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Platts launches UK low-carbon hydrogen assessments ahead of state strategy

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Platts launches UK low-carbon hydrogen assessments ahead of state strategy

Highlights

Reforming with CCS, electrolysis pathways assessed

26 low-carbon projects announced: Analytics

Hydrogen strategy due later this year

London — S&P Global Platts launched a suite of UK hydrogen price assessments April 1, shedding light on three different low-carbon production pathways for the energy carrier ahead of publication by the government of a formal hydrogen strategy.

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The assessments reflect the daily cost of hydrogen production via autothermal reforming of natural gas with carbon capture and sequestration, proton exchange membrane electrolysis and alkaline electrolysis.

"The UK has significant plans aimed at accelerating hydrogen production and consumption as part of its 2050 Net Zero carbon plan, and hydrogen continues to attract interest from investors, policymakers and energy market participants as a carrier for clean energy," said Jeffrey McDonald, Hydrogen Pricing Specialist at S&P Global Platts.

Project data compiled by S&P Global Platts Analytics show plans for 26 low carbon hydrogen projects, totaling potential investment of GBP6.54 billion ($8.97 billion) over the next decade.

Low-carbon hydrogen is a key component of the government's Ten Point Plan for a Green Industrial Revolution. The plan, announced in November 2020, outlines a range of measures to support the development and adoption of hydrogen, including a GBP240 million ($331 million) Net Zero Hydrogen Fund.

Support thus far has focused on fossil-based production with CCS, the government on March 17 announcing industrial decarbonization funding of GBP171 million for nine projects across five industrial clusters.

The projects -- in Scotland, South Wales, Merseyside, Humber and Teesside -- support engineering and design studies into carbon capture usage and storage and hydrogen infrastructure. These include the HyNet North West project on Merseyside, Net Zero Teesside and H2H Saltend on Humberside.

Underlining the current direction of travel, on March 18 oil major BP announced it would study installing up to 1 GW of fossil-based hydrogen capacity with CCS on Teesside by 2030.

BP said 1 GW of capacity could produce up to 260,000 metric tonnes of hydrogen a year in theory, although actual output would be lower due to maintenance and the need to build demand.

The UK has a target of 5 GW of "low carbon" hydrogen production by 2030. A detailed hydrogen strategy is due to be published in the coming weeks, although government sources were not immediately available April 1 to confirm exactly when.

Platts' calculated hydrogen prices reflect both the commodity production cost and the capital expenditure associated with building a hydrogen facility, expressed in GBP/kilogram and GBP/kilowatt hour.

For autothermal reforming with CCS, Platts' methodology assumes plant efficiency of 68%, a capacity factor of 95% and a CO2 capture rate of 95%.

For alkaline electrolysis the methodology assumes electrolyzer efficiency of 67% and a capacity factor of 95%.

For PEM electrolysis, electrolyzer efficiency of 58% and capacity factor of 95% are assumed.

Per kW installed capital cost assumptions in the methodology equate to around GBP646 for ATR with CCS, GBP631 for alkaline electrolysis and GBP1,003 for PEM electrolysis.

Platts Atlas of Energy Transition