Storegga seeks partner for UK hydrogen project as ScottishPower pulls out

Storegga is seeking a new partner for its planned 10.6-MW Cromarty renewable hydrogen facility in Scotland, after ScottishPower said it would pull out as it pauses UK developments in the sector.

'We are aware of ScottishPower's intention to withdraw from Cromarty Hydrogen Project," a company spokesperson told Platts, part of S&P Global Energy, by email Sept. 3. "Storegga is actively exploring options to secure the long-term future of this strategically important project and its potential role in industrial decarbonization."

The project has signed a grant agreement with the UK government under its first electrolytic hydrogen allocation round, though it has not yet reached a final investment decision or drawn any of the funds.

The plant would supply up to 6.5 mt/d of renewable hydrogen.

The UK's Department for Energy Security and Net Zero said the HAR program was boosting the country's hydrogen sector.

"Although HAR1 was a first-of-a-kind allocation process where the risk of some projects not proceeding to construction and operation was expected, the number of projects that are progressing remains strong," a DESNZ spokesperson told Platts by email Sept. 2.

ScottishPower halted all its renewable hydrogen project developments amid "challenging market opportunities" and a limited route to market, it said Sept. 2.

Cromarty was originally a collaboration between the Port of Cromarty Firth, ScottishPower, Glenmorangie, Whyte & Mackay, Diageo and Storegga during the feasibility stage, focused on supplying hydrogen to local whisky distilleries to help decarbonize their operations.

A feasibility study was carried out in 2021, the group said on its website.

The proposed development would be powered by renewable electricity, either directly from ScottishPower's existing 29-MW Beinn Tharsuinn Wind Farm or through the grid via power purchase agreements with renewable energy guarantees of origin, the group said in a planning document.

Platts assessed the cost of producing hydrogen via alkaline electrolysis in the UK (including capex) at GBP5.48kg ($7.36/kg) on Sept. 3, based on month-ahead grid power prices.

The Cromarty project signed a grant agreement with the government via the Low Carbon Contracts Company with Storegga at an initial strike price of GBP214.27/MWh (about GBP8.44/kg), equivalent to a current strike price of GBP255.39/MWh.