Much anticipated strategy Hy-lights the challenge ahead

Hydrogen strategy
18 Aug 2021

TNEI welcomes publication of the much-anticipated UK Hydrogen Strategy. The contribution that low carbon hydrogen can make towards achieving net-zero could be huge. Having been involved in energy and transport system demonstration projects involving green hydrogen generation and use since 2008 we understand the energy system opportunities and the challenges to scaling up both supply and demand.

Hydrogen has potential to be a key contributor in helping achieve ambitious net-zero targets in the UK. The strategy's whole energy system approach is essential. Its roadmap sets out a series of ambitions aligned with key targets such as 40GW of offshore wind generation by 2030, feeding an integrated hydrogen network that supplies a wide range of industrial and transport users. However, the key question is how quickly can we deliver each part of the puzzle? Ramping up green hydrogen production will need speedy deployment of high volumes of renewable electricity generation. While the technology for that generation is very well established, and the UK has the skills, the renewables industry needs greater investment stability, more simplified early-stage development and consenting processes as well as proactive complementary power grid infrastructure development.

The strategy published yesterday does not provide the clear insight into market support that we would have liked to see to reduce project development investment risk. But it does commit to detailing the revenue mechanism later this year and finalising the Hydrogen Business Model in 2022 so that the first contracts can be allocated in the first quarter of 2023. How that business model influences the profile of investment and focus on scales of development will be critical to the success of the strategy.

Overall, the strategy is comprehensive and logical. We look forward to seeing more detail on the business models and to the Hydrogen Sector Development Action Plan and working with our new and existing clients to take up the challenge. To discuss how TNEI can support your hydrogen energy projects and consider the opportunities and challenges around hydrogen please contact one of our experts