Hydrogen

Low-carbon hydrogen emerges as our revolutionary super-fuel, representing a reservoir of eco-friendly energy harnessed through the application of British proficiency, knowledge, and indigenous resources.

The release of the inaugural Hydrogen Strategy in the United Kingdom in August 2021 has underscored the pivotal role of hydrogen in securing the nation’s energy self-sufficiency, bolstering security, and honouring our legal obligation to attain net zero emissions by 2050. As part of the British Energy Security Strategy, we have elevated our aspirations, increasing our initial target from 5 gigawatts (GW) to a potential 10GW of low-carbon hydrogen production capacity by 2030. The actual scale of this expansion is contingent upon financial feasibility and value for money, with a minimum requirement of half of this capacity to be derived from electrolytic hydrogen.

Opportunity highlights

In April 2022, the UK’s Department for Business, Energy & Industrial Strategy (BEIS) unveiled the UK Hydrogen Investor Roadmap to encourage engagement from investors. This strategic roadmap positions the UK as a global leader in attracting investments, underlining its outstanding business environment, renowned expertise in advanced energy infrastructure, the world’s largest offshore wind market, and a rich history of gas production, distribution, storage, utilization, and regulation.

The UK benefits from favourable geological conditions suitable for large-scale hydrogen storage in salt caverns and repurposed oil and gas fields beneath the North Sea. The well-established oil and gas sector in the UK will play a pivotal role in advancing carbon capture, utilization, and storage (CCUS)-enabled hydrogen production. The North Sea Transition Deal is expected to unlock substantial investments, secure up to 40,000 jobs, reduce emissions by as much as 60 million metric tons, and promote domestic supply chains. This agreement commits the oil and gas industry to invest between £14 and £16 billion in new energy technologies, including electrolytic and CCUS-enabled hydrogen production capacity by 2030.

Projections suggest that the UK’s hydrogen demand will reach between 80 and 140 terawatt-hours by 2035. The heightened ambition for UK hydrogen production, with a stronger emphasis on electrolytic hydrogen generation, creates potential opportunities for substantial hydrogen exports from the UK, particularly to continental Europe. This aligns with the increasing demand for hydrogen in Europe, alongside well-established energy trading and interconnection with the UK.

The United Kingdom boasts one of the world’s most advanced hydrogen markets, thanks to its inclusive approach that supports various hydrogen production technologies, such as electrolysis and carbon capture-enabled hydrogen production. This strategy has resulted in a robust project pipeline with a cumulative capacity of up to 18 gigawatts (GW). A substantial portion of this growth is centred around crucial industrial hubs in Merseyside, Grangemouth, Southampton, Wales, Tees Valley, and the Humber. These hubs have the potential to meet a significant share of the country’s hydrogen demand by 2030.

The UK government is actively promoting hydrogen adoption through initiatives like the £60 million Industrial Fuel Switching competition, which explores and demonstrates hydrogen use in sectors like steel, chemicals, glass, food and beverages. Industrial facilities are upgrading their equipment to incorporate hydrogen, as seen at the Stanlow refinery, for example. Leading manufacturers like Mitsubishi, Siemens, and GE are engaged in research and innovation programmes to develop power generation systems powered entirely by hydrogen, with commercial availability anticipated by 2030.

The Government’s Sector Development Action Plan sheds light on the immense opportunities within the UK’s hydrogen economy, with a strong emphasis on investment, supply chains, job creation, skills development, and exports. This plan outlines collaborative efforts between the government and industry to maximize the value of scaling up the UK’s hydrogen sector.

Commercial maturity

The United Kingdom is a global leader in the hydrogen market, with one of the most well-established and advanced sectors. This achievement is a result of the country’s comprehensive strategy, which supports various hydrogen production technologies, including electrolysis and hydrogen production with carbon capture. This approach has led to a substantial project pipeline, with a combined capacity of up to 18 gigawatts (GW). A significant portion of this growth is concentrated in key industrial hubs in Merseyside, Grangemouth, Southampton, Wales, Tees Valley, and the Humber, which have the potential to meet a considerable portion of the country’s hydrogen demand by 2030.

Through the BEIS-funded £60 million Industrial Fuel Switching competition, the UK is actively researching and demonstrating the use of hydrogen in various sectors, such as steel, chemicals, glass, and the food and beverage industry. Industrial facilities are upgrading their equipment to facilitate hydrogen usage, as seen at the Stanlow refinery.

Leading manufacturers, including Mitsubishi, Siemens, and GE, are engaged in research and innovation programmes (RI) aimed at developing power generation systems that run entirely on hydrogen. These systems are expected to be commercially available by 2030.

