At the moment, on that point, can I ask you to maybe give us a brief primer on the hydrogen colour wheel? We hear about blue and green and grey hydrogen.
Can you maybe, yeah, can you elucidate for us?
Sarah
Yeah, that there also are people disagreeing about the color. So green hydrogen is usually hydrogen that's generated from the electrolysis of water using renewable power, mainly from wind power or solar.
And there's blue hydrogen, which is generated by breaking down methane, which is in natural gas, and converting that to hydrogen and carbon dioxide. In order for that to be blue hydrogen, the carbon dioxide has to be captured and stored below ground, so it's taken out of the carbon cyst.
Or there's pink hydrogen as well, which is another low-carbon form of hydrogen which is where the electricity is provided by nuclear generation and again, you split water by electrolysis and generate low-carbon hydrogen like that.
And then there's grey and brown, which are the sort of hydrogen we have now where we sort of get it from natural gas and we don't capture the carbon dioxide.
So, it's not very, very good for the planet.
So those are the main colours: grey, green, blue, pink and brown. Thank you. There are all sorts of things on that, but I think mainly we want to make sure, I mean they're all, they're all ways of identifying the carbon intensity of the hydrogen basically.
Andrew
Perfect.
So far in the UK, and you know we've seen a few kind of hydrogen clusters pop up, or proposals for them there, some plans are underway that seem to involve a lot of industrial users.
Could you maybe give us a scale of the opportunities that are available and how the market is going about it.
Sarah
The moment? I mean, Bayes have been running competitions, looking at industrial clusters as the basis for decarbonising industry.
So industrial clusters are very, very energy-intensive areas and use a lot of energy very, very quickly.
And so the idea was to decarbonise these industrial clusters. The two industrial clusters that are going ahead are in the North-West around the Liverpool, Manchester kind of area, and the other ones in the Humber area.
These are the major areas of emissions in the UK. So what they're doing there is, they're trying to convert industry in these areas from natural gas to hydrogen.
And in the North-West scheme, they're looking at using blue hydrogen, so that would be hydrogen generated from natural gas, with the carbon dioxide buried under the Irish Sea somewhere.
And in the Humble one, they're looking at similar projects with blue hydrogen as well, and taking the carbon dioxide away and burying it under the North Sea.
So they're just ways of initiating decarbonisation. And then what we're hoping is that the decarbonisation of the rest of Britain will roll out from those sort of seed areas.
Andrew
Is hydrogen kind of one of the silver bullet technologies in terms of this idea around seasonal storage? Is being able to produce and store, then move that into the winter when we need, especially for heat, something that is capable of [delivering] the level of output that you just mentioned, 8 or 900 terawatt hours worth of energy?
Sarah
Yeah, I mean, hydrogen is really good because no matter where, wherever you're using natural gas, you can use hydrogen instead for most applications.
For example, refineries generate a lot of hydrogen and they use a lot of hydrogen in lots of heavy industry in Teesside, Humberside, for example, or are using hydrogen, yes, so wherever you can use natural gas, you can replace it with hydrogen most usually. And it's sort of notable that these two areas, this sort of North-Western/NE, have also got availability of salt cavern storage for hydrogen.
So in the North-West you've got the Cheshire area, which has got lots of salt caverns, and then in also in the Humberside area you've got salt cavern storage as well, and that seems to be the sort of most accessible.
Some form of hydrogen storage is needed in the short term, so a salt cavern takes you about 10 years to excavate, and then storing hydrogen in a salt cavern is proven technology.
I mean, there are other options being looked at, for example repurposing spent hydrocarbon fields and using them for storing hydrogen or even carbon dioxide for carbon capture, but these are slightly more tentative technologies at the moment.
We know that we can store hydrogen in salt caverns, but we're still working on whether we can store hydrogen in spent hydrocarbon fields. So it's a known technology. We know you can do it. The trouble is, it depends on you having salt cavern storage available nearby. And that's probably one of the chief regions why the North-West and the North-East have been chosen for these initial industrial cluster projects.
Andrew
So I think we should move on to maybe looking at how the UK is supporting these technologies a little bit more generally.
You know, Stephen, do you think there is the kind of right policy and frameworks in place already to be able to allow you to license this technology and have interest from developers?
Or do you think that needs a little bit more work?
Stephen
So at the moment the UK, like most countries around the world, is exploring what the regulation landscape might look like for energy storage.
There's definitely not yet a clear market or regulation around energy storage that is fit for the future.
But the UK Government and other governments do seem very aware that it's something that they do need to resolve.
I think probably the timescales we're realistically looking at are, you know, three to four years to have a much more transparent regulation framework in place, or what the incentives might be and what the payment mechanisms for these type of technologies, and you know, for different durations and it will vary from country to country.
Different countries will have different needs and their regulation framework will change or differ from each other, so you could imagine someone in France with lots of nuclear power; whether they replace it or not as it retires is going to need something different to somewhere like Poland, which has got a lot of hydrocarbon infrastructure at the moment and they are probably shifting to something that isn't neutral nuclear.
