Northern Gas Networks (NGN) has launched a green transition bond, giving the public the opportunity to invest in a hydrogen-ready network for the first time.
NGN has teamed up with Abundance, the UK’s leading ethical investment crowdfunding platform, to launch the bond which will help fund the upgrade of pipes to prepare the gas distribution network to transport hydrogen.
It’s the first time a regulated energy distributor has offered a green transition bond exclusively for members of the public, allowing everyone to participate in the transition to net zero emissions.
The investment, in Northern Gas Networks’ Finance Plc, seeks to raise £1 million through a lower-risk, long term investment with returns of 1.6 per cent a year over a 10-year term. As with all Abundance products, the minimum investment is just £5.
Unlike the natural gas currently transported through the UK’s gas network, hydrogen produces no carbon when used, making it a viable fuel for homes and industry to meet the government’s target of net zero carbon emissions by 2050.
As part of NGN’s plans to transition its network to net zero, three quarters of the region’s pipework has already been upgraded from metallic mains to polyethylene and the investment will help replace a further 2,900 km by 2026. This brings two major carbon cutting benefits: it creates a hydrogen-ready gas network; and will make an impact on carbon targets by reducing emissions from the day to day operation of the network.
A third of UK carbon emissions come from heating our homes and businesses, posing a big challenge for decarbonisation. With eight out of 10 UK homes currently heated with natural gas, the option of piping in clean-burning hydrogen as an alternative fuel offers exciting potential for the transition to a low carbon energy future.
Mark Horsley, CEO, Northern Gas Networks, said: “The UK energy sector is facing an exciting transition. Whilst focus is often placed on how energy production must change, the networks that distribute our energy must change too. At NGN, we’re delivering on a clear plan for a Net Zero carbon network by 2050. Working in collaboration with our regulator, Ofgem, central government and the energy industry across the UK, our research is proving that hydrogen offers a safe, affordable and deliverable Net Zero solution, and with this investment we want our customers to be involved in this important transition. Repurposing the gas network to transport hydrogen is likely to be the least disruptive and most cost effective solution to zero carbon home heating for the vast majority of the UK homes.”
NGN delivers gas to 2.7 million homes and businesses in the North East, Northern Cumbria and much of Yorkshire and Humber.
From late spring 2021, NGN will be distributing a blend of hydrogen and natural gas to 670 homes near Gateshead, subject to approval from the Health and Safety Executive. Later in the year, they are planning their first live trials of 100 per cent hydrogen on an unoccupied section of network.
NGN is offering this investment in its net zero vision to the public. As the first regulated energy distribution company to launch a green bond exclusively for the public, the company wants to let everyone participate in the green transition.
Gareth Mills, NGN’s Director of Regulation and Strategic Planning added: “We want to give the communities we serve the opportunity to help with this transition by investing directly into our pipe replacement programme. It provides a means by which we can engage with each other on the energy transition, build trust and create a roadmap to Net Zero that feels like a just transition for all.”
Bruce Davis, co-founder and Managing Director, Abundance, said: “Abundance’s customers want to back a range of solutions to deliver a Net Zero future, and this is the first time we’ve been able to offer them something that directly tackles heating in the home. It’s also the first time we’ve worked with a major utility which has chosen crowdfunding to enable their customers to participate directly in the Net Zero transition.
“The development of hydrogen, alongside other technologies like heat pumps, offers a practical solution that will make a real difference to cutting emissions. The UK needs urgent investment in the infrastructure that can deliver this if we are going to meet our targets to decarbonise how we heat our homes.”
To find out more and download an offer document, please visit www.abundanceinvestment.com/northern-gas-networks.