Hydrogen
Low carbon hydrogen is our new super-fuel, a source of clean energy which we can produce domestically using British skills, expertise, and natural resources.
The publication of the UK’s first Hydrogen Strategy in August 2021 has further emphasised that hydrogen will be an essential part of the UK’s future energy independence, security, and our legally binding commitment to achieve net zero by 2050. In the British Energy Security Strategy, we doubled our ambition from 5 gigawatts (GW) to up to 10GW of low carbon hydrogen production capacity by 2030, subject to affordability and value for money, with at least half of this coming from electrolytic hydrogen.
Opportunities to invest in now
Opportunity highlights
In April 2022 BEIS published the UK Hydrogen Investor Roadmap to support investor engagement. The Roadmap showcases the UK as a world-leading investment destination, highlighting our first-class business environment, global reputation for advanced energy infrastructure and expertise, the world’s largest offshore wind market and decades of experience in production, distribution, storage, use and regulation of gas.
The UK also has favourable geology for large-scale hydrogen storage in salt caverns and disused oil and gas fields under the North Sea. The UK’s mature oil and gas industry will play a central role in delivering carbon capture, utilisation and storage (CCUS) enabled hydrogen. The North Sea Transition Deal is expected to unlock investment, secure up to 40,000 jobs, reduce emissions by up to 60 million metric tons and promote domestic supply chains. The deal commits the oil and gas industry to deliver investment of up to £14 to 16 billion by 2030 in new energy technologies, including electrolytic and CCUS-enabled hydrogen production capacity.
UK hydrogen demand is estimated to reach 80 to 140 terawatt-hours in 2035. The increase in UK hydrogen production ambition, with a greater focus on electrolytic hydrogen production, has opened potential opportunities to export hydrogen from the UK at scale, particularly to continental Europe where we see increasing hydrogen demand alongside established energy trading and interconnection with the UK.
Commercial maturity
The UK has one of the most mature hydrogen markets globally and the approach of supporting multiple production technologies, including electrolytic and carbon capture-enabled hydrogen production, has led to a pipeline of projects totalling up to 18GW. A significant proportion of growth is focused on the key industrial clusters in Merseyside, Grangemouth, Southampton, Wales, Tees Valley and the Humber, which could fuel a significant proportion of hydrogen demand by 2030.
Through the BEIS £60 million Industrial Fuel Switching competition, hydrogen is being researched and demonstrated in the steel, chemicals, glass, and the food and drinks sectors. Industrial sites are upgrading plant equipment to enable the use of hydrogen, for instance at the Stanlow refinery. Manufacturers, including Mitsubishi, Siemens and GE are conducting RI programmes to develop 100% hydrogen-fuelled power generation, expected to be commercially available by 2030.
The Government’s Sector Development Action Plan highlights the nature and scale of opportunities across the hydrogen economy in the UK, focusing on investment, supply chains, jobs and skills, and exports. It outlines government and industry actions to maximise the value from scaling up the UK hydrogen economy.
Key UK assets
Liverpool City Region
Assets: SMR and Electrolyser production facilities, future hydrogen and CO2 storage
Investment opportunities: LCR Hydrogen Bus project and HyNet blue hydrogen production
Scotland
Assets: existing pipelines that could be repurposed, connecting major industrial hub Scotland to mainland Europe, early wind and tidal electrolytic hydrogen production in Orkney, Aberdeen Hydrogen Hub.
Investment opportunities: power station for CCS in Peterhead
Solent
Assets: electrolytic hydrogen production and refuelling station
Investment opportunities: hydrogen super-hub in the port of Southampton
Wales
Assets: South Wales Industrial Cluster, Energy Kingdom at Milford Haven, RWE’s Pembroke Net Zero Centre and Holyhead Hydrogen Hub
Investment opportunities: Hydrogen Highway and ports infrastructure.
Tees Valley
Assets: existing underground hydrogen storage and Teesside Freeport
Investment opportunities: first-of-its-kind Hydrogen Transport Hub at Tees Valley
Humber
Assets: empty gas and salt caverns for hydrogen storage and Equinor’s H2H Saltend
Investment opportunities: shared hydrogen pipeline, green hydrogen projects such as Gigastack and Keadby Hydrogen Power Station
Northern Ireland
Assets: long duration energy storage funding at Ballylumford
Investment opportunities: hydrogen bus production at Wrightbus in Ballymena
R&D capability
UK Research and Innovation (UKRI) is the UK’s largest public funder of research and innovation (RI) with a budget of over £8billion. UKRI sees RI as a key tool to grow the hydrogen economy and for the UK to reach net zero emissions by 2050, which is reflected in its interdisciplinary approach to funding across RI and skills activities across the whole hydrogen value chain.
UKRI’s Innovate UK supports hydrogen business growth and innovation through the development and commercialisation of new products, processes, and services. Furthermore, the Catapult Network’s first-of-its-kind Hydrogen Innovation Initiative (HII) is a strategic collaboration, which aims to accelerate the development of the hydrogen economy, through working with industry to connect end-to-end innovation across generation, distribution, and consumption.
The Engineering and Physical Sciences Research Council (EPSRC) has announced funding worth £25million to support the establishment of 2 hydrogen research hubs in the UK: one for research challenges - and a second hub for systems integration of hydrogen and alternative liquid fuels.
Business and government support
- a £240 million Net Zero Hydrogen Fund to support the deployment of new low carbon hydrogen production plants, and a Hydrogen Business Model to provide producers with revenue support.
- a commitment to design new business models for hydrogen transport and storage infrastructure by 2025.
- a Low Carbon Hydrogen Standard, and a commitment to set up a certification scheme by 2025, to support future international trade.
- a £1 billion Net Zero Innovation Portfolio (NZIP), which supports the commercialisation of clean energy technologies in 10 priority areas, including hydrogen.
- a £170 million Industrial Decarbonisation Challenge Fund to invest in developing technologies such as CCUS and hydrogen fuel switching
The BEIS Hydrogen Funding Landscape includes a timeline for the above competitions.
Case studies
HyNet is set to be one of the UK’s first net-zero carbon industrial clusters, based on the production of hydrogen from natural gas, using Johnson Matthey’s proprietary technology. Plans include a new hydrogen pipeline, and the creation of the UK’s first carbon capture, and storage (CCS) infrastructure, which could reduce carbon emissions by 10mn tonnes a year by 2030. To be located at Stanlow Refinery, the ultimate project may include up to 3 plants, producing up to 18TWh per year of low carbon hydrogen.
HyGreen Teesside: BP confirmed it is planning a new large-scale green hydrogen production facility in the North East of England that could deliver up to 500 megawatt electric (Mwe) of hydrogen production by 2030. BP is aiming to start production by 2025, with an initial phase of some 60MWe of installed hydrogen production capacity. A final investment decision on the project is expected in 2023.
The Tees Valley Hydrogen Transport Hub will host a £20million competition to discover how hydrogen can be used to decarbonise the transport sector. The competition, run by Innovate UK, will address challenges such as large-scale refuelling for buses and coaches, and how to make the supply chain greener with hydrogen-fuelled HGVs.