Industry split as gas networks leave ENA

Yesterday the Energy Networks Association announced that its gas network member companies had decided to leave at the end of 2024. This may be seen as the moment where the energy industry began to split?

The ENA's roots came from privatisation in 1990 and the separation of supply of energy from the networks that deliver it. Two trade associations formed. The Association of Energy Producers went on to become Energy UK whose core membership was generation and supply companies but has broadened to include much of the industry, including supply chain companies like 西门子能源 . Meanwhile, both gas and electricity network companies came together in the Energy Networks Association (ENA).

There have been many reasons for gas and electricity networks to work together. They own and manage critical national infrastructure, they are regulated in a similar way, they provide a monopoly service to homes and businesses. The ENA has for decades done great work on safety across the industry.

There is increasing need to manage the GB energy system in a joined up way, recognising that natural gas often sets the electricity price and delivers energy storage and dispatchable power. The new Future System Operator will manage both electricity and gas networks and CO2 and hydrogen too.

However decarbonisation means the futures for electricity and gas networks are headed in different directions.

Demand for electricity will at least double as heat and transport switch to clean electricity, increasingly made from renewable generation. There needs to be significant extra investment in electricity networks, both transmission and distribution.

Whereas a net zero world cannot burn much, if any, fossil natural gas. Much of the gas network will need to be decommissioned in an orderly way.

The transition could be messy. As customers electrify, there will be fewer and fewer customers paying to support GB's extensive gas network that today reaches 85% of homes and businesses. This can't be dodged, it needs to be managed well to protect vulnerable customers.

Some parts of the gas network may be repurposed to carry 100% hydrogen, but far from all of it. The East Coast Hydrogen study found that around 3/4 of its proposed hydrogen backbone network to connect industries would be new pipes, because the existing ones would still be needed at that stage for natural gas.

The people who run gas and electricity networks have spent careers bringing energy to society, which is a noble thing. Decarbonisation is an easy concept if you work in electricity but may look like an existential threat if you work in gas. The good people working in the gas industry have not changed, just because our view of the product has. The leadership challenge is perhaps greater in gas; To help people in the gas industry embrace net zero and enthusiastically do the difficult work to help our country decarbonise.

As an outsider I can see how the ENA would find it hard to balance the interests of its two main constituencies. Maybe this departure was inevitable? Let's hope the gas network companies stay classy and that whatever group they form next takes a positive view of the energy transition.

This is also a moment where other parts of the industry could realign. The trade association landscape we have today grew in a different era and there are opportunities for consolidation and a unified voice for Britain's vital energy industry.