London — The UK government should set a target of 5 GW of renewable electrolyzer capacity by 2030 and 10 GW by 2035, along with a cost reduction target of GBP2 ($2.55) a kilogram of green hydrogen by 2030 down from GBP8/kg now, renewable energy association RenewableUK said Sept. 23 in a new report.
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Achieving the targets would mean that by 2030, green hydrogen would be cost-competitive with blue hydrogen made from methane with carbon capture and storage, the association said.
"Clean hydrogen would help us to reach net zero faster, as current CCS technology fails to capture up to a fifth of all carbon emissions," it said.
The current costs of renewable hydrogen electrolyzers were estimated to be around GBP800/kW at 10 MW capacity.
The Gigastack project on Humberside, backed by government funding and led by ITM Power and Orsted, would deliver cost reductions of around 50% on this, the association said.
For its part, the renewables sector was confident it could repeat the success of offshore wind in driving down the cost of green hydrogen, the report said, but a fully-fledged government strategy was needed by the end of the year.
This should focus on supporting research and development spending on electrolyzer systems, with a commitment to a certain volume of hydrogen to be produced from a pipeline of projects, and a clear view on how demand for hydrogen would develop.
In detail, a revenue support mechanism for hydrogen production taking carbon costs into account could drive investment and cost reduction via a hydrogen Contract for Difference, or a Hydrogen Obligation Certificate.
"Hydrogen is already emerging as a solution to decarbonizing long-distance transport, either directly or as a feedstock for other fuels," the report said.
Transport was a good place to start for implanting a renewable hydrogen economy, it said.
"Hydrogen Europe estimates that at Eur5/kg (roughly GBP4.50/kg), hydrogen is competitive with diesel; a price achievable in the near term. Hydrogen for transport can be rapidly deployed as a source of demand for an expanding hydrogen supply, while other sectors, especially industrial processes and gas networks, ready themselves for the transition," it said.
Blue vs Green
The UK government is already supporting the development of hydrogen, but modest funding to date has focused on production of blue hydrogen from natural gas with CCS, while support for the Gigastack electrolysis project is an exception, reflecting the dominant nature of gas in the UK energy mix.
RenewableUK's database shows a pipeline of 27 renewable hydrogen projects which are operational, under construction, consented or in planning, with a capacity of just 33 MW.
Top 16 UK hydrogen electrolysis projects
From these humble beginnings, RenewableUK's Director of Future Electricity Systems, Barnaby Wharton, said renewable hydrogen would be "the next big global industry" in the decades ahead.
"The UK is well placed to lead this new industry, with plentiful renewable resources and world leading hydrogen companies. We're urging Government to come on board with us by setting out a strategy to secure a multi-billion-pound prize which will create tens of thousands of jobs around the country," he said.
Association spokesman Rob Norris told S&P Global Platts a good first step would be recognition of the need for full-scale pathfinder green hydrogen projects in the government's Energy White Paper, due this autumn. "We think this is one of those technologies which shouldn't be ignored by the White Paper," he said.
Almost all the UK's hydrogen supply is produced from methane gas via steam methane reformation.
SMR is a highly carbon-intensive process -- for every ton of hydrogen, 10 mt of carbon dioxide are produced.
"CCS is currently only around 80%-90% efficient, meaning it still releases a significant portion of the carbon dioxide and will add significant cost," the report said.
RenewableUK was instrumental in forming the Offshore Wind Sector Deal in March 2019, a partnership between government and industry to raise the sector's productivity and competitiveness and reach up to 30 GW of generating capacity by 2030.