Report explores how to create a hydrogen economy


Energy Systems Catapult has released a report, setting out what it says is the “most comprehensive picture to date” on how to create a hydrogen economy.

Delivered for Milford Haven in Wales, the report detailed the structures of policy, regulation, markets, technologies and interoperability with other energy vectors such as natural gas and electricity to enable hydrogen to form an integrated part of a smart local energy system. Taking a multi-faceted approach, it investigated local renewable energy; diversified seed markets for hydrogen across buildings, transport and industry; consumer trials of fuel cell vehicles; and hydrogen-ready heating systems.

Milford Haven, it noted, has the potential to lead the net zero transition. It can handle 30% of total UK gas demand, plays host to Europe’s largest gas power station and has ambitions to build 90MW of floating offshore wind, while economically it supports 5,000 jobs and delivers £324mn to the Pembrokeshire economy.

It found smart local energy systems to be dominated by a substantial number of complex inter-relationships, namely between people and technology to business models to markets to regulations to policies; local areas, regions and national systems; vector to vector interfaces, between electricity, natural gas, hydrogen, water and liquid fuels; production and usage, including storage; actor to actor in the value chain; and capital investment and operational revenue. A whole systems approach will be critical to ensuring development in one area is not at the expense of another, it added.

Furthermore, while net zero will be driven locally, there are key enablers in the hands of central government, meaning there is only so much local authorities, industry and other stakeholders are able to do before hitting major regulatory or legal barriers. In the case of hydrogen this is especially the case, given its early maturity. However, while these enablers are required to ensure hydrogen is fully integrated into smart local energy systems, it did note industry and local authorities can still join forces and make immediate progress.

As for the likes of government and regulators, it set out a series of recommendations to help overcome what could be “blockers” to a hydrogen heavy smart local energy system, including a more comprehensive approach to carbon pricing to make hydrogen appropriately valued against other vectors or carriers, such as natural gas.

It also called for early movement on regulating production until there is sufficient competition to send appropriate pricing signals; an agreed approach to network and infrastructure cost recovery; an approach to supplier obligations to encourage uptake of low carbon gases; publication of standards, particularly on purity and quality so that innovators have confidence as to the operation of their equipment; and an approach to production support, similar to CfDs, of hydrogen assets to establish and build an early set of production and storage assets until the industry becomes self-sufficient.