Exploring the Potential Interactions Between FLOW & Hydrogen Report

04 October 2022

The UK Government’s Ten Point Plan and British Energy Security Strategy have set the direction of
travel to 2030; alongside other technologies, there is to be a major ramp up of offshore wind and
hydrogen production via electrolysis. Together, these will have a significant effect on the energy
system. Although there is some uncertainty around the manner in which these new targets will be
reached, they have great potential to deliver positive outcomes for the country.
Among the numerous hydrogen production routes, offshore wind powered electrolysis is looking
increasingly attractive for the UK and Europe. High gas prices are pushing the cost of blue hydrogen to
around £5.70/kg1 2. Against this backdrop, the costs of green hydrogen from offshore wind are
projected to fall substantially; numerous research groups expect it to be competitive with, or even fall
below this blue hydrogen cost by around 2025, then fall further to between £1.50 – 3/kg by 20503 4.
Results from numerous energy system modelling studies support investment in hydrogen technology.
Investment group CLSA Limited have reviewed findings from five organisations: Bloomberg New
Energy Finance, the International Renewable Energy Agency, the International Energy Agency, the
Hydrogen Council and the Energy Transitions Commission. These five organisations have estimated
that the world needs at least 500 million tonnes of hydrogen per year by 2050. CLSA, writing after the
ongoing crisis in Ukraine, have estimated that this quantity is now required by 2040.
CLSA have observed that the five studies expect hydrogen will provide between 12 to 22% of final
energy demand by 2050, with another study from DNV estimating that 15% is required to meet the
Paris Agreement goals. CLSA thinks this could be 15 – 20% by 2040. On average, the five studies predict
that only about a quarter of this supply comes from blue hydrogen, which emphasises the importance
of green hydrogen.
For the UK, and the Celtic Sea region, there is potential to use hydrogen, produced from offshore wind,
in sectors which are or could be supplied by British companies. Examples include using hydrogen: for
light duty transport, as is the aim of Riversimple and Microcab; for heating, as targeted by Worcester
Bosch and Baxi Heating; in refineries, which could help reduce emissions from Welsh and other UK
refineries; and as a means of decarbonizing manufacturing in South Wales, which in turn could provide
low carbon wind turbine components for Celtic Sea deployment.
There are a range of enabling actions to support green hydrogen and offshore wind, many of which
the UK Government has already set in place. Supporting actions include: Contract for Difference style
allocation rounds to support production; introducing standards, such as the low carbon hydrogen
standard; providing support for electrolyser and new offshore wind grid connections; the introduction
of regulatory sandpits to accelerate novel projects; and providing targeted funding for R&D and
demonstration projects.


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