A new white paper from Westwood Global Energy Group (Westwood), the specialist energy market research and consultancy firm, highlights a bountiful pipeline for the UK hydrogen sector, with 17 GW of capacity projected to come online by 2030.
However, only a small number of demonstration-sized green hydrogen projects have thus far reached a final investment decision (FID) and the execution of a successful hydrogen economy rests on government shoulders and cross-value chain collaboration.
Following Russia’s invasion of Ukraine 12 months ago, the UK government doubled its original 5 GW low-carbon hydrogen production, and by taking a two-pronged approach and supporting both blue and green hydrogen the industry is already setting itself up for success.
Westwood analysis shows that blue hydrogen currently accounts for the lion’s share of announced capacity (14.3 GW out of 17 GW), and traditional oil and gas players are leading the way. Shell is the largest participant in the development of blue hydrogen projects in the UK, involved in three projects that will develop 3.3 GW. Vertex Hydrogen (a joint venture between Essar and Progressive Energy) is developing 3.3 GW through Hynet.
Equinor’s two projects will add another 1.8 GW. In contrast to blue, green hydrogen accounts for a much smaller capacity of around 2.6 GW in total; capacity is much more fragmented, with smaller project sizes and a higher number of developers.
However, according to Westwood’s analysis, political instability and a lack of government clarity around future support, unfinalised definitions and the approval of business models could stunt growth potential.
Joyce Grigorey said: “Global competition is quickly heating up and any delay in the government’s steer could have adverse consequences for the UK’s hydrogen ambitions should investors believe they can gain higher returns elsewhere.
“But with a collaborative push the UK could become a leader of a successful hydrogen economy, with significant strides already being made across blue and green hydrogen, and carbon capture and storage.”
The insight follows the appointment of Joyce Grigorey to her newly created role in November 2022 and the launch of Westwood’s latest New Energies intelligence solution, Atlas New Energies, in September 2022.
David Linden commented on opportunities for the sector: “There is significant potential for hydrogen and carbon capture and storage in the UK. There is no shortage of money or willingness across the industry; however, stakeholders are under no illusion that it will still take a herculean effort to ensure the success it’s capable of.
“As part of our wider Energy Transition offering, we’re tracking projects across the whole hydrogen ecosystem in the UK and Norway through the Atlas New Energies platform. With our in-house specialists we support our clients with the strategic, technical and commercial concerns they have as the industry continues to take shape.”