Arup believes that the establishment of a strong hydrogen economy is a very real opportunity and within reaching distance, but how far away is the finishing line? By Nick Herbert.
If the world is to realise the aims of the Paris Agreement, the energy system needs an another way of moving large volumes of energy in addition to a decarbonised electricity grid. Arup, the multinational professional services firm providing design, engineering, architecture, planning, and advisory services, sees hydrogen as playing a critical role in moving energy at the scale required.
“On a typical winter's day in the UK, around 1/6th of our energy travels as electrons, about a third of our energy as liquid fuels, and half of the energy we're using goes through the gas grid,” said Mark Neller, Arup’s energy leader for the UKIMEA region. The proportion of energy moved through the gas network can rise dramatically over breakfast on a cold winter’s day to as much as six times that of the electricity network, according to Neller.
“Even if you take the most optimistic view on energy efficiency measures and demand reduction, the idea that we could put the entirety of our energy system onto an electricity network looks very challenging,” he concludes.
Neller, a mechanical engineer with experience in gas and electricity distribution, joined Arup 16 years ago and over the last five years has been focused on developing its portfolio of hydrogen projects. “Arup’s energy business is focused on accelerating the pace of decarbonisation, helping to achieve 2050 decarbonisation and net-zero targets and assisting clients thrive through the transformation in the energy system,” he said.
The energy business is split five ways: hydrogen and carbon capture utilisation and storage (CCUS); HVDC network; nuclear; urban energy; and renewables. There are some 700 heads working on energy projects across the UK, with around 130 focused on hydrogen. Clients include the UK government, for which it acts as hydrogen technical adviser in support of various strategies including the development of a low carbon hydrogen standard, project evaluation and the business models to attract private finance.
Hydrogen has significant potential for the transfer and storage of renewable energy and the supply of clean fuel for residential, industrial and transport activities. Substantial quantities of hydrogen are already produced from fossil fuels and consumed in various industrial processes, including the production of ammonia. Many of the components necessary for producing and using hydrogen already exist and are mature technologies.
Addressing the generation of low-carbon hydrogen and its wider distribution and use throughout the economy, however, have challenges. Green hydrogen, produced by splitting water into hydrogen and oxygen by electrolysis, requires a source of low carbon power, such as solar or wind power – and some would argue nuclear (although different colours are also ascribed to hydrogen produced in this way) – as well as lots of clean water. Blue hydrogen is produced by splitting natural gas into carbon dioxide and hydrogen and then storing the carbon dioxide. The reformation process is associated with CCUS technology.
In the UK and in Europe, there will almost certainly be three sources of hydrogen, according to Neller. “Green hydrogen from constraint renewables makes sense as we put more and more renewables onto the electricity grid,” he said. “But if you look at predictions of volume requirements, green hydrogen is not going to be enough to meet European or UK demand.”
The 2021 European Hydrogen Backbone report analysing future demand, supply, and transport of hydrogen concluded that the European Union (EU) and UK could see hydrogen demand of 2,300TWh, 2,150TWh–2,750TWh, by 2050, corresponding to 20%–25% of EU and UK final energy consumption by 2050. “We see two other sources of low carbon hydrogen filling the gap: blue hydrogen and international imports,” said Neller. “And the balance of those three is currently unclear.”
Two things determine the price of green hydrogen: the price of electricity and the efficiency and capital cost of the electrolysers. Both charges are falling as the cost of renewable electricity reduces and as electrolysers become more efficient and manufactured at scale. Supply chain and energy security risks are minimised by a broad geographic spread of electrolyser manufacturers.
Sheffield-based ITM Power recently signed two contracts, each for the sale of 100MW of PEM electrolysers to Linde Engineering. Siemens manufactures the Silyzer and Arup is working with Enapter, winner of the inaugural Earthshot Prize, on its plans to scale up.
“There's a wide variety of electrolyser manufacturers in lots of different locations,” said Neller. “And there's new technologies coming along all the time.” Nevertheless, the low-carbon hydrogen sector is still in its infancy. “The basic building blocks are starting to come together,” he said. “We're seeing lots of projects forming on both the blue and green hydrogen side.”
Several green hydrogen projects are being developed that will help in decreasing the cost of production to a point where it is competitive with alternative energy sources. As in the early stages of wind power development, these green hydrogen projects will prove invaluable in testing the technology, improving production efficiency, demonstrating the viability of business models, cutting costs and building scale.
In December 2022, the UK updated its hydrogen strategy doubling its low carbon hydrogen production capacity ambition to up to 10GW by 2030 with at least half from electrolytic hydrogen. Policy provision included the launch of the first Electrolytic Hydrogen Allocation Round – offering joint Net Zero Hydrogen Fund (NZHF) and Hydrogen Production Business Model (HPBM) support – and the appointment of a UK Hydrogen Champion, Jane Toogood, bringing industry and government together to accelerate the development of the UK hydrogen economy, assess opportunities and identify barriers. It recently extended Toogood’s appointment for a further six months.
The Department for Energy Security & Net Zero (DESNZ) shortlisted 20 projects in the NZHF and HPBM funding round. The shortlist totals 408MW and DESNZ expects to award 250MW. The department wants to sign the hydrogen agreements by year-end, moved back from the original target of July. Projects apply for HBM revenue support only, or they can apply for joint HBM revenue support and capex support through the NZHF. The winning projects will be able to get a grant backing 20% of the capex of the project. The HBM revenue support will cover the cost of the gap between hydrogen and cheaper natural gas. It is believed £100m was allocated for the first round of projects in the first year, with subsequent years to be funded by an industry levy.
