Low-carbon hydrogen production is expected to be “broadly investable” in the UK by the end of next year, but storage, transportation and end-use will require additional support, according to the UK government’s recent sector development action plan.

The UK has set a target for 10GW of low-carbon hydrogen production by 2030. The country has taken a ‘twin-track’ approach to developing both green and blue varieties of the fuel.

The government has launched its allocation round for green hydrogen projects, combining grants from the £240mn ($287mn) Net Zero Hydrogen Fund with hydrogen business model revenue support. It expects hydrogen business model negotiations with blue hydrogen projects to be underway by next year.

From 2023, the government expects investment in UK hydrogen to transition from small-medium scale (£10-50mn+) to larger-scale development opportunities. “The rapid scale-up of the sector will bring significant development and operational investment opportunities for increasingly large-scale production projects from 2025, such as opportunities in hydrogen-specific transmission and storage,” it says.

10GW – 2030 target for low-carbon hydrogen production

The government plans to design a business model to support hydrogen transportation and storage infrastructure by 2025. And it notes that the UK has geology “well suited to addressing storage needs”, such as salt caverns in the Wessex and Cheshire basins and in East Yorkshire—some of which are already used to store natural gas or LPG.

Constructing new pipelines, or replacing those that already exist, presents an opportunity for additional turnover and jobs in the UK. The government highlights the shortage of suppliers for high-capacity hydrogen compressors as a potential market that could be met by UK firms, based on existing capabilities in smaller-scale compressors.

Demand for hydrogen is expected to lag, and only reach “partial investability” by end-2023. While economic and commercial frameworks are emerging, “end-users want more information about where and when low-carbon hydrogen will be available and its future cost”, the government acknowledges.

Industry has highlighted the lack of certainty on hydrogen’s role in heating and existing gas networks  as a major challenge. The government aims for a policy decision on enabling 20pc hydrogen blending in gas networks in 2023 and to decide whether to support hydrogen as a pathway to decarbonise heating in its upcoming heat and building strategy in 2026.

Exports

The UK plans to export hydrogen as well as produce it for domestic use. The government notes that continental Europe is a particular market of interest, as the switch away from Russian gas has raised the demand for alternative energy sources.

The government plans to develop a hydrogen certification scheme to define its standards for ‘green’ and ‘low-carbon’ hydrogen in order to support international trade.

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Author: Polly Martin