And so they will need very, very different types of energy storage and probably a regulation map around it as well.
Andrew
And Sarah, in terms of the new hydrogen producer storage operator, do you see a kind of a model that would emulate how we think about gas right now is, is that also another easy win and that we can just transfer those kind of business models over?
Sarah
Unfortunately, we don't think so because at the moment, I mean, if you look at the history of the gas networks, when it was nationalised in the 1970s or so, there was a national storage strategy for gas.
But as the gas networks have been broken up and made more commercial, that's sort of largely dropped out of favour. And for the gas system now we almost completely rely on LNG as our method of storing gas at the moment.
So, you know, whenever we need an extra supply of gas, we just order a few more boatloads of LNG and it arrives and we put it into the terminal and then it goes into the system.
But there isn't anything like that now for moving hydrogen around the world, and you can't move hydrogen like that, so I think we're going to have to be a bit more self-sufficient, and certainly in the short term with hydrogen we're going to have to generate our own hydrogen, store our own hydrogen to make sure that we can continue to provide the heat and light that we do now.
I think the government's done some great stuff on hydrogen policies and hydrogen strategies. I mean, if we look around the rest of the world, you find that the UK is actually probably one of the countries in the lead and the EU's also pretty strong as well.
But I think for storage, we still haven't really addressed it for hydrogen and I don't think the government sort of fully appreciates what an urgent need there is for hydrogen storage. Until there is some kind of hydrogen storage, then no one going to start producing it, and that's going to be a problem.
So there’s sort of a chicken-and-egg thing going on there.
You need the storage to persuade people to produce it, and then once it's gone into storage, then you need the people to use it.
So we need the government to stimulate that storage mechanism for hydrogen and come up with a decent strategy rather than allowing us to depend upon on markets and things, because I think it won't actually start unless the government has some kind of intervention there.
Stephen
Could I also pick up on that, and talking a little bit about the power grid, which is facing similar problems, we currently have a system where the network operators are really only allowed to build infrastructure if they can prove demand for it, and that's whether you're a generator or a consumer, and that means there's a sort of an inertia to the system, which shouldn't really be there, because if we're moving to an energy system that is based on renewable energy or largely based on renewable energy, with probably some nuclear and some other bits in there, we know where the resources are, we absolutely know where it's going to be generated. We know there's much more wind in Scotland and offshore and we know there's much more solar in the South, where the ability to generate is very well understood by the market and there really should be a system designer that starts putting in place what the system looks like, knowing where the generation is going to come from and how you might move that about and it very much needs a system designer, but there's no reason not to do it, because it's clear where the generation is going to come from and I suspect that is somewhat similar to the hydrogen network, even though I know much less about it.
Where it's get the hydrogen is going to likely to be where it is generated, it's likely to come from offshore type facilities.
I would have thought on the whole, so you also know then where you're not going to once you've created the hydrogen from offshore wind.
You're going to want to store it locally to that. So I think again, that there's a system design case across the network that is really needed and there's no reason not to do it. And it may not be 100% right, but you'll probably get 80% right, even from today.
And you can't build it all on day one. So you know what you build today is almost certainly going to be needed, and you'll have to evolve your system design over the next two or three decades. But there's not going to be a lot of waste if you design a system, in my opinion.
Sarah
Yeah, I agree with you. I think it's no regrets to actually get some national policy on storage.
It's absolutely no, no regrets. No matter what solution we have or whether it's electrification or we go for hydrogen, we're going to need some kind of storage.
And the other thing I was going to say is that we're sort of working with the gas networks to actually work out how you can move hydrogen through the system.
So with the distribution networks, the lower pressure, it's probably going to be OK, but with the high pressure national system, there's still some work to be done on whether the hydrogen is fully compatible with that.
I'm sure we can make it so, but there's some work to be done and so at the moment we don't even have a national mechanism for moving hydrogen around, so that's another reason for sort of starting with the industrial clusters and building out regionally from that, rather than going for a national solution straight away.
Well, I agree with you, Steve, and I think a strategic storage strategy is something there's definitely no regret, or low regrets, and that the government should be thinking about doing that as soon as possible because we haven't got long. It's 2022 now. We've only got until 2025. We need to get this all sorted by then. It takes 10 years to develop a salt cavern and if you've got hundreds of salt caverns to develop or hundreds of other things to develop, it's like we're running out of time.
It's really, really urgent and time that we need to get cracking with this.
Viran
How far advanced our regulatory frameworks will be so far away from it, so that it's doing a blockage in the way of progress.
Sarah
What, for hydrogen?
Viran
For hydrogen and, yes, partly hydro, I suppose, but hydrogen mainly.
Sarah
Well, for hydrogen, the government wants to make a decision in 2026 on whether we're going to convert the gas networks to hydrogen. So basically replace the natural gas with low-carbon hydrogen.
