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Building a strategy

Published by , Editorial Assistant
Global Hydrogen Review,

Against the backdrop of the UK’s ‘Hydrogen Strategy’, which was announced in 2021 and was hailed as a ‘green industrial revolution’, hydrogen has played an increasingly critical role in the decarbonisation of the UK’s energy system.

Pilot projects

Across the UK, a number of pilot projects have used hydrogen. For instance, last year Centrica Business Solutions announced that it will commence a 12-month trial to inject hydrogen into its existing 49 MW gas peaking plant in Brigg, Lincolnshire, England, with the use of HiiROC’s technology that produces so-called ‘emerald hydrogen’ – a type of hydrogen created using a process known as Thermal Plasma Electrolysis. This is the first time that hydrogen will be used within a grid-connected, gas-fired power plant. Blending hydrogen with natural gas will reduce the overall carbon intensity of the plant. Additionally, the byproduct of emerald hydrogen is a form of solid carbon called carbon black, which can be captured easily and has commercial value, as carbon black is used in the production of tyres, rubbers and toners, and also in building materials and soil enhancers. The outcome of this trial will be important in informing future use cases of this technology and its wider deployment across gas-fired peaking plants.

Hydrogen is also being trialled in the quest to develop a cleaner and more efficient transportation sector in the UK. The first phase of a pilot project kickstarted at Teesside Airport in Darlington, England, with the use of vehicles fitted with 100% hydrogen, zero-emission engines.

The UK’s Hydrogen Strategy

The raft of pilot projects in the hydrogen sector has been propelled by the UK’s commitment to work with industry to meet its ambition to develop the country’s low-carbon hydrogen production capacity. The UK announced a £105 million funding package through its Net Zero Innovation Portfolio as a first step towards building the UK’s low-carbon hydrogen economy. The funding package takes the form of various grants to businesses and developers to support the development and trials of solutions to switch industry from high- to low -carbon fuels such as natural gas to clean hydrogen, for instance.

Additionally, in April 2022 the British Energy Security Strategy was published, outlining the government’s plan to double its hydrogen production target from 5 GW to 10 GW by 2030. In order to meet this target, the Net Zero Hydrogen Fund (NZHF) was announced, whereby £240 million of available funding will be distributed to eligible low-carbon hydrogen projects across four strands. Which strand a project can apply for depends on its maturity and the level of support required:

  • Strand 1: DEVEX support for early projects to cover FEED studies and post-FEED studies.
  • Strand 2: CAPEX for projects that do not need a hydrogen business model (HBM) – a project applying for this strand must exist on its own merit and solely require CAPEX support.
  • Strand 3: CAPEX for projects requiring an HBM.
  • Strand 4: CAPEX for carbon capture, utilisation and storage (CCUS) projects requiring an HBM.

The HBM is a financial support mechanism incorporated into strands 3 and 4, and is designed to subsidise operational costs to encourage and support the hydrogen market. It is provided together with funds granted through the NZHF, as a long-term revenue support contract.

Written by Conrad Purcell and Shu Shu Wong, Haynes and Boone, LLP.

This article was originally published in the Summer 2023 issue of Global Hydrogen Review magazine. To read the full article, simply follow this link.

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