Scotland has an abundant offshore wind resource and massive potential to produce green hydrogen, but action is needed on the demand side
Scotland has the potential to use green hydrogen generated from offshore wind domestically and export it, but much needs to happen before that potential can be realised. To find out more about what needs to happen, OWJ spoke to one of the authors of Scotland’s recently published Hydrogen Policy Statement, Xodus renewables division manager Scott Hamilton.
Described by Mr Hamilton as “a vote of confidence” in offshore wind and green hydrogen, the policy statement suggests that unlocking Scotland’s offshore wind potential could result in it producing large-scale green hydrogen that is competitively priced in a growing European market.
Xodus’ analysis supports a long-term outlook of the levelised cost of energy falling towards £2.00/kg (US$2.79/kg), with an estimated reference cost of £2.30/kg in 2032 for hydrogen delivered to shore.
Recognising the potential of offshore wind and green hydrogen, the Scottish Government has allocated £100M (US$133M) to the hydrogen sector. It believes Scotland can become a leading hydrogen nation, generating 5 GW of renewable and low-carbon hydrogen by 2030, with an economic impact worth up to £25Bn a year to the Scottish economy by 2045. Scotland could become a hub for a European distribution network for green hydrogen produced using electricity from offshore windfarms, with existing gas pipelines re-purposed for green hydrogen, it argues.
Mr Hamilton also sees massive potential for offshore wind and hydrogen but says a decade of serious action is required to realise its potential and unlock it as an economic opportunity. Apart from electricity from offshore wind, other vectors and “something storable” like green hydrogen will be required if decarbonisation targets are to be met, he says, but a lot will also need to happen to drive the development of demand-side infrastructure.
Overall, says Mr Hamilton, the Scottish supply chain is well-placed to support green hydrogen development, but gaps in design, manufacture and maintenance of hydrogen production, storage and transportation systems will need to be addressed, “technology gaps” will need to be plugged and reskilling will be required to develop indigenous skills and capabilities.
Lots of wind and electrolysers producing green hydrogen sounds great, he suggests. So does using green hydrogen to exploit areas off the Scottish coast where there are grid constraints that make offshore wind less economic. But without the development of demand it will not be possible to set a price for green hydrogen, and without a price for green hydrogen the market will not develop.
Scotland’s offshore wind resource and green hydrogen potential is undoubted, Mr Hamilton says, but there is also much to be done on the route to market for green hydrogen and on scaling up from small-scale demonstration projects to commercial-scale supply. Who would be the initial users of Scottish green hydrogen? he asks. How might demand be created?
“What it will need is government intervention somewhere,” he tells OWJ. And with the COP26 climate conference due to take place in Glasgow in November 2021, an ideal opportunity exists for the Scottish Government to make a bold statement about developing demand. That might take the form of designating the Scottish capital for a green hydrogen initiative, he suggests.
Glasgow has a long history of innovation and the Scottish Government’s commitment to net-zero emissions makes COP26 the ideal time to kick-start demand for green hydrogen, says Mr Hamilton. Already, plans are being developed for a hydrogen-powered train that will be ready to enter service by the time the climate conference takes place, and the companies behind a £45M production facility for green hydrogen have confirmed its location in Lanarkshire, but a larger-scale initiative is needed. “The Scottish Government is looking at transport in the near-term, but then what?” says Mr Hamilton.
“In the first stage, the transport sector will play an important role as an initial price setter,” Mr Hamilton tells OWJ. “But heat networks will play an important role in the second stage. It’s about how much hydrogen the government can get into the system, and in what timeframe.”
“The more hydrogen Scotland can get into the system, the sooner it will be possible to establish a market and set a price,” he tells OWJ, but that is only part of the equation. Another part is how to create local content in the overall supply chain, how green hydrogen can be ‘localised.’ Yet another important part of the equation is developing the right engineering solutions for green hydrogen.
It has been suggested recently that the UK ought to bring in a contracts for difference (CfD) mechanism for green hydrogen that is harmonised with the CfD for offshore wind or that space ought to be created for the development of offshore windfarms that would incorporate green hydrogen production.
Developers are said to be considering green hydrogen in their plans for ScotWind Leasing, but what they most need is a clear, financeable route to market, says Mr Hamilton.
“Production of green hydrogen from offshore wind can help overcome Scotland’s grid constraints and unlock a massive clean power generation resource, creating a clean fuel for Scottish industry and households and a valuable commodity to export,” Mr Hamilton concludes. “But apart from action to stimulate the demand side, strategic investment in hydrogen transportation and storage will also be essential to unlocking the economic opportunity.”
Engineering green hydrogen from floating wind
Following a competitive tender, The Scottish Government has awarded the European Marine Energy Centre (EMEC) a contract to explore opportunities for floating offshore wind and hydrogen supply chains in Scotland and France.
EMEC will partner with French engineering firm INNOSEA and London-based Renewables Consulting Group (RCG) to carry out research to understand the technical status of floating wind and hydrogen in Scotland and France, and identify ways that collaboration can be encouraged to address challenges of mutual interest.
Research and development is required to identify engineering solutions to increase the competitiveness of floating wind and green hydrogen technology. Towards this aim, the consortium will evaluate the technical status of the floating wind and hydrogen production components and systems that are under development, accounting for the impacts of the policy context and innovation programme landscape in the two nations.
The consortium has also been tasked with engaging with floating wind and hydrogen supply chain companies to seek feedback on existing collaboration successes, as well as identifying opportunities to facilitate ‘joined up thinking’ and cross-border activity. The findings of the project will be published in a report later in 2021, ahead of COP26.
RCG associate director and floating wind lead Dan Kyle Spearman says, “Exploring new engineering solutions for floating wind linked to green hydrogen production is going to be an important innovation for the energy transition.”