Hydrogen cluster up for grabs
Decarbonising heavy industry is one of the thorniest challenges of the energy transition - as is the question of the role of hydrogen in accomplishing it. Utility Week visits the two contenders bidding to win government backing to showcase the UK's first hydrogen cluster
By David Blackman, policy correspondent
Hydrogen cluster up for grabs
Decarbonising heavy industry is one of the thorniest challenges of the energy transition - as is the question of the role of hydrogen in accomplishing it. Utility Week visits the two contenders bidding to win government backing to showcase the UK's first hydrogen cluster
By David Blackman, policy correspondent
They are two of England’s traditional industrial powerhouses. The north west was famously the birthplace of the Industrial Revolution, while the Humber Estuary emerged later as a key hub of UK petrochemicals after the Second World War. However, both areas have suffered from major de-industrialisation in recent years.
Now a major new government energy initiative holds out the prospect of an industrial renaissance for one of these regions. The two areas are pitted against one another in the government’s competition to create the UK’s first hydrogen cluster. They are bidding for £500 million-worth of support through the Department for Energy Security and Net Zero’s Hydrogen Transport and Storage (T&S) Business Model.
The outcome of the heavily delayed competition, which is designed to pay for the construction of a bespoke hydrogen pipeline network and storage facilities, could secure the future of some of the UK’s best known industrial businesses. And lined up on either side are some of the biggest names in the UK utilities scene, including Cadent, Centrica and National Gas.
Utility Week visited both projects during the summer to check on how they are shaping up. In the first of a two-part feature, we focus on Humberside.
Sleeping giants
Hydrogen is regularly touted as a key fuel for the decarbonised future.
However, it probably doesn’t look like that to Yara. The multi-national fertiliser company has used hydrogen as a feedstock since 1989 at its ammonia production plant in Hull. Two years ago, though, Yara announced the closure of the plant, which is located on the outskirts of Hull at the Saltend chemical park. The company’s decision to mothball the Hull plant was driven by difficulty accessing competitively priced hydrogen.
While currently idle, the facility is maintained in a restart-ready state. However, access to reliable, low-carbon hydrogen is critical to any decision to re-open the plant, says Anita Nyvold, VP energy sourcing at Yara International. What must make this scenario particularly galling is that the shuttered Yara plant is located on the doorstep of UK’s first mooted hydrogen cluster.
Ian Livingston, UK head of hydrogen & ammonia at Norwegian gas and oil giant Equinor, points out the dormant plant en route to the heart of the proposed cluster, which straddles much of the east end of the North Humber estuary between Hull and the North Sea.
Equinor, along with National Gas, Centrica and SSE Thermal, make up the four partners in the Hydrogen Humber bid.
The mooted cluster’s nervous system is an approximately 45km-long pipeline. This connects the potential end hydrogen users, like Yara at the Saltend chemical park, with large scale production and storage hydrogen projects at nearby Aldbrough and Centrica’s Easington terminal.
The proposed pipeline network also includes a spur across the Humber to link up with the power stations and petrochemical plants on the river’s south bank. And it provides for a connection to National Gas’s proposed Project Union nationwide hydrogen network.
Sceptics often play down hydrogen’s potential future role by arguing that many of its mooted uses would be better met by electrification, such as electric vehicles and heat pumps. However, the Yara plant is a great example of how there will be a need for hydrogen in the future, says Livingston: “It can't be anything other than hydrogen because it's got to be the feedstock.”
Industries like Yara matter more relatively to the Humber economy than that of many other UK regions. Manufacturing accounts for 14.6% of regional output compared with 9.4% nationally, according to figures from the Future Humber local business network. The approximately 360,000 jobs in the Humber estuary’s energy-intensive industries account for around one-tenth of the sub-region’s employment.
The overall share of manufacturing jobs is also twice the national average in the Humber, which is also the UK's most carbon-intensive region. Around one-twentieth of the UK’s total carbon is emitted within the estuary. This makes the Humber Britain’s biggest large-scale and rapid industrial decarbonisation opportunity, the project’s backers claim.
Amount of government cash available to back a hydrogen cluster
Proportion of the Humber region's output accounted for by manufacturing
Number of jobs in the Humber estuary reliant on energy-intensive industries
New life for key site
The other lynchpin of the Humber Hydrogen project is further along the coast at the Easington Terminal, which has been one of the UK’s key sites for receiving and processing natural gas since 1967. Currently around a third of the UK’s total gas supply enters via Easington, much of it by pipeline from Equinor’s Norwegian facilities. From the highest point on the sprawling coastal site, Britain’s biggest gas store offshore at Rough can be glimpsed.
While Easington will remain a key plank of ensuring the UK’s gas security for many years, Humber Hydrogen is looking at the role that this historic and strategic energy site can play in a decarbonised future too.
The Hydrogen to Humber (H2H) Easington project, being developed jointly by Centrica and Equinor, aims to deliver up to 1.2GW and 1GW of blue and green hydrogen production respectively around the existing terminal. The first step is a bid, submitted for the second round of the government’s Hydrogen Allocation Round (HAR), for green hydrogen electrolysers. H2H Easington eventually plans to scale up hydrogen production at the site to 400MW by 2030.
However, round two of HAR, like the T&S competition that was due to be announced nearly a year ago, is heavily delayed. This matters due to the chicken and egg nature of hydrogen production and use. There is no point investing in the T&S project if no customers exist, Livingston points out: “Customers need production of hydrogen so you have to line up all of the investment decisions for all parts of the value chain to fit together.”
And projects like storage have long lead in times, he says: “It takes a really long time to build these caverns and therefore you have to have made your decisions to do that long before you actually need it.”
Agreeing, Gillatt says. “There's no point in having a store without a pipeline and there's no point in a pipeline without a store or without customers and producers.”
The way the government has chosen to fund hydrogen T&S has made it a more vexed issue politically. While the government decided to directly fund CCS, it has chosen to put the costs of hydrogen T&S on to another mechanism called the Gas Shipper Obligation (GSO). This charge, which is based on the units of gas traded or sold, will ultimately end up on customers’ bills, says Livingston: “The more hydrogen you do, the more it [the GSO] is put on customer bills.”
The rationale for the T&S project being funded via the GSO levy when the project was first being developed in the late 2010s was that hydrogen was envisaged at the time as a “replacement” for natural gas across a range of different end uses, he says. Now, though, instead of a being seen as a “Swiss Army knife that can do everything for everybody”, hydrogen is being viewed like “more as a scalpel” that will have very specific uses, like substituting gas in heavy industry.
“It's all waiting for government announcements and that's the frustration,” Livingstone says.
However, the Humber’s natural salt caverns, heavy industrial base and skilled workforce make it the ideal location for large-scale hydrogen infrastructure development, he says. “You've got geography and geology that enable it. You're reasonably close to the CO2 stores.
“The salt exists here at the right depth at the right thickness to be able to get a cavern that's the right size and you've also got lots of industry and power generation, which means it's the right place to bring those things together.”
The question is whether the government will agree.
Next week, we take the West Coast Main Line to Cheshire to look at Hynet’s rival plans.
