Top 5 priorities for UK Hydrogen Strategy Refresh
The UK Government announced in April that it intended to publish a “refresh” of the UK Hydrogen Strategy in 2025. This comes four years on from the publication of the original strategy and will reflect the new Government’s vision for hydrogen. The North West Hydrogen Alliance (NWHA) welcomes this refresh as an opportunity to provide clarity to the industry and inject momentum into the sector as we look to deliver on the Government’s objectives.
As we look ahead, NWHA have developed a list of the top five things that are needed in the upcoming Hydrogen Strategy refresh.
- Reset on Ambition
In 2020, the Government set out an ambition to deliver 10GW of hydrogen production capacity by 2030. Following the invasion of Ukraine in 2022 and the subsequent spike in energy prices, this ambition was increased to 10GW, reflecting the important role that hydrogen will play in delivering energy security. This ambition was very impactful, giving the industry confidence in the Government’s long-term commitment to hydrogen and driving investment into the sector. This is clearly evident in the projects that have been developed in the North West, which have benefited from significant investment and are not just some of the highest quality and most mature projects in the UK, but are also globally leading.
Since the 2021 UK Hydrogen Strategy, whilst much progress has been made, development has not kept pace with the original ambition of 10GW by 2030. In the UK Hydrogen Strategy refresh the Government should recast the ambition, outlining the long-term vision for hydrogen and what it intends to deliver in the medium term. Providing an achievable but ambitious target that industry can get behind will be critical to the next phase of hydrogen’s development journey.
- Clarity on Demand
Since the 2021 UK Hydrogen Strategy there has been significant evolution in the role that hydrogen is expected to play within the energy system. The setting of the Clean Power 2030 target has placed a higher emphasis on hydrogen’s role in the power system whilst it remains clear that it still has a critical role to play in decarbonising those parts of the energy system which are hard to electrify.
The North West is home to many businesses and industries that are reliant on hydrogen to decarbonise and clarity is needed from the Government on which sectors hydrogen will be supported in and how the use of hydrogen will be prioritised in the short term. In addition, more decisive action from Government on how it intends to support offtakers to switch to hydrogen, especially in the absence of further funding via the Industrial Energy Transition Fund (IETF) is essential. This will enable project developers to be targeted in their activities and give confidence to offtakers to invest in switching to hydrogen.
- Plan for Infrastructure
As highlighted in the NHWA’s recent paper, investment in hydrogen pipeline networks and hydrogen storage are absolutely critical to matching production and demand and scaling hydrogen cost effectively. Giving both producers and offtakers advanced sight of where and when hydrogen infrastructure will be available will allow them to plan investment accordingly.
The recent announcement from Government committing £500m to the transport and storage business models was an important step. HyNet is the most advanced hydrogen pipeline project in the UK and the Hydrogen Storage project at Northwich is ready to go. With a strong community of offtakers and well-developed large-scale hydrogen production projects, the North West is well placed to lead the UK in the development of hydrogen infrastructure.
- A Regional Approach
To date the UK Hydrogen Strategy has taken a national approach with policies designed and projects selected across the UK and little consideration of local and regional energy system and demand characteristics. The creation of the National Energy System Operator (NESO) and the development of the Strategic Spatial Energy Plan (SSEP) enable the UK to take a more strategic and integrated approach to whole system energy planning. As part of this work, the infrastructure and assets required to deliver on the UK’s Clean Power and Net Zero commitments will be planned spatially.
This spatial approach to energy system planning should be reflected in the strategy refresh with recognition of the strengths of regions such as the North West which have a high density of hydrogen demand and the geological assets to enable both hydrogen and carbon dioxide storage.
- Supply Chain Strategy
Hydrogen offers the UK a unique opportunity to deliver high quality jobs and economic growth. Much of this opportunity lies not just in the projects themselves but in the supply chains and technology development that underpins them. The UK Government intends to invest significantly in hydrogen over the coming years, however there is currently a risk that a large proportion of this investment leaks overseas, as projects procure technologies and services from outside the UK.
In the upcoming strategy refresh, the Government must urgently address this challenge, outlining how it will support UK supply chains to grow capability and capacity and encourage project developers to select and work with UK suppliers.