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Scottish offshore wind consortium studies Orkney renewable hydrogen project

Highlights

2-GW wind farm proposal to power Flotta Hydrogen Hub

Consortium eyes first production from 2028-29

Wind licensing round decision expected Jan 2022

A consortium bidding in the Crown Estate Scotland's ScotWind offshore wind leasing round is studying the potential to develop a renewable hydrogen production plant on Orkney, powered by 2 GW of wind power, the group said in a statement Oct. 12.

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Offshore Wind Power Ltd (OWPL), a consortium of Macquarie's Green Investment Group, TotalEnergies and Scottish developer Renewable Infrastructure Development Group (RIDG), has submitted a bid to develop the N1 area west of Orkney.

If successful, the proposed 2-GW West of Orkney Windfarm could supply renewable power to a hydrogen production facility at the Flotta Terminal, OWPL said.

"Green hydrogen could provide a critical alternative route to market for some of Scotland's largest offshore wind projects and play a significant role in creating wider economic benefits as the North Sea goes through its energy transition," Head of Green Investment Group Europe Edward Northam said.

OWPL is developing plans for the Flotta Hydrogen Hub in partnership with the Flotta Terminal's owner Repsol Sinopec, and Uniper.

The development is in the pre-front end engineering design stage, a spokesperson for the consortium told S&P Global Platts.

The project partners aim to secure funding in 2022, taking a final investment decision in 2025 before first production and export of hydrogen in 2028-29, the spokesperson said.

The development is predicated on a successful outcome of the offshore wind bid and securing Contracts for Difference, as well as the development of a hydrogen market, the spokesperson said.

Crown Estate Scotland expects to announce initial ScotWind offers in January 2022. It is seeking to award leases for up to 10 GW of offshore wind capacity, including floating wind, to be built over the next decade.

The project has the potential to deliver renewable hydrogen to domestic and export markets, Uniper Hydrogen CEO Axel Wietfeld said in the statement.

"We now await the outcome of the ScotWind offshore wind leasing round, in anticipation that the proposal can be then realized," Wietfeld added.

The consortium has finalized a power grid connection agreement with National Grid enabling the project to start generation in 2029, it said in a statement Sept. 29.

It also has an exclusive memorandum of understanding with the European Marine Energy Centre on Orkney, which is supporting the hydrogen project.

The project would enable the Flotta Oil Terminal, which receives crude oil from North Sea fields, into a "diversified energy hub where conventional oil and gas operations continue, co-existing alongside the development of a sustainable long-term green future for the facility," Repsol Sinopec CEO Jose Luis Munoz said in the statement.

Calculated costs for renewable hydrogen production via electrolysis of water have risen sharply in recent weeks on the back of high power prices.

S&P Global Platts assessed the cost of producing hydrogen via alkaline electrolysis in the UK (including capex) at GBP13.61/kg ($18.51/kg) Oct. 11.

PEM electrolysis production was assessed at GBP16.10/kg, while blue hydrogen production by autothermal reforming was GBP4.80/kg (including capex, CCS and carbon).

However, costs are expected to come down rapidly, with expectations that low-carbon and renewable hydrogen production could be cost-competitive with unabated fossil fuel-derived production by 2030.