Pairing the UK’s offshore wind resources with green hydrogen production is an opportunity for the UK to become an energy exporter, especially as the North Sea’s oil and gas reserves reach their end of life – but government support is needed.
In a briefing paper, Imperial College London’s Energy Futures Lab outlined how the UK’s targets for offshore wind deployment could be derailed over the coming decades because of the challenge of managing system implications from variable wind energy. This is where flexible green hydrogen production can play a role, providing a means to store surplus electricity generation and then step up when wind is in short supply.
The Energy Futures Lab set out how the UK’s wind resources have the potential to produce hundreds of millions of tonnes of hydrogen every year, which would be more than enough to meet the current global demand for hydrogen. It also found that the cost of production would fall below £3 per kilogram. This is “only marginally higher” than the cost of production from natural gas before the 2022 energy price crisis took a foothold.
However, despite this potential, there are two uncertainties looming as the hydrogen value chain develops over the coming decade in the UK. These are which end-uses hydrogen will meet and where these end-uses will be located. With green hydrogen to be more expensive than hydrogen made using steam methane reforming over the short to medium term, green hydrogen needs to be prioritised for sectors and processes without an alternative, more cost-effective decarbonisation pathway.
Beyond 2030 is when production of green hydrogen is expected to accelerate. This is when the UK government needs to step up, providing support for both the development of the production itself and the markets for end-use.
Green hydrogen will suffer from a “chicken or egg” issue where demand is inhibited by the current costs of production, but without demand-pull factors, investments into production will remain too risky for the large-scale expansion of supply which will eventually drive cost reductions.
Political will and support are needed to advance green hydrogen production and guide it through the cost reduction phase. This is something the UK has already managed to accomplish with offshore wind and, as a result, become internationally recognised as a leading force within that sector. Rolling out large-scale hydrogen production will be mandatory, meaning policymakers need to closely assess the current situation. This will call for the supply chain issues plaguing offshore wind to be addressed and a safe investment environment created.
It further drew on how policymakers could want to assume a more governing role for early hydrogen projects in a bid to ensure energy policy objectives are achieved. This could help guarantee a more economically efficient pathway to delivering projects, with de-risking considered a “key challenge”. It pointed to the high risks of project failure prevalent right now, including the halting of the Norfolk Boreas offshore wind project because of soaring costs.
It still stressed that the cost reduction trajectory is promising for offshore wind, as long as the current spike in financing costs can be overcome, adding the same is true for hydrogen electrolysers. This would complete the picture of a future low-cost hydrogen production value chain.
It also highlighted how the creation of a hydrogen production industry represents a transition story for the UK’s oil and gas sector, with the country one of the few that is capable of producing more hydrogen than it consumes in hydrocarbons today. Investing now in an effort to reduce costs and benefit from the generated value of exported hydrogen would help realise the government’s previously declared ambition to make the UK the “Saudia Arabia of wind”, it said.
