Urgent steps needed to embrace green hydrogen

BY CHARLES YATES, MANAGING DIRECTOR, CMY CONSULTANTS:

Europe is leading a green hydrogen revolution that is gaining pace worldwide.

Global consultancy Afry has identified ten large green hydrogen projects in development in eight western European countries, including two each in Denmark and Netherlands. This is being powered by a swift realisation in the renewables industry that green hydrogen can drive decarbonisation in several hard-to-abate sectors: industrial heat, heavy goods transport and domestic heating.

For offshore wind, hydrogen can also help mitigate risks such as negative prices and price cannibalisation. Hydrogen can be stored economically and later converted into power or heat. This can greatly increase wind farm revenues, by producing green hydrogen when wind speeds are high and power prices are low, and then selling it when prices are high.

This is why a group of companies and trade associations this week targeted the European Union with a campaign to ‘Choose Renewable Hydrogen’.

The UK and offshore wind

The potential of green hydrogen in the UK is highlighted by National Grid’s 2019 Net Zero Future Energy Scenario. This forecasts that, in 2050, 68TWh of the electricity system would be dedicated to producing green hydrogen, or 14% of electricity production.

And the Climate Change Committee argues that: “By 2050, a new low-carbon industry is needed with UK hydrogen production capacity of comparable size to the UK’s current fleet of gas-fired power stations.”

The first offshore wind farms that will be used to produce green hydrogen are likely to include Ørsted’s Hornsea 2, which is set to provide power to the Gigastack project. This would then supply hydrogen to the Phillips 66 Humber Oil Refinery.

Also expected soon is the NortH2 project being developed by a Dutch consortium including Shell. The consortium’s ambition is to generate 3GW-4GW of wind energy for hydrogen production before 2030, increasing to 10 GW around 2040.

We should not ignore the fact that green hydrogen faces significant challenges and requires a global roll-out at scale to produce hydrogen at competitive prices. For example, is it best to produce hydrogen offshore or onshore? However, there are good locations with low-cost access to clean power and stable, credit-worthy demand – such as from an oil refinery.

If the UK wants to be a green hydrogen leader, the critical next step is developing a national hydrogen strategy, as has been done in the Netherlands, Japan and Portugal.

The UK has several hydrogen projects and innovators but there is a gap when it comes to co-ordinating the many government agencies involved in the sector. We need a cross-sector vision, covering energy production, heat, transport, infrastructure investment and regulation.

The Netherlands has a co-ordinated strategy that recognises green hydrogen is currently more expensive than other hydrogen technologies, and so the government plans to allocate €35m/year from 2021 to scale up projects. Support may also come from EU funds such as the Connecting Europe Facility.

Japan started investing in green hydrogen R&D and infrastructure six years ago, adopted a ‘basic hydrogen strategy’ in 2017, and held a Hydrogen Ministerial Meeting with over 1,000 attendees in 2019.

Now Portugal has approved a national hydrogen strategy in anticipation of European Commission proposals for green hydrogen in the EU’s €1trn post-Covid recovery plan. Portugal’s strategy is to make hydrogen an integral pillar of its energy transition. Around €7bn is due to be invested in local green hydrogen projects by 2030, of which 85% will be privately financed.

An effective UK green hydrogen policy that contributes to an affordable net zero approach requires co-ordinated policy development and pump-priming investment to build on our considerable advantages. As the world’s largest offshore wind producer, the UK already has abundant renewable energy near water, the other key ingredient for green hydrogen, and is often close to depleted oil and gas fields which can be used for hydrogen storage.

It also has an extensive gas distribution network supplying gas boilers, which can burn a blend of natural gas and up to 20% hydrogen. With new boilers and modifications to the gas distribution system, homes can switch to pure hydrogen. National Grid’s net zero scenario envisages around 14million hydrogen boilers for residential heating by 2050. If the Government acts decisively, the UK can be a leader of the green hydrogen surge.

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