While the UK government is currently focusing on developing hydrogen production for domestic use, it considers the country to have “strong potential as a future exporter of hydrogen while maintaining secure supplies for domestic use”.

“Our Energy Security Strategy sets out our aim to make the UK more energy self-sufficient, doubling the UK’s hydrogen production ambition to up to 10GW by 2030 and supporting 12,000 jobs across the country along the way,” a spokesperson for government’s Department of Business, Energy and Industrial Strategy (Beis) tells Hydrogen Economist.

“This increased ambition will open up opportunities for companies to export UK hydrogen while domestic demand increases, particularly to continental Europe.”

“This increased ambition will open up opportunities for companies to export UK hydrogen... particularly to continental Europe” Beis

To date, the UK has signed a memorandum of understanding with Belgium, primarily to expand electricity interconnection between the two countries but with a provision to cooperate on low-carbon hydrogen in future. And while Scotland—which has its own separate, hydrogen action plan to Westminster—has signed a joint declaration of intent with the German city of Hamburg to explore potential export of green hydrogen, a wider German-UK declaration has yet to be signed.

As Germany courts countries for hydrogen supply to replace Russian gas, having signed pacts with the UAE, India and most recently Canada, the lack of engagement with the UK indicates two things: first, that Germany’s hydrogen diplomacy tour comes with added expectations for LNG exports to rapidly replace a shortfall in gas this year—which the UK is unable to provide—and second, that the UK’s potential as a hydrogen exporter is unlikely to take off in the near future.

Adding up to demand

However, while the UK is unlikely to export significant volumes, the country is likely to fulfil its goal for hydrogen self-sufficiency.

The UK government anticipates 38TWh of demand by 2030 in its hydrogen strategy.

“This needs around 9-14GW of domestic hydrogen production capacity,” says Anise Ganbold, head of research for global energy markets at UK-headquartered Aurora Energy Research. While the rate of new project announcements has slowed in recent months, Ganbold is confident that the pipeline of development is on track to meet this demand by next decade.

So far, developers in the UK have announced around 5GW of production capacity from electrolysers, and around 3GW of planned blue hydrogen projects. This would meet domestic demand, but is unlikely to exceed it enough to export significant volumes.

In contrast, Germany forecasts 90-110TWh of demand by 2030, necessitating imports. And according to Aurora modelling, the economics are more in favour of imports than co-located hydrogen production near German industrial centres.

38TWh – UK hydrogen demand by 2030

“We found that it’s actually cheaper to import it from a nearby country, like Norway or the Netherlands, than to produce it domestically. And then if you look at the cost of importing it all the way from Australia or Morocco, it can still be price-competitive just because their cost of electricity is so low,” says Ganbold.

Market opportunity

In Hydrogen Economist’s discussions with developers, the opportunity for UK hydrogen is decidedly domestic. The country’s policy support for individual hydrogen projects, as well as associated sectors such as renewables and carbon capture and storage, is seen as a particular positive.

“For us to see a market in green hydrogen, we have to see a commitment to renewables,” says Will Rowe, CEO of UK developer Octopus Hydrogen. He estimates that the country’s planned expansion of low-carbon electricity generation could sustain enough hydrogen production capacity for the gas to take up 20-30pc of the final energy mix.

Rowe adds that if hydrogen penetrated further in some sectors, the UK could even have to look outside domestic production to meet demand. “If we moved to 100pc hydrogen to replace the natural gas system, then I think we would end up a net importer,” he says.

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Author: Polly Martin