Production

Bargain H2? | UK awards $27m to seven low-carbon hydrogen projects with 'potential capacity' of 800MW

But only three proposals are identified, all for renewable H2 transport

Hydrogen powered vehicles in Aberdeen city centre.
Hydrogen powered vehicles in Aberdeen city centre.Photo: BP
The UK government has promised £21m ($27m) to seven hydrogen projects under development that it claims have the combined potential to increase the UK’s H2 production capacity by a massive 800MW.

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However, the Department for Energy Security and Net Zero (DESNZ), has only identified three of the projects in line for cash from the second funding call for £240m Net Zero Hydrogen Fund, all of which are small-scale renewable hydrogen projects intended to service local transport needs.

One of the three, the Aberdeen Hydrogen Hub, is under development by oil giant BP and Aberdeen City Council, which envisages green hydrogen production alongside a refuelling and distribution network for the Scottish city’s fleet of more than 15 H2 buses.
The project is designed to be scaleable, but the first phase will see just enough H2 per day produced to power 25 buses and 60 other vehicles operated by the public sector.

Phase 1 is scheduled to begin operation next year, and already has planning permission in place.

“This [funding award] is an important step towards considering the final investment decision on the project to deliver phase one of a scalable green hydrogen production, storage, and distribution facility in Aberdeen,” BPand its partner said in a statement. “By harnessing natural resources, a skilled workforce, and the pioneering spirit of the northeast of Scotland, the Aberdeen Hydrogen Hub could create a new energy solution that builds on the region’s strong oil and gas heritage.”

Around a third of the funding went to the Tees Valley Hydrogen Hub, to support green H2 production and its distribution among 20 trucks supplied by UK-based Electra Commercial Vehicles and German manufacturer Quantron. Green hydrogen would be produced at a terminal in Stockton-on-Tees, owned by Spanish liquids transport specialist Exolum.

The third project confirmed as receiving funds, Suffolk Hydrogen, is a new proposal put forward by Hydrab Power, owned by hydrogen investor and heir to the JCB heavy-machinery fortune, Jo Bamford, who is also executive chairman of Ryze Hydrogen.

Few details were available about Suffolk Hydrogen at the time of publication, however it will produce and deliver green H2 to vehicles working on the site of the giant Sizewell C nuclear project in eastern England, which is due to begin construction this year.

“The seven projects have the potential to increase our capacity to make hydrogen by 800MW, supporting local communities to cut their emissions while moving towards net zero,” DESNZ said yesterday (Tuesday).

The startling capacity figure of 800MW would indicate that the government had unlocked an unusually high rate of private investment in relation to its direct grants.

Installing 100MW of electrolyser capacity (without associated renewables) costs in the region of $300m, depending on the location. It would mean that the $27m investment from the UK government would have unlocked around $2.4bn of private capital.

However it is far from clear whether all the projects involved are green H2 schemes, and whether DESNZ has included future (and unfunded) scale-ups in its analysis.
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Published 28 February 2024, 08:52Updated 28 February 2024, 08:52