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UK aims to attract private investment of £4Bn

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Through plans outlined in its long-awaited and long-delayed Hydrogen Strategy, the United Kingdom hopes to attract private investment of 4 billion British pounds sterling ($5.51 billion) in blue and green hydrogen production, distribution, storage, and consumption, primarily in the country’s industrial heartlands.

The blueprint’s central idea is to “learn by doing” in the early 2020s, with the possibility of fast development after that.

Prime Minister Boris Johnson declared in 2020 his goal of enabling 5 gigawatts (GW) of low-carbon hydrogen generating capacity by 2030, but Whitehall has yet to produce a strategy to achieve this goal due to industry stakeholder disagreements over the fledgling technology.

In its best-case scenario, the Hydrogen Strategy forecasts that the industry would generate 9,000 employment, be worth 900 million pounds, and attract 4 billion pounds of private investment by 2030, after committing an initial sum of 500 million pounds through 2020’s Ten Point Plan.

“Before hydrogen for heating can be considered as a potential option for decarbonizing heat in buildings, more evidence on the costs, benefits, safety, feasibility, air quality impacts, and consumer experience of using low carbon hydrogen for heating in comparison to other more established heat decarbonisation technologies is needed.” — Hydrogen Policy

The Strategy’s Major Milestones

The “2020s Roadmap” of the Hydrogen Strategy, which was established in conjunction with the Hydrogen Advisory Council, includes key milestones such as:

The first phase of the carbon capture, utilization, and storage (CCUS) cluster will be decided in 2021.

Finalize a low-carbon hydrogen standard by 2022 to ensure that manufacturing is carbon-neutral.

Finalize the business model by 2022, so that the first contracts may be awarded in Q1 2023.

In early 2022, launch the Net Zero Hydrogen Fund (NZHF).

In 2023, a neighborhood heat trial will be conducted.

By Q3 2022, there will be a good value for money argument for mixing.

By 2025, we want to be able to produce 1GW of electricity.

By 2025, there will be at least two carbon capture, utilization, and storage (CCUS) clusters.

In 2025, a heat village trial will be held.

By 2026, a decision on hydrogen heating will be made.

By the mid-2020s, a decision on heavy goods vehicles (HGVs) will be made.

By 2030, the goal is to have a 5GW manufacturing capacity.

By 2030, there will be four CCUS clusters.

By 2030, there might be an experimental hydrogen town.

By 2030, the goal is to have 40 GW of offshore wind installed.

Gray hydrogen decarbonization

The 10-27 terawatt hour (TWh) hydrogen now generated in the United Kingdom primarily relies on fossil fuels and does not include CCUS, which would reduce emissions. Chemical factories and refineries produce the majority of the UK’s output. The decarbonization of this so-called gray hydrogen is thus one of the major outcomes of the Hydrogen Strategy.

The Hydrogen Strategy, in particular, pledges the United Kingdom to aggressively create blue hydrogen from natural gas and CCUS. By 2030, the government hopes to have CCUS in four industrial clusters, supporting its goal of capturing 10 million metric tons of CO2 per year and supported by the 1 billion-pound Carbon Capture and Storage Infrastructure Fund, which was announced in 2020.

The Hydrogen Strategy states, “This strategy puts the United Kingdom unique, providing us a competitive edge and building on our strengths to ensure we can be confident in fulfilling our 2030 objective and beyond.”

“However, electrolytic hydrogen costs are projected to fall significantly over time, and in some situations, electrolytic hydrogen may be cost-competitive with CCUS-enabled methane reformation as early as 2025,” it states.

Environmentalists are divided on blue hydrogen, but some analysts believe it is ideally suited to a country with a ready supply of natural gas from the North Sea.

A significant feature of the Hydrogen Strategy is the government’s commitment to continue consulting with the sector on different initial measures, such as developing a low-carbon hydrogen standard and establishing a hydrogen business model by 2022 to stimulate investment.

The UK government has started a series of consultations as part of its Hydrogen Strategy, focusing on lowering costs for what remains a costly gas to generate, including a 240 million-pound Net-Zero Hydrogen Fund.

After a period of consultation, the Department for Business, Energy and Industrial Strategy (BEIS) will pick new manufacturing units that will benefit from the designated funding.

According to the BEIS model, by the middle of the twenty-first century, the hydrogen economy will need to contribute about 20%-35 percent of the UK’s energy demands, or 250-460 TWh of hydrogen.

The government also expects the 60 million-pound Low Carbon Hydrogen Supply 2 Competition, which was just announced, to create new hydrogen supply solutions that will aid in the scaling up of commercial production.

The government expects that the 68 million-pound Longer Duration Energy Storage Demonstration Challenge would assist offer cost-effective solutions for the development of hydrogen network and storage infrastructure, which is a critical problem.

The government will also engage with industry on the possibility of mixing 20% hydrogen into existing gas supplies and repurposing existing National Grid pipes for hydrogen transmission in the United Kingdom.

Hydrogen demand in the United Kingdom

On the demand side, the BEIS model predicts that by the middle of the twenty-first century, the hydrogen economy would have to contribute about 20%-35 percent of the UK’s energy demands, or 250-460 TWh of hydrogen. This may increase the sector’s value to £13 billion and create up to 100,000 jobs.

According to the government, demand-side actions would involve working with industry partners to establish suitable market structures.

The Hydrogen Strategy emphasizes the importance of the newly established Phase 2 of the 315 million-pound Industrial Energy Transformation Fund, as well as the 55 million-pound Industrial Fuel Switching 2 competition, which will take place in 2021.

A new 55 million-pound Industrial Fuel Switching 2 Competition and a new 40 million-pound Red Diesel Replacement Competition will be launched by the UK government later in 2021 to assist an industrial move to hydrogen and other low-carbon fuels.

According to the model used in the UK Hydrogen Strategy, the eventual proportion of hydrogen deployment will be determined by the cost of hydrogen technologies in comparison to alternatives such as electrification, biomass, and carbon capture.

Arnes Biogradlija
Creative Content Director at EnergyNews.Biz

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