The UK Government’s Sector Development Action Plan outlines the vast potential and scope of opportunities within the country’s hydrogen economy. The plan places a strong emphasis on areas like investment, supply chains, job creation, skills development, and exports, and it delineates the collaborative efforts between the government and industry to fully harness the value of scaling up the UK’s hydrogen economy.

UK assets

Liverpool City Region

Key Assets: Facilities for Steam Methane Reformer (SMR) and Electrolyser hydrogen production, with future provisions for hydrogen and CO2 storage.
Investment Opportunities: LCR Hydrogen Bus project and HyNet blue hydrogen production initiatives.

Scotland

Key Assets: Existing pipelines suitable for repurposing, linking Scotland’s major industrial centres to mainland Europe, early-stage wind and tidal electrolytic hydrogen production in Orkney, and the Aberdeen Hydrogen Hub.
Investment Opportunities: Establishment of a power station for Carbon Capture and Storage (CCS) in Peterhead.

Solent

Key Assets: Electrolytic hydrogen production capabilities and a refuelling station.
Investment Opportunities: Development of a hydrogen super-hub located at the Port of Southampton.

Wales

Key Assets: Presence of the South Wales Industrial Cluster, the Energy Kingdom at Milford Haven, RWE’s Pembroke Net Zero Centre, and the Holyhead Hydrogen Hub.
Investment Opportunities: Projects like the Hydrogen Highway and enhancements to port infrastructure.

Tees Valley

Key Assets: Existing underground hydrogen storage facilities and the Teesside Freeport.
Investment Opportunities: Pioneering a first-of-its-kind Hydrogen Transport Hub in the Tees Valley region.

Humber

Key Assets: Availability of vacant gas and salt caverns suitable for hydrogen storage and Equinor’s H2H Saltend project.
Investment Opportunities: Initiatives like shared hydrogen pipeline development and green hydrogen projects such as Gigastack, in addition to the Keadby Hydrogen Power Station.

Northern Ireland

Key Assets: Funding support for long-duration energy storage projects at Ballylumford.
Investment Opportunities: Potential for hydrogen bus production at Wrightbus in Ballymena.

R&D capability

UK Research and Innovation (UKRI) stands as the United Kingdom’s most substantial public financier of research and innovation (RI), with a substantial budget exceeding £8 billion. UKRI recognises the pivotal role of RI in nurturing the hydrogen economy and aiding the UK in achieving its net-zero emissions target by 2050. This commitment is evident in their comprehensive approach to funding, which encompasses RI and skill development activities across the entire hydrogen value chain.

In tandem, Innovate UK, an arm of UKRI, plays a crucial role in fostering the growth and innovation of hydrogen-related businesses. It supports the development and commercialisation of novel products, processes, and services within the hydrogen sector. Additionally, the Catapult Network has initiated the pioneering Hydrogen Innovation Initiative (HII), a strategic partnership designed to expedite the progress of the hydrogen economy. This collaborative effort involves working closely with industry partners to foster end-to-end innovation spanning the generation, distribution, and consumption of hydrogen.

Furthermore, the Engineering and Physical Sciences Research Council (EPSRC) has recently allocated £25 million in funding to establish two hydrogen research hubs in the UK. One of these hubs will focus on addressing research challenges, while the other will centre on the integration of hydrogen and alternative liquid fuels within systems. These initiatives represent a significant step forward in advancing hydrogen-related research and applications in the UK.

Business and government support

The BEIS (Department for Business, Energy & Industrial Strategy) has introduced several strategic initiatives to foster the development and deployment of low-carbon hydrogen and advance the UK’s journey towards a net-zero future:

A substantial £240 million Net Zero Hydrogen Fund has been established to facilitate the rollout of new low-carbon hydrogen production facilities. Additionally, a Hydrogen Business Model has been devised to offer financial support to hydrogen producers.
A commitment has been made to design fresh business models for hydrogen transport and storage infrastructure by 2025. This effort aims to enhance the efficiency and sustainability of hydrogen distribution.
The introduction of a Low Carbon Hydrogen Standard sets a benchmark for the quality of low-carbon hydrogen, ensuring its eco-friendliness. By 2025, plans are underway to establish a certification scheme, promoting the international trade of hydrogen produced according to this standard.
The UK Government has allocated £1 billion to the Net Zero Innovation Portfolio (NZIP), which focuses on expediting the commercialisation of clean energy technologies in ten priority areas, including hydrogen. This substantial investment aims to bring innovative clean energy solutions to the market.
To address industrial decarbonisation, the BEIS has created the £170 million Industrial Decarbonisation Challenge Fund. This fund supports the development of technologies like Carbon Capture, Utilisation, and Storage (CCUS) and the transition to hydrogen as a fuel source in various industrial processes.

The BEIS Hydrogen Funding Landscape provides a comprehensive timeline for the competitions and initiatives mentioned above, underlining the government’s commitment to fostering hydrogen-related projects and innovations in the UK.