Biomethane is ideal for greening gas. Hydrogen is also made more expensive by European regulation, says head of gas association

The development of the gas sector in the Czech Republic faces key challenges – many see decarbonisation simply as a move away from gas, while gas industry representatives see it as the gradual rise of renewable gases. In the second part of our interview with Josef Kotrba, head of the Czech Gas Association, you will find out how he views the future of natural gas, the role of hydrogen and the transition to renewable alternatives.

We also discussed why a long-term strategy is crucial for the sector’s stability and how a realistic approach by politicians can ensure an efficient transformation without excessive reliance on subsidies.

In the first part of the interview, we outlined the European Union’s future plans for renewable gases. How realistic do you consider the possibility that natural gas will be replaced by renewable gases?

I see the greatest potential in biomethane. Yes, it is still more expensive than natural gas, but we are no longer talking about the multiples we saw, for example, in electricity during the solar boom of 2009–2010. The price is now roughly double, which is relatively reasonable.

An interesting point will come when landfill disposal of municipal waste is restricted, or rather banned. Landfilling is still relatively cheap here, but once waste disposal costs rise, the cost of producing biomethane from waste will fall, because waste producers will effectively contribute to its production – instead of paying a fee to the landfill owner for waste disposal, they will pay the operator of the biomethane plant.

Biomethane production is technologically well established and, in terms of its use in existing gas infrastructure, it is an ideal option. Biomethane is chemically almost identical to natural gas (which consists of methane with small impurities), so storage in underground storage facilities, transmission, distributionand use all remain the same. It is already present in the Czech gas grid, albeit to a limited extent, and in Denmark biomethane’s share of the grid is even approaching 40%. This could make biomethane the key and fastest route to greening gas.

We have to ask what role you see for hydrogen in the future?

Hydrogen is another option, especially during periods of surplus energy from renewable sources, for example when the sun is shining and the wind is blowing.

However, its production is currently too expensive. Projects I have seen – for example in the Netherlands, where they have offshore wind farms and cheaper renewable sources than we do – show that hydrogen costs around 10–12 EUR/kg. That corresponds to approximately 300 EUR/MWh when used as a gas and 600 EUR/MWh if it is used to generate electricity. That is not a price that can compete in the market. But over time, there is a fair chance that prices will come down.

What do you attribute hydrogen’s high price to?

Europe has partly complicated the situation for itself. The definition of renewable hydrogen under the RFNBO (Renewable Fuels of Non-Biological Origin) rules is extremely restrictive. It requires hydrogen to be produced only from new renewable sources, rather than from surplus existing electricity.

The purpose of the legislation was to ensure that electrolysers do not burden existing renewable energy sources. The principle of additionality was therefore introduced, requiring newly built renewable sources to be used for renewable hydrogen production. Discussions are currently under way on easing, or at least postponing, some of these conditions.

Temporal correlation is a similar complication.

What does the principle of temporal correlation mean?

The principle of temporal correlation stipulates that the renewable electricity used to produce hydrogen must be generated at the same time as it is consumed by the electrolyser. The aim is to ensure that energy generated from non-renewable sources is not counted among the “green electrons”. This definition was created to ensure that renewable hydrogen genuinely meets the strictest environmental standards.

However, if the rules were less stringent – meaning that the planned move to hourly temporal correlation were abandoned and a postponement or complete abolition of the application of the temporary additionality exemption for electrolysers commissioned by 2008 were secured – the resulting price of hydrogen under Czech conditions could be significantly lower. Even so, I place greater hopes for developing the hydrogen market in new technologies for producing low-carbon hydrogen, which could initially be much cheaper. Timely adoption of an EU-level methodology certifying production conditions and the emissions threshold for low-carbon hydrogen will be important here.

How do you see the path towards gradually replacing natural gas with renewable gases, such as hydrogen?