Five industrial clusters are being developed in the UK: HyNet in the north-west, and the Teesside, Humberside, Scottish and Welsh hubs. There are also modular-style developers. Both strategies have their merits.
“The idea that you can produce hydrogen at the point where you need it at relatively low volumes – for things like distilleries and transport use – is very positive. But we also need to be in the mass manufacturing business for hydrogen,” said Neller. “The industrial clusters and the hydrogen projects that are in development in the UK are obvious locations to start mass production of all sorts of low carbon hydrogen.”
Production of low-carbon hydrogen at scale needs to take place in areas where renewable energy – wind and solar – is in ready supply or, in the case of blue hydrogen, where carbon capture and storage projects are in place.
Jeremy Hunt, the UK Chancellor of the Exchequer, recently announced that the UK government will make some £20bn available for carbon capture projects. As low-carbon hydrogen production is ramped up, the next challenge is delivering it from where it is produced to where it is used. Hydrogen can be transported as compressed gas, liquid hydrogen or other chemical compounds such as ammonia. Pipelines are well suited for the distribution of large volumes of hydrogen.
“Pretty much all of the technical challenges for using pipelines for transmission and distribution are well understood,” said Neller. “Safety work is nearing completion and the next phase of development has received funding.”
Gas distribution and transmission companies are looking at using existing networks, where it will blend hydrogen with natural gas, as well as building new hydrogen pipelines. National Grid Gas Transmission has been granted £1.1m in funding for 10 projects to further investigate the future of gas compression of hydrogen and hydrogen blends and test how its equipment will operate.
The firm’s flagship project, Project Union, explores transitioning to a 100% hydrogen transmission system by repurposing existing transmission pipelines to connect major locations for hydrogen production, storage and demand. It envisages the creation of a 2,000km low-cost hydrogen backbone, representing around 25% of the UK’s current natural gas transmission pipelines, by the early 2030s. It will also link to the proposed European Hydrogen Backbone, which will enable hydrogen to be moved across Europe, creating the potential for the development of an international trading market.
Transporting hydrogen across long distances as liquid in super-insulated, cryogenic tanker trucks is also possible but moving hydrogen around in "bottles" is not particularly efficient, according to Neller.
“It’s OK as an interim solution, but if you really want to move large volumes of energy around quickly, then pipelines are the way to go,” he said. “It's even more cost effective to move energy as molecules through pipelines than it is to move it through electricity cables as electrons.”
Another part of the hydrogen infrastructure needing attention if the gas is to be used at scale is an increase in the capacity of storage mechanisms, building up reserves for later use at times when electricity demand is low. In the UK, for example, hydrogen is already stored in three former brine caverns in the Saltholme Brinefield, Teesside.
While the supply side of the low-carbon hydrogen equation is moving in the right direction, the demand side needs stimulating.
“An obvious first thing to do with low-carbon hydrogen is to displace the existing use of hydrogen in things like the manufacturing of fertiliser, in the petrochemical industry and in heavy industry,” said Neller. “There’s more to do there.”
Using hydrogen to load balance the electricity grid is also something that could be adopted but “that would require gas turbines running on 100% hydrogen, and that technology is in the laboratory at the moment and requires deployment at scale”, he said.
Hydrogen in transport is another avenue of demand, particularly as hydrogen vehicle technologies improve in terms of capacity and efficiency.
“There is a massive industry around installing fuel cells in transport, and we do have some strong capability in the UK,” said Neller. “But this sector really needs scaling up because we don't have a major HGV manufacturer in the UK.”
Transport applications where electrification is difficult is another area where hydrogen could play a bigger role. Arup is providing rail engineering consultancy services for technical concepts, high-level design, and safety strategies for the Scottish Hydrogen Train project led by Scottish Enterprise, in collaboration with Transport Scotland and the hydrogen accelerator at the University of St Andrews.
The project involves the design, installation, and demonstration of a hydrogen-powered train in an effort to support the development of the technology as well as the retrofit of old rolling stock. Deployment is planned for between 2026 and 2027.
“All the technology works, it's more about understanding where it's most effectively deployed and where it's cost effective in comparison to electrification solutions,” he said. “Then it’s about rapidly scaling up and deployment.”
Then there’s the potential for hydrogen to replace natural gas in the residential and commercial space. Hydrogen is no more or less dangerous than other energy carriers as long as infrastructure, facilities and products are suitable designed. Indeed, hydrogen made up to 60% of the gas being used in Britain as town gas before the discovery of North Sea gas in the 1960s. Domestic appliances can already take a blend of hydrogen and natural gas and new boilers, gas burners and cookers are being developed in preparation for the conversion of networks to hydrogen.
Costing the earth
There is widespread acceptance that hydrogen does have a substantial and significant role to play alongside other technologies in helping reach net-zero targets but to realise its potential it needs the right economic and business models.
“There's plenty of organisations really keen to deploy capital in this area,” said Neller. “In the UK, the industrial cluster process and government funding supports the development phase of projects, and then we need a CFD model similar to the one deployed for offshore wind.”
Reaching a low-carbon hydrogen solution is not just a net-zero issue, there are wider economic benefits from the development of the sector. Those that benefit the most will be the ones that drive forward on the demand side and scale up the ability to use hydrogen across a wide variety of sources.
“It’s about time and it's about pace,” Neller said. “And it's about getting that first mover advantage because those countries that move first are going to be the ones that get the manufacturing jobs and the ones to realise the competitive advantage from hydrogen.”
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