Hydrogen
Hydrogen will help power the UK economy and decarbonise the transport, power generation, heating and chemical industries.
UK hydrogen demand is expected to reach 38TWh by 2030, rising up to 165TWh in 2035, and up to 460TWh in 2050. Working alongside partners in industry our aim is for the UK to develop 5GW of low-carbon hydrogen production capacity by 2030.
The UK’s twin track approach of developing both blue and green hydrogen capability has a pipeline of announced projects totalling 18GW through to 2037.
Because hydrogen complements the UK’s vast offshore wind industry, hydrogen investment has a role to play in storing that energy when electricity generation is high, but demand is low.
Opportunity highlights
Because of its geography, geology, infrastructure and capabilities, the UK can show global leadership in low-carbon hydrogen and secure competitive advantage.
The twin track approach capitalises on the UK’s potential to produce large quantities of both electrolytic green hydrogen and CCUS-enabled blue hydrogen. Building hydrogen production and enabling use across multiple sectors will be critical for developing domestic capacity and capabilities and securing green jobs.
The UK also has decades of experience in production, distribution, storage, use and regulation of gas. The widespread use of natural gas for power generation and for heat in industry and homes means that the UK has potential supply routes and many potential use cases for hydrogen gas.
The UK also has favourable geology for large-scale storage of hydrogen and is already storing hydrogen in salt caverns and exploring storage in disused oil and gas fields under the North Sea.
Commercial maturity
The UK has one of the most mature hydrogen markets globally according to the Hydrogen Council’s Hydrogen Insights Report 2021.
The UK has six industrial clusters:
- Liverpool City Region (Merseyside)
- Grangemouth (Scotland)
- Solent (Southampton)
- Wales
- Tees Valley
- Humber
These will be the starting point for a new carbon capture industry and support up to 50,000 jobs in the UK by 2030.
Despite the maturity of the UK market, it still requires a significant scaling-up of production capacity to meet net zero targets set out by the UK government.
Key UK assets
Located across the country, the six industrial clusters that will be the starting point for a new carbon capture industry and support up to 50,000 jobs in the UK by 2030. The clusters include:
Liverpool City Region
Assets: SMR and Electrolyser production facilities.
Investment opportunities: LCR Hydrogen Bus project and HyNet blue hydrogen production.
Grangemouth
Assets: include existing pipelines connecting major industrial hub connecting Scotland to mainland Europe.
Investment opportunities: at the power station for CCS in Peterhead.
Solent
Assets: include H2 Research and Refuelling Station.
Investment opportunities: the hydrogen super-hub in the port of Southampton is a key investment opportunity at the Solent cluster.
Wales
Assets: include Energy Kingdom at Milford Haven (blue hydrogen) and energy hub at Holyhead.
Investment opportunities: include the Hydrogen Highway and ports infrastructure.
Tees Valley
Assets: include existing underground hydrogen storage and Teesside Freeport.
Investment opportunities: include a first of its kind Hydrogen Transport Hub at Tees Valley.
Humber
Assets: include empty gas and salt caverns for hydrogen storage and Equinor’s H2H Saltend.
Investment opportunities: include shared hydrogen pipeline and Green hydrogen projects such as Gigastack.
R&D capability
Growth of low carbon hydrogen will be supported by the following.
A £1 billion Net Zero Innovation Portfolio, which will invest in 10 priority areas, including hydrogen, floating offshore wind, advanced modular nuclear reactors, energy storage solutions and CCUS solutions.
The £240 million Net Zero Hydrogen Fund supports the development of both blue and green hydrogen production capacity.
Business and government support
Policies supporting the growth of low carbon hydrogen in the UK include:
- Low Carbon Hydrogen Supply Competition – provided £33 million to accelerate the development of low-carbon, bulk-hydrogen supply solutions in key sectors.
- Industrial fuel switching policy – competition funding projects that demonstrate potential for industrial GHG emission reductions via fuel-switching technologies, to contribute to net zero by 2050.
- Industrial Decarbonisation Challenge Fund – provides £170 million, matched by £261 million from industry, to invest in developing technologies such as CCUS and hydrogen fuel switching.
Early development opportunities
Trafford Green Hydrogen
Developer
Carlton Power Limited
Technology
H2 Electrolyser (10MWe – 200Mwe)
Location
Trafford, Manchester
Estimated Value
£25 million with potential to expand
Opportunity and background
Carlton Power’s Trafford Green Hydrogen is developing a 10MWe hydrogen electrolyser plant at Carrington in Greater Manchester. The project will use onsite and offsite renewable energy to produce green hydrogen fuel for transport and heating.
The site has access to 400kV electrical connection and land available for expansion of electrolyser capacity up to 200Mwe.
Stakeholders can develop the site as a multi-vector micro-industrial cluster. The project is expected to participate in the UK Government’s competition for hydrogen production projects.
Carlton’s timeline aims to secure planning and electrical connection for the initial phase hydrogen electrolyser within a few months and wish to identify co-developers and investors willing to engage in early discussions related to development and construction funding.
HyNet NW Hydrogen Production
Developer
Progressive energy
Technology
Autothermal reforming with carbon capture and storage (Johnson Matthey LCH process)
Location
North West
Estimated Value
£750 million
Opportunity and background
HyNet North West is one of the industrial decarbonisation clusters that position the UK as a world leader in clean energy, aligned with the UK hydrogen strategy.
The demand-driven project is supported by more than 25 industrial users and extensive wider market development activities. It is a phased build-out of hydrogen production, with the first two lines delivering 1GW of capacity rising to nearly 4GW by 2030.
The front end engineering design study is now completed for the first line and the project can be operational within 5 years, subject to finalisation by the UK government of its low-carbon hydrogen business model.
The government aims to finalise the business model in 2022, so the first contracts can be allocated and selected projects can take final investment decisions shortly after.