The UK renewable lobby is urging the government to make hydrogen “the central pillar of decarbonisation” and to publish its hydrogen strategy before the year is out. It should also start working on financial support mechanisms for producers.
Germany and the wider EU last summer committed billions to hydrogen investment, but the UK has yet to show its hand. An energy white paper is expected before Christmas.
Renewable UK wants cross-departmental support for hydrogen, commitments to gigawatts of electrolyser capacity and a financial support mechanism for producers, or ‘hydrogen CfDs’. Transport, it suggests, should be the priority for hydrogen growth in the short term.
Most of the world’s hydrogen production is ‘grey’, largely produced using pressurised methane and steam in reformer vessels with a nickel catalyst. It produces high levels of greenhouse gases.
‘Blue’ hydrogen adds carbon capture to the steam reformation production process. Gas producers and grid operators are keen to build out carbon capture and storage infrastructure to enable a blue hydrogen economy. But CCS infrastructure does not come cheap and the carbon has to stay stored.
‘Green’ hydrogen is produced via electrolysis using power from sources such as wind and solar. As such, it is genuinely clean gas, though costs are currently high due to lack of scale. However, it does provide a natural buffer to weather-dependent power generation. Using excess renewables to produce hydrogen would also help smooth power prices and reduce system balancing costs.
According to Renewable UK’s report, hydrogen produced via renewable power currently costs about £8/kg.
The cost of electrolysers themselves are also high, around £800/kW at 10MW scale (around £8m for a 10MW electrolyser).
However, ITM Power with partners including Ørsted and Linde are building a manufacturing base in Sheffield that aims to produce a gigawatt of electrolysis capacity every year. The ‘Gigastack’ project is expected to cut costs by 50 per cent.
“Further innovation in the energy efficiency of electrolysers and innovation means that overall costs will fall from £8 per kilogram of renewable hydrogen today to £2/kg by 2030 and less than £1.50/kg by 2050,” states the report.
Renewable UK wants government to commit to targets of 5GW electrolyser capacity by 2030 and 10GW by 2035.
Pointing to the cost reductions in offshore wind financial support, from £120/MWh to around £40/MWh within four years via the CfD mechanism, Renewable UK said government should consider a similar approach for hydrogen.
See the report here.