I see it as a gradual process. Blending is currently being discussed – that is, mixing hydrogen into natural gas at a ratio of 2–5%. Even that is more a matter of a longer time horizon than a short-term prospect. Implementing blending depends on the price and availability of hydrogen. If hydrogen remains expensive, its use will probably be limited to industrial applications. However, when there is surplus electricity generation from photovoltaics or other renewable sources, this surplus could be used to produce hydrogen for injection into the gas grid – initially at a low concentration. Blending means that the grid contains a mixture of methane and hydrogen. Technically, even a blend containing 20% hydrogen is not a problem.

How would you describe the current state of development of hydrogen technologies?

We are currently at the stage of verifying technological feasibility and costs. Production already works technologically, but it remains expensive. For hydrogen to replace 20–30% of natural gas, or even all of it, its current cost is too high. But the process must begin with testing, for example at so-called hydrogen test sites.

These are locations where it is tested whether an entire local distribution system, domestic piping and appliances can operate without problems with a 10–20% hydrogen blend. These experiments are crucial for the future deployment of this technology. In the Czech Republic, GasNet is conducting such a test operation in Hranice near Aš.

What about hydrogen safety? Are any additional protective measures needed?

When hydrogen blending began to be discussed, conservative concerns emerged that it was dangerous – that hydrogen is explosive, has a small molecule and leaks easily. History, however, shows that such concerns were exaggerated. I remember the days when town gas, which contained up to 50% hydrogen, was still used for heating. Town gas was still predominant throughout the Czech Republic in the 1980s. A similar gas was used even longer in the Sokolov region. Yet nothing serious happened, even given the quality of the networks at the time, which was very poor compared with today.

To sum up, we could gradually move towards blending hydrogen and natural gas, and theoretically even to fully hydrogen systems. Or do you still see that as something very uncertain and distant?

The obstacles lie more in the possibilities for producing green hydrogen and in its price. At present, I therefore cannot say how or when this could become a reality. Full conversion to pure hydrogen would be very expensive – mainly because of the cost of green hydrogen. It would also require changes to part of the infrastructure and to appliances.

Blending – adding a smaller amount of hydrogen to natural gas – is, by contrast, a relatively simple step that already poses no technological problem today. It is a logical and almost self-evident direction of development. But switching to 100% hydrogen? That remains quite distant for now.

What would such a conversion require?

Full conversion to hydrogen would entail major interventions. Households would have to replace their boilers and other equipment. Existing natural gas storage facilities are not automatically suitable for hydrogen storage – that is a major technical difference. The situation is somewhat better for transmission and distribution. Parts of the transmission and distribution system already exist that are hydrogen-ready, meaning they are prepared to transport pure hydrogen. With an evolutionary approach combining blending and gradual upgrades of the system during replacement, this need not be financially insurmountable. But I am talking about the system, not the price of hydrogen itself.

What would be the specific challenges in households and in transmission?

For households, it would be more complicated because most appliances and equipment that currently run on natural gas would need to be replaced. In transmission and distribution, by contrast, preparations are already under way – some pipelines are suitable, or can be adapted relatively easily. The main problems are more likely to be compressor stations and other technical nodes.

And what about the price?

Price is key. Today, full conversion to hydrogen is economically unaffordable. If hydrogen production and storage technologies became significantly cheaper, it could be realistic. In that case, manufacturers would probably start supplying hydrogen-ready appliances and equipment – there is no technological problem with that. Just as natural gas power plants that are already hydrogen-ready are commonly supplied today, household appliances such as hydrogen-compatible cookers could also emerge. That is still a matter for the distant future, however.

How is the Czech Republic doing in the context of renewable gases, such as biomethane or hydrogen blending? Do we have any specific characteristics that we should focus on?

Unfortunately, I would say our particular characteristic is that we have fallen asleep in some areas. On the other hand, we are relatively advanced in producing biogas and electricity from biogas. However, when it comes to converting biogas to biomethane, we are lagging behind – significantly. If we look, for example, at Germany, which has conditions similar to ours, its biomethane production per capita is many times higher.

