Comment by Daniel Murrant Networks and Energy Storage Practice Manager and Corentin Jankowiak Systems Engineer at Energy Systems Catapult

There is increasing acceptance that hydrogen has a role to play in the Net Zero energy system to support flexibility. However, there are likely to be barriers to deployment at the scale needed to deliver this role. Energy Systems Catapult and the University of Birmingham set out to identify and collate these barriers.

A series of interviews and analysis was undertaken towards the end of Q1 2023. Twelve organisations representing academia, industry, government, network operators and regulators made up the interviewees. This work is part of the Hydrogen Innovation Initiative (HII) Seed project, funded by Innovate UK.

Setting the scene 

Today, flexibility of the electrical system is dependent on the natural gas system, which provides energy on demand (to gas Combined Cycle Gas Turbines and embedded gas-engines). To meet Net Zero, increased electrification and replacement of fossil fuel generation by intermittent renewable energy, will lead to a change in the type and scale of energy system flexibility needed.

There is expected to be more input from demand side response, however, this has limits. So, the supply side will remain a critical element of energy system balancing. Interviewees felt that, as a gas, hydrogen would be a critical part of Net Zero energy system, able to provide the 10s of TWhs of energy storage currently largely provided by natural gas, and increasingly needed to provide security of supply covering wind troughs lasting a week or more.

The UK Government should therefore “get on with” infrastructure to connect the initial centres of hydrogen supply and demand (the industrial clusters) and the development of hydrogen storage both on and offshore.

Seven Key Barriers:

Interviewees identified a broad range of barriers, many heavily interlinked. Seven themes, considered to be ‘Key Barriers’ were identified:

1. Clear government direction and ambition: A lack of clear government direction on the role of hydrogen in the transition to Net Zero was felt to be a major barrier to early investment.
2. Culture of decision and policy making: An industry culture of needs-driven investment, relatively low risk appetite, risk adverse decision making and failing to convert early innovation to business as usual was identified as a barrier to hydrogen development.
3. Market and regulatory innovation for hydrogen storage and flexibility: A lack of meaningful market signals to value flexibility provided by the gas sector was felt to be a barrier.
4. Education: The skills needed to scale up the deployment of hydrogen from the planning system, through to manufacture, installation, and end users were felt to be barriers.
5. Coordination in planning across whole energy systems: Whole systems planning, and co-ordinated delivery was not felt to be happening in any meaningful way. Revised governance and regulation are needed to make this happen.
6. Standards and standardisation: A lack of standards can be a barrier to the hydrogen transition, and increasing standardisation can help to drive down costs.
7. The planning sector: The capacity within the planning sector to cope with increased levels of applications was felt to be a barrier.

Clear government direction and ambition

A topic raised by multiple interviewees, this barrier was seen as fundamental and one on which others were heavily dependent and so is focused on here.

The 2030 hydrogen production ambition set by UK Government of 10GW was well received, however, delivery of this was dependent on appropriate business models and regulation being progressed. There was a clear recognition from interviewees of the policy effort taking place to develop a hydrogen sector in the UK, but that much was still needed to clarify opportunities, scale, and direction. There were growing challenges from supply chains prioritising other international markets that had greater clarity and opportunities.

Connecting industrial clusters and hydrogen storage seemed to be a low-regrets decision to:

• increase market scale away from captive local markets.
• enhance security of supply between clusters.
• develop the foundations of a future system in a timely manner.

Hydrogen for heat was an example of uncertainty, with the decision from UK Government (due in 2026) on the role of hydrogen boilers to decarbonise homes unclear in both the result and the form (e.g., will it be a simple yes/no, or will there be conditional factors).

Hydrogen has a critical role in the UKs Net Zero economy to support the integration of greater levels of renewable generation and to support balancing of the electrical system.

Major infrastructure was recognised as having long lead times, and early certainty on low-regrets approaches was felt to be helpful. The scale of deployment was influenced by the uncertainty about future needs, and there were risks with over sizing or under sizing infrastructure during waves of investment. The wider benefit of oversizing infrastructure was highlighted in the short to medium term to provide greater levels of resilience.

Innovation Focus

Across the barriers identified by interviewees innovation was felt to continue to have an important role with technology development and evidencing the safety case of hydrogen transport and storage. Focus on whole systems analysis and coordination, planning and business models to underpin timely deployment was also highlighted.

Summary

Despite the increasing likelihood of the need for hydrogen to provide large quantities of storage and flexibility to a future Net Zero energy system, the barriers found in this analysis have the potential to delay, limit, or halt all together the deployment of hydrogen generation, storage and infrastructure.

A range of stakeholders including the sectors interviewed for this analysis; academia, industry, government, network operators and regulators, will be required to develop collaborative solutions to reduce these barriers.

The Hydrogen Innovation Initiative (HII) will continue to work with these sectors to build on the analysis presented here to further explore and accelerate the future role of hydrogen in the energy system.

Interested in learning more? We provide further detail in our short report, available on the Energy Systems Catapult website.