Gas network companies across the UK and Ireland have told the Energy Networks Association (ENA) they intend to quit the trade body at the end of next year, sparking speculation around the prospect of a major split within the energy sector over the preferred approach to delivering on net zero goals.
The ENA confirmed yesterday its gas network members had undertaken a review of their membership of the trade body and decided that “in view of the changing energy policy landscape, their interests are best served by leaving ENA at the end of 2024”.
The companies set to leave the ENA at the end of next year have been named as Cadent, Northern Gas Networks, Wales & West Utilities, SGN, and National Gas, although all plan to remain as full members of the association in the near term, it said.
It remains to be seen whether the gas network firms leaving the ENA would seek to join an alternative industry association to represent their views and interests, or whether they could seek to establish a new trade association in future.
In a joint statement, the firms thanked the ENA for its efforts in representing their interests over the years, but said there was now a need to “focus our delivery activity more clearly” outside the association.
“As organisations at the core of the energy transition, we understand that delivering net zero means change for virtually every energy user across the country,” the statement read. “To meet this challenge we must evolve within the changing energy landscape and, to best represent national interests, as gas networks we need to focus our delivery activity more clearly.”
The statement also praised the ENA’s work advancing “the discussion about the role of biomethane and hydrogen in the decarbonisation of gas”, but warned that “the size and scale of the energy transition now requires us to move away from the status quo so that we can focus our transformation activity to expediate the transition to net zero for our customers”.
Established in 2003, the ENA represents companies responsible for the electricity wires, gas pipes, and wider energy systems across the UK and Ireland, and counts every major electricity and gas network operator in both countries as members.
Its members also include a host of independent operators, as well as National Grid ESO, which operates the electricity system in Great Britain, and Britain’s gas system operator National Grid Gas, while affiliate members include major energy users such as Heathrow Airport and Network Rail.
No precise reasons were given for the exodus from the ENA, but its chief executive Lawrence Slade stressed that major changes were currently underway in the UK and Ireland’s energy landscape as the country seeks to deliver on its statutory net zero goals.
“Twenty years after the association was established, the energy and political landscape has changed massively and continues to change,” he said. “Following the decision of the gas networks and given the scale and importance of net zero, we will now undertake a strategic review to ensure that our team, who are at the heart of the organisation, have the best support and structure to help deliver the net zero future for the country.”
The announcement has prompted speculation as to the precise reason for the split in ENA membership between gas and electricity networks firms, given it comes in the midst of an intense policy debate around how to decarbonise domestic heating.
In recent years, policy support for electric-powered heat pumps has increased with the government signalling that it regards the technology as the primary means for replacing fossil gas heating in UK homes. Such an approach presents an existential challenge for gas network operators, while at the same time providing a major commercial opportunity for electricity network operators.
The government is considering allowing hydrogen to be injected into the gas network so as to provide an alternative means of decarbonising heating.
But earlier this month, Energy Efficiency and Green Finance Minister Lord Callanan told BusinessGreen hydrogen would only have a “very small role, if at all” in heating UK homes. Challenges surrounding hydrogen production capacity, as well as the efficiency of using hydrogen to heat homes compared to electric-powered heat pumps, meant pumping hydrogen into people’s homes would prove “very problematical”, he said.
Meanwhile, the government continues to face significant local opposition to its plan to trial hydrogen heating across a number of homes in Redcar in North East England, as part of a project led by several ENA members, including Cadent and Northern Gas Networks. A decision over whether to go ahead with the trial is expected from the government before Christmas.
Proponents argue using hydrogen as a low carbon replacement for fossil gas could prove less disruptive for households than getting a heat pump fitted, as it would allow operators to utilise some of the existing gas network infrastructure. But such claims are fiercely disputed by critics who argue hydrogen heating poses a far bigger technical and financial challenge than switching to electric heating systems, which are already suitable for most properties.
Following yesterday’s confirmation of membership changes, the ENA’s board said it would take the opportunity to review its strategy while “recognising ENA’s central role in supporting its members to enable the energy transition”.
The planned review will also look at how best the ENA and its members should interact with the new Future System Operator (FSO) that is tasked with preparing the UK for a decarbonised power grid, it said.
“I’m confident that by working with our gas and electricity colleagues, and the great ENA staff team, to manage this transition carefully, we will deliver best value for all our members, stakeholders and customers involved now and in the future,” said Slade.
Phil Jones, chairman of the ENA, insisted yesterday’s announcement would not change the net zero or climate commitments of the companies remaining in the trade association, adding that the industry body’s operations would continue unchanged for the time being.
“We firmly believe that ENA is best placed to support us working together to enable net zero and tackle the challenges that lie ahead,” he said. “That’s what ENA has enabled us to do as a sector consistently: deliver better outcomes for our customers across the board.
“As we navigate the transition into the next chapter in the organisation’s history, I am confident the dedicated team at ENA will continue to support the networks to deliver for customers as we play our part in enabling net zero for the country.”