Octopus Hydrogen, a portfolio company of the UK’s Octopus Energy Group, plans to bring its first two commercial green hydrogen plants online within months and install a third, 3t/d plant in Scotland by Q1 2024, CEO Will Rowe tells Hydrogen Economist.

The first two projects will have 180t/yr of production capacity, with one co-located with 7MW of new solar capacity.

“We are really keen on not taking otherwise viable renewables projects and placing them into green hydrogen,” says Rowe. Octopus Hydrogen aims to match green hydrogen production “as best as possible” with the co-located, newbuild renewables site and any other newbuild projects with which the firm has struck power-purchase agreements.

Technology-agnostic

The project closest to startup, based at Mira Technology Institute in Nuneaton, will be brought online next quarter. UK hydrogen technology company Clean Power Hydrogen has supplied the project with a 1MW membrane-free electrolyser, which cryogenically separates the combined oxygen and hydrogen gases produced via electrolysis.

Q3 2022 – Nuneaton project to come online

“There is no one else really doing that technology, so it needs to prove it can scale its efficiencies and commercialisation,” adds Rowe.

The second project, located at Cotswold Airport in Kemble, will use a 1MW pressurised alkaline electrolyser from Denmark’s Green Hydrogen Systems.

“Alkaline systems have been around for a long time, but atmospheric alkaline has its challenges because you cannot really change the output that well,” says Rowe, adding that, while there have been issues with getting pressurised alkaline electrolysers delivered, “we definitely see a future in it”.

Octopus Hydrogen plans to install a 15MW proton-exchange-membrane electrolyser for its Scottish project.

“Our view is very consciously to be technology-agnostic at this point and try and focus on working with partners that we like, who we think can scale up, and then see what wins,” says Rowe. The company is prioritising technologies with high availability that can produce fuel-cell grade green hydrogen using a low amount of energy per kilogram, be easily scaled without additional cost and can handle “dynamic changes to output associated with intermittent renewables”.

Ultimately, the key factor is how many kilowatt-hours of renewable electricity it takes to produce 1kg of hydrogen, according to Rowe.

“At the moment, you are looking at somewhere between 55-60kWh/kg. Now, if the system was perfectly efficient, it would be around 39kWh/kg,” he says. “There is still a long way to go to get to that potential, and it is going to be whatever technology gets there quickest. Given that power is probably between 60-70pc of the cost of the green hydrogen molecules, the more efficiently you can turn power into hydrogen, that will be the technology that wins.”

Rowe notes that solid-oxide electrolysers may struggle to compete if powered by renewables, owing to the technology’s high heat demand. “For lots of industrial processes, where heat is already available, or nuclear, where there is heat and power available on a high baseload, that is where it feels like it has a real opportunity,” he says.

Hydrogen business models

The Nuneaton and Kemble projects have both been developed without direct capex support from the government. “They are as subsidy-free as they can be,” says Rowe, noting the Renewable Transport Fuel Obligation enables a supportive policy environment to secure offtake agreements with the mobility sector.

“We do not see a viable business case for replacing natural gas” Rowe, Octopus Hydrogen

Octopus Hydrogen has applied to the second strand of UK’s Net Zero Hydrogen Fund to cover 30pc of the Scottish project’s capex. Results of this funding round are expected to be announced in September. And Rowe confirms that the firm is seeking opex support through the recently launched government hydrogen business model support scheme for electrolytic projects.

The developer is focused on producing green hydrogen as a replacement for grey and for use in heavy-duty mobility applications.

“We do not see a viable business case for replacing natural gas,” Rowe says. However, while he highlights domestic heating as a case where electrification is likely to win out on efficiency and cost compared with hydrogen switching, he notes that there will be cases where the economics for replacing or blending with natural gas will be in hydrogen’s favour, such as combined heat and power requirements where grid electrification is impractical.

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Author: Polly Martin