50 shades of… green gas markets
FSR Topic of the Month
by Ilaria Conti (Head of FSR Gas)
To blend, or not to blend, that is the question
We discussed how decarbonised/renewable or green gases are entering the market and will need to be classified according to a fair taxonomy. We also convened that, in order to make these new gases “tradable”, some degree of homogeneity is required.
In the case of gas, there’s no need for market products to be 100% homogeneous: different types of gases can be traded as one if they are largely homogeneous and able to use the same infrastructure. That’s the very well-known case of L-gas and H-gas, whose difference in calorific value doesn’t prevent them to be blended and traded as gas of the same quality.
So, in fact, the question “How many gas markets?” can actually be converted into “How many types of infrastructure are needed?” to facilitate the development of decarbonised gases?
Can the current gas infrastructure backbone be repurposed to this scope or is there a need to build parallel routes?
In our recent online debate on “Is gas infrastructure ready for sector coupling?”, the discussion focused on the relation between the existing infrastructure and the new gases, with a special attention to biogas/biomethane and hydrogen.
The panel concluded that there is certainly a role for existing gas infrastructure, although if the long-term plan includes moving towards a 100% hydrogen network, new investments in the network will soon be needed.
During the same debate, taking the final consumers ’perspective, one of the speakers postulated the distinction between, on one side, households who shall be mainly using biomethane and the existing network and, on the other side, large industrial consumers making a wider use of hydrogen and its dedicated infrastructure.
The FSR Taxonomy distinguishes gases (including Natural gas) which can use the existing pipelines, compressors, storage sites and end users appliances – hence they can be indistinctively mixed among themselves, from gases which cannot be transported in their pure form through the existing infrastructure, namely hydrogen.
While blending hydrogen with natural gas (or a mixture including also decarbonised gases) is technically feasible within certain limits, it seems to have a limited scope beyond low percentages.
Blending hydrogen with other gases is therefore certainly a helpful option, but only as ad interim solution – as it is not an efficient process. In addition to the efforts and costs for adjusting, testing and monitoring the infrastructure in order to make it suitable for blending, it should be taken into account that the resulting gas delivered has a lower calorific value than pure hydrogen.
Therefore, as their chemical composition is different and, therefore, it is unlikely that they will be used interchangeably in all applications, it seems more efficient to envisage separate markets for decarbonised gas and hydrogen.
As we concluded in our recent workshop, Europe’s decarbonised future is likely to be based on three main energy vectors: electricity, decarbonised gas and hydrogen.
However, even if decarbonised gas and hydrogen (and electricity) will be traded in separate markets, these markets will not be totally disjoint. On the contrary, the greater and greater interlink between different sectors (see FSR Sector coupling platform) will eventually lead to a “multi-energy system” where several energy carriers or vectors will inevitably coexist and interact more closely, by enabling arbitrage opportunities.
Already at this stage, there are instruments and processes which in a way “bridge” electricity and gas, energy and heating, gas and transport (i.e. power to gas, steam reforming/pyrolysis, bunkering, etc) and which are the object of growing research and commercial interest.