Utility Week - authoritative, impartial and essential reading for senior people within utilities, regulators and government
Issue link: https://fhpublishing.uberflip.com/i/1298293
16 | NOVEMBER 2020 | UTILITY WEEK Build Back Better ment Regulations are very out- dated and need to be changed to make them agnostic in terms of natural gas or hydrogen, so that customers will have the same protection. And then industry standards [such as the Gas Safe Register] can be reformed." As well as a regulatory regime, Needle says commercial incentives for producers may be needed, along the lines of the contracts for difference that support renewable electricity. But she also sees blending as an important step towards building consumer confidence in hydro- gen. "It needs a commercial regime that allows consumers to buy it as 'green gas', similar to buying biomethane today," she says. "Blending will make hydro- gen a 'real thing'." Large-scale production Before blending can begin, another domino needs to fall into place – large-scale hydrogen pro- duction. Here, Norwegian energy giant Equinor, with project part- ners including National Grid Ven- tures, is planning a "kick-starter" project at the Saltend Chemicals Park near Hull, H2H Saltend. A 600MW auto-thermal reformer (ATR) with carbon capture could be built by 2026, supply- ing hydrogen to on-site chemi- continued from previous page Policy needed now to give the UK a platform for hydrogen development Clarity will bring investment, say Paul Dight and Anna Sweeney Heating our homes and businesses accounts for over 30 per cent of all the UK's greenhouse gas emissions. It must be decarbonised if we are to reach our net zero goal by 2050, but as yet there is no clear policy direction from government. In the meantime, industry has been busy doing the groundwork, with various pilot projects testing the feasibility of using hydrogen instead of natural gas for heating. It should be a "no regrets" action to start blending up to 20 per cent of hydrogen into heat networks: the safety standards would need revising, but the existing infrastructure and appliances can cope with this level. That could be a quick interim solution. In the longer term, using hydrogen for heat will need production at scale. This will likely involve producing "blue" hydrogen from natural gas (and capturing the carbon released, through carbon capture, utilisation and storage in industrial clusters such as Zero Carbon Humber, and "green" hydrogen from renewables using electrolysis, as demonstrated by the H100 project in Aberdeen. We need a national hydrogen strategy that sets out how we move towards a hydrogen economy spanning multiple sectors: transport, heavy industry, power and heat. Investors need business models they can invest in. The downstream infrastructure is already there: it is the upstream production that needs to start happening. Investment will come once government support and policy is clearer. Paul Dight is partner in the Energy and Utilities Group at Addleshaw Goddard and Anna Sweeney is senior knowledge lawyer, Infrastructure, Projects & Energy at Addleshaw Goddard Utility Week's Build Back Better campaign comprises in-depth insights, analyses and interviews, all of which can be found online: utilityweek.co.uk/tag/build-back-better/ Analysis UtilityWeek jects, particularly in areas such as the Humber, which is close to the Teesside industrial clus- ter, and in the offshore fields in Scotland." Andersen's comments come as countries around the world place hydrogen in their post- Covid green recovery plans. In June, Germany announced an investment of €9 billion in hydrogen, and a National Hydro- gen Strategy as part of an overall €130 billion recovery plan; Nor- way also announced a hydrogen strategy that month. In July, the EU adopted its Hydrogen Strat- egy, outlining plans to support the installation of at least 6GW of electrolysers by 2024 and 40GWM by 2030. Meanwhile, both South Korea and Japan plan to switch their respective car industries to hydrogen fuel cells rather than EVs, and are also committed to hydrogen for power generation. It's agreed that the UK is mak- ing good progress, particularly on hydrogen for heat. As Green says: "Germany and a few other countries may have more clarity on their strategies and commit- ments, but the UK is on a good trajectory right now." Speaking from Norway, Andersen remarks: "We see that the UK is the most advanced in Europe in terms of developing the business model and policy framework. The EU framework sets a vision and goal but is not so mature on how to get there." He also endorses Green's view on the UK's engineering capa- bility. "There are a lot of highly skilled engineers in the UK in the hydrogen space." Everyone involved in shiing the UK away from natural gas agrees that developing hydrogen will be a long and slow. But in five years, the sector is optimistic that the large-scale plants will be in operation, probably anchored to industrial clusters; that hydro- gen will be blended on to the network in some parts of the country, fuelling commercial and domestic boilers, and that large- scale decarbonisation will be on its way to becoming a reality. cal plant operators, offering the nearby Triton Power Station a 30 per cent hydrogen blend, and later blending hydrogen for local homes and businesses. Aer 18 months of prepara- tory work, Equinor's Henrik Andersen, project director of the wider Zero Carbon Humber initi- ative, explains that H2H Saltend is waiting to hear whether it has secured £11 million from Phase II of the government's £131 million fund to decarbonise industrial clusters and – more importantly – the moral support that lies behind the grant. "The recognition and support of the government is the key. The biggest cost is when you do the final investment decision [sched- uled for 2023], so we want the business model [on low carbon hydrogen production] to be in place so that there is economic substance to the project. We are on that journey, but we need to see it is progressing at the right pace," he says. Green hopes to see additional carbon capture and storage (CCS) projects supported by the decar- bonisation fund, part of the £4.7 billion Industrial Strategy Chal- lenge Fund (ISCF). "Bids have to be submitted by 7 October, so we should see more projects moving forward. We want to see govern- ment back two or three CCU pro-