Ofgem, the UK energy regulator, has awarded National Grid’s gas distribution arm together with DNV GL a £4.8 million, three-year contract to improve the way gas bills are calculated. The new billing method seeks to specifically assign the energy content of gas, rather than using the present flow-weighted average calorific value.
By doing so, the two partners aim to unlock the full potential of the UK gas network to distribute renewable and low carbon alternative gases.
“We believe gas has a key role to play as an affordable and cleaner energy source. However, times have changed and renewable gases are increasingly being introduced into the grid, requiring more accurate billing methodologies,” commented DNV GL’s regional manager UK & Ireland, Hari Vamadevan.
The project with National Grid, in his view, will give “new insights on the financial consequences of new billing methodologies for gas consumers, and will help give confidence in gas pricing based on energy content.”
David Parkin, director of Network Strategy at National Grid Gas Distribution, added: “OFGEM’s decision to award National Grid £4.8 million for this programme reflects how serious the UK’s gas grids are about delivering low carbon heat, as well as delivering a sustainable gas future which works for consumers as well.”
The United Kingdom has been dependent on North Sea gas since the 1970s, with regulations and billing regimes designed for this source of gas. However, the supply market is changing rapidly with LNG imports making up 18% of supply already back in 2015.
By 2030, hydrogen, biomethane and bio-substitute natural gas from a large number of sources are estimated to account for up to 10% of domestic gas usage – hence the UK gas distribution network has to be able to accommodate the “differing constitution”.