So at the moment we're working with industry, trying to get together all the evidence that we need to demonstrate it can be done safely and effectively, and once we get that decision in 2026, then it's going to be all systems go to actually go about converting the whole country and industry and domestic and everything to hydrogen.
Or maybe some of it could be electrified; I don't know.
I mean, there's going to be all sorts of solutions in there. There's no one solution that fits them all. So 2026 is our target date for that decision from the government and that's really, really important to the future of the gas system.
Stephen
What you tend to find is that the clarity of the regulatory framework really drives the decision to invest or not.
And so if 2026 is when that's announced, then for those who are mindful to invest in this sort of infrastructure, there's probably at least two years of building their business cases and things like that, and then there's an inertia to build in the planning process and it is just going to take a huge amount of time. So the sooner you get those regulatory frameworks in place, the better chance you have of hitting 2050 or the less you have to compress things during the relevant time frames.
Andrew
Here, and I'm going to throw to you. Do you see appetite in the market to invest in technologies like this? I mean, I know you work with a lot of developers potentially, and you were mentioning co-location. Is that maybe where you're seeing a lot of interest in?
Viran
We tend to work with, sort of on the financing side, private equity funds and those are focusing increasingly on renewable energy assets because they're stable and they're widely proven.
So anything like a proper regulatory framework would encourage them to invest and they're really looking at safe ways to deploy capital.
Andrew
In which case what I'm hearing is that joined-up thinking is increasingly important if we want to get some money moving around to back some of these projects.
Stephen
So I think there's a lack of appreciation on also on the sheer scale of the amount of storage that is likely to be needed across the world. So at the moment the total amount of energy storage we have in the world is approaching 200 gigawatts.
Consultancies like McKinsey or the long duration Energy Storage Council are talking about 2 terawatts of energy storage, so that's 10 times.
It seems the total amount of energy storage that exists today is going to be needed by 2040-2050.
I mean different people give different dates and this energy storage we have got today, 95% of it is pumped hydro, batteries make up 2-3% and that energy storage has been built over the last 100 years.
So what we're talking about by 2040 is every 18 months to two years is replicating the total world energy storage that has been built over the last 100 years. So it's just a phenomenal challenge.
The longer you leave it, the harder it becomes to deliver it and that's one of the reasons that we went down the route of a licensing model, just because of the sheer scale of the rollout.
You need to do that, you know. No company can do it.
You need hundreds of companies trying to achieve the goal and that's why we sort of opted for a licensing model, but the sheer scale is just phenomenal and you actually need to do everything, you know, thinking that hydrogen might be the solution.
Or our high-density hydro or batteries might be the solution. The answer is you just need it all and then you might have a chance of achieving what the world wants to achieve, decarbonisation by 2050.
Andrew
No time like the present, I'm hearing.
Sarah
Yeah, I'm like Steven. I'm really impatient. I think we are running out.
Over time we definitely need energy storage at scale, and I think that hydrogen storage at scale is a no regrets solution as well.
We need to think about a replacement for importing LNG because, you know, that's all go to storage.
Now, when we have got a problem we just get another boatload. We can't do that with hydrogen.
People are talking about maybe shipping hydrogen around the world in the form of ammonia, but well, ammonia is nasty stuff. And to get the hydrogen back out, the ammonia is actually another very energy-intensive solution, so I'm yet to be persuaded that that is a solution.
I think we need geological storage at scale and agree with Stephen on that.
And finally, I think we need government support for hydrogen storage in particular right now just to get it going.
It's definitely no regrets.
We need it no matter what solutions we come up with and we need a mix of everything.
Bit of everything is what we need. No one has got the whole truth.
Andrew
I'm going to let Viran have the last word. What would you like to see done to kind of accelerate some of these technologies either from the finance point of view or the policy point of view?
What do we need?
Viran
I think from the government point of view, we need incentives for the investment and hopefully there's a budget, emergency budget, coming up.
So maybe we can wish for what Sarah is asking for in that, but probably not this early, but really we need encouragement to invest because of that, the scale that's needed by 2040-2050.
And at the moment we do have tax relief, some incentives, you know, so credits for research and development, but we need something more substantial, particularly the hydrogen industry.
Andrew
Our time, too, is running short on this installment of the MW hour, so I'll draw to a close.
That brings us to the end of the third installment of the Mega Hour. Thank you once again to my co-host Viran, as well as Stephen and Sarah.
Thanks also to you for listening. You can let us know your thoughts through our social media channels or by emailing outloud@energyvoice.com.
And every week, the Energy Voice team get together to highlight important stories from the world of energy in our regular podcast episodes. If you've not already done so, please do subscribe free to Energy Voice Out Loud on Apple Podcasts, Spotify or wherever you get your podcasts, and listen out for more of my episodes of the MW hour coming your way very soon.
I'm Andrew Dykes.
Thanks for listening.