Natural gas distribution will remain central to National Grid PLC's U.S. operations even as policy headwinds persist in the U.S. Northeast and the multinational utility company shifts toward electric transmission in its U.K. business.

The U.S. gas grid complements the company's increased focus on developing networks to support offshore wind power and green hydrogen infrastructure, according to Ben Wilson, chief strategy and external affairs officer. Wilson reaffirmed the company's commitment to distributing gas in Massachusetts and New York at the S&P Global Market Intelligence Annual Power and Gas M&A Symposium in New York City on March 30.

The pronouncement came just days after National Grid announced it would sell a 60% equity interest in its U.K. gas transmission and metering business for £4.2 billion. The company exited its U.K. local gas distribution business in 2019 and purchased the country's largest power distribution company for £14.4 billion in 2021.

During that time, a movement to electrify buildings took root in Massachusetts and New York, threatening the prospects for National Grid's gas distribution business.

Asked about the difference in U.K. and U.S. strategies, Wilson said the American gas networks will be essential infrastructure for many decades, given the volume of energy that pipelines deliver during cold periods in the Northeast.

"We're very comfortable retaining the gas networks in New York and Massachusetts," Wilson said. "We see them as core."

Future in low-carbon fuels

According to Wilson, National Grid has endeavored to transition these networks to carry low-carbon hydrogen and renewable natural gas, or RNG, an alternative processed from methane waste at farms, landfills and other sources. The company plans to use offshore wind power during off-peak times to produce zero-carbon green hydrogen, which it will blend into both gas-fired turbines and its Brooklyn Union Gas Co. and KeySpan Gas East Corp. distribution systems in New York City, Wilson said.

In December 2021, National Grid announced the HyGrid Project, which will expand a facility in Long Island, N.Y., designed to produce green hydrogen for the vehicle market, to blend the fuel into its distribution system. National Grid also secured funding for its hydrogen Energy Transfer System project through the most recent rate case for its upstate subsidiary, Niagara Mohawk Power Corp.

Wilson said RNG and hydrogen distribution will give policymakers an alternative to building electrification, a major priority in New York and a growing focus in Massachusetts as both states implement climate laws. Wilson acknowledged that there will be "a lot of electrification" but said National Grid analysis indicated that 40% of New York's housing stock will be difficult to convert to electric heating.

Hydrogen production can also help policymakers avoid overbuilding infrastructure, Wilson said. The fuel, produced by splitting water into hydrogen and oxygen using zero-carbon energy, allows generators to store renewable electric power in gaseous form over long durations.

Hydrogen supports offshore wind network

In the U.K.'s North Sea, National Grid is focused on developing transmission wires, a new generation of interconnectors and other network infrastructure to support the offshore wind industry, Wilson said. "We see our positioning long term as in the wires. That's what we're interested in."

That model explained why National Grid's joint venture with RWE Renewables GmbH, named Community Offshore Wind, is vertically integrated to include developing offshore wind resources, Wilson said, adding that power generation opens the door to developing the wires business and other common-use infrastructure. Among the infrastructure are so-called energy islands that would include offshore hydrogen production platforms.

Hydrogen project investments benefit both sides of the business, according to Wilson. In addition to providing a pathway for decarbonizing gas distribution systems, green hydrogen production can help improve offshore wind project economics, Wilson said. Community Offshore Wind secured the right to develop a 125,964-acre parcel off New York's coast in a U.S. offshore energy lease sale in February.

"So, we see the North Sea evolving into an interconnected offshore grid and that's a core business for us," Wilson said. "We think the Northeast U.S. will go the same way."

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