Biomethane production is not a costly technology, especially compared with other technologies that receive support. Moreover, it has significant advantages over traditional biogas plants. To this day, biogas plants mainly generate in baseload mode – that is, at constant output, which was often subsidised even when it was not needed – for example in summer, at times of peak sunshine, when maximum volumes of electricity from photovoltaics are being supplied to the grid. Much is written about negative energy prices or the curtailment of energy during periods of peak PV output – yet even at such times we subsidise the combustion of biogas... That is deeply irrational.

However, if you convert a plant to biomethane production, you produce biomethane that can be sent through the gas system to storage facilities and used in winter, when heat demand is highest. This approach is far more efficient and flexible – it allows gas to be used where and when it is actually needed.

What is preventing a wider shift to biomethane?

One of the main obstacles is that current subsidies support biogas plants operating on a simple model – they produce a certain amount of energy and receive money for it. And the state supports biomethane less than biogas. Conversion to biomethane also requires more work and effort. Biogas plant owners therefore have little incentive to convert. Although it is much more beneficial for the economy and the state, appropriate support has not been put in place. Unfortunately, this still persists.

What are the prospects for the gas sector going forward? How do you assess the National Energy and Climate Plan?

I see some positive progress, but I remain cautious. The National Energy and Climate Plan envisages expanded gas-fired electricity generation, a shift by heating plants to gas and support for biomethane. All of this is in line with our positions. But it depends on how and to what extent these measures are implemented. Support for CHP should hopefully get under way for the heating sector.

If I am not mistaken, until recently it was possible to obtain operating support for modernising biogas plants through auctions. However, this has not continued. That is not an entirely positive step, is it?

But a new support programme has been notified. It depends on how generous this support will be and whether it can compete with existing support for biogas. An action plan to support biomethane is currently being prepared at the Ministry of the Environment, and I hope this plan will improve the situation somewhat. However, views differ on its specific form and scope.

Do you think this could help decarbonise the gas sector? And what would the gas sector itself value most to move forward, particularly in the context of the transition from coal to gas?

There are two key directions that would help.

The first is support for the development of renewable gases such as biomethane and hydrogen – not only financial support, but also in terms of legislation. The fossil component of gas infrastructure needs to be gradually reduced. Biomethane is key in this respect, because its integration into existing systems is technologically simple and beneficial.

The second direction is caution when replacing gas with other sources. It is important for replacement to take place only when there is a genuine alternative that is affordable and technologically feasible. Hasty changes without an adequate replacement could cause problems both for the economy and for energy supply.

We have had three exceptionally hectic years full of price turbulence and political decisions from the European Union. What do you think could be key to stabilising the sector, particularly looking ahead to 2025?

The gas industry is an extremely long-term business. Assets in this sector, such as pipelines and storage facilities, have lifetimes of many decades. Equipment is, of course, continuously modernised, but core infrastructure remains the same for a generation. For this sector to operate efficiently, it above all needs a long-term and stable vision of the direction it should take and what is expected of it.

At present, however, it all resembles a kaleidoscope. Every year, trends seem to change, and political ambitions often destabilise the sector more than actual market conditions do.

Are you suggesting that political strategies should be more realistic and consistent?

Absolutely. The goals set should not only be long-term, but also realistic. When you create an unrealistic plan, everyone knows it cannot be met. That then leads to uncertainty and mistrust.

Let us look, for example, at the current situation in energy:

• Solar developers complain that electricity prices are too low in summer, making it unprofitable for them to build new solar plants unless they receive operating support.
• Coal-fired power plants can hardly be operated without subsidies any more, so coal barons are seeking support.
• Gas-fired generation is crucial for covering peaks, but no one knows how many hours a year these facilities will actually operate or how long they will be allowed to operate because of decarbonisation targets. As a result, they too are demanding subsidies.
• Heat pumps for households? Again, subsidies are necessary.

It appears that there is currently almost no segment of the energy sector that can operate without support. A system set up this way is unsustainable and unaffordable in the long term. Stability must be introduced and a clear anchor found that will anchor the sector and enable its development without constant reliance on subsidies.