EXCLUSIVE | Shell-backed blue hydrogen project shelved amid 'cost concerns'
Uncertainty over government support also behind decision to suspend Project Cavendish
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Launched with much fanfare in 2021 by oil major Shell, utilities Uniper and SSE, combined heat and power specialist VPI and consultancy Arup, as well as an offshoot of power transmission operator National Grid, Project Cavendish had been targeting a final investment decision by the end of this year, with first hydrogen production at a site in southeast England in 2027.
Uniper also confirmed the project’s demise, noting that the agreement expired in June 2022.
Project Cavendish was originally billed as a hydrogen blending and heating project that could replace up to 50% of the 2040 gas demand in London and southeast England from a location on the Isle of Grain on the Thames Estuary.
The Isle of Grain also hosts three power stations as well as a major liquefied natural gas (LNG) receiving terminal.
The blue hydrogen — made with fossil gas with the carbon emissions captured and stored (CCUS) — was also earmarked for use in the area’s power stations supplying giant UK electricity customers such as the London Underground, as well as for use as hydrogen fuel for London buses and road freight.
The project hinged on reforming regasified LNG from the National Grid-owned Grain terminal, turning it into hydrogen using an autothermal reformer (ATR), before capturing the carbon dioxide and disposing of it offsite.
But the Project Cavendish consortium fell apart when it realised the extent of technical and economic uncertainties associated with the project, according to a source familiar with the matter.
The UK has also yet to unveil its subsidy mechanism for CCUS.
Pointing out that the LNG imported to the Grain terminal carries an even higher carbon footprint than domestically produced fossil gas, he also warned that the plan to ship captured carbon to Scotland from Kent would prove prohibitively expensive and carbon-intensive.
For some of the partners, the Project Cavendish exit appears permanent. Uniper, which had hoped to host the project on the site of its 1.3GW Grain gas-fired power plant with a view to eventually converting it to run on hydrogen, has recalibrated its plans.