Comment by Frank Bridge, Digital Delivery Manager, and Matt Joss, Practice Manager – Engineering and Analysis, at Energy Systems Catapult.

In our pursuit of Net Zero, hydrogen is emerging as one of the UK’s strongest tools to decarbonise, ready to power industries, reduce emissions – especially in hard-to-decarbonise sectors – and build our green economy.

As part of the Hydrogen Innovation Initiative (HII), we’re diving into the big questions surrounding hydrogen: where it’s needed most, the barriers we face, and how we can build a thriving hydrogen economy that benefits everyone. Here’s a look at what we’ve been working on and where hydrogen could take us.

A versatile powerhouse: How hydrogen fits into the UK’s energy story

One of hydrogen’s biggest strengths is its versatility. From powering transport and heavy industry to balancing our power grids, hydrogen has the potential to decarbonise those sectors where other clean energy solutions aren’t yet cutting it – or simply aren’t suitable. Our Sectors and Scenarios report digs into this, modelling future pathways for hydrogen in the UK. Demand projections are striking – hydrogen could meet almost 300 TWh of the UK’s energy needs by 2050, matching today’s entire electricity demand. This isn’t just about replacing one energy source with another; it’s about creating a flexible, low-carbon system that works across the board.

Powering industry and transport

Decarbonising the energy system requires an increase in network infrastructure . Electrolysers (for example, Polymer Electrolyte Membrane/Proton Exchange Membrane (PEM) electrolysers or Anionic Exchange Membrane electrolysers), can be used flexibly, and when .

We have used our Living Lab data of over 4,500 homes and the Whole Energy System Accelerator (WESA) to explore the potential benefits that co-located hydrogen generation and storage at small industrial sites can provide to electricity networks through the provision of flexibility services.

Hydrogen can help further by providing long-duration energy storage for the power sector and increase energy security. This means it can store surplus renewable energy and release it when we need it, helping to balance.

For heavy industries like steel and cement production, hydrogen is a real solution where traditional electrification could fall short. It provides the high temperature heat these industries need without the carbon dioxide emissions. Transport is another key area, particularly for hard-to-decarbonise sectors such as heavy-duty transport, aviation, and shipping, where hydrogen and hydrogen-based fuels offer an alternative to fossil fuels that can go the distance.

Funding, risk, and supply chain development

Scaling up hydrogen won’t come without its challenges. One of the biggest obstacles is financing. Our Debt Financing for Low-Carbon Hydrogen Projects report highlights the high upfront costs of hydrogen infrastructure, which are daunting for investors, especially for early-stage projects that are trying to commercialise. Debt financing has been a challenge in the UK, although there is strong global interest in hydrogen projects.

There are already existing initiatives such as the Hydrogen Production Business Model (HPBM) which provides subsidies and contracts to help developers secure the funding they need, reducing some of the risks and making hydrogen projects more attractive to investors. Another development is the Hydrogen Allocation Rounds (HAR), where projects can apply for production support to kickstart more of these investments. However such initiatives are limited in supporting smaller projects trying to commercialise.

Our HII debt financing study has explored this gap by considering the potential for a Hydrogen Debt Fund to help expedite a UK hydrogen industry. Such a fund could help smaller, innovative projects in the range of £7 to £25 million commercialise and ensure a focus on stronger offtake commitments as well as insurance and assurance solutions to increase project credibility.

Seizing the opportunity

The hydrogen economy isn’t just a UK endeavour – it’s a massive global market, potentially worth £8 trillion by 2050. Our Hydrogen Innovation Opportunity report estimates that if the UK captures just 10% of this market, it could generate £46 billion annually and support 410,000 jobs. This is a chance not only to drive domestic decarbonisation but also to establish the UK as a leader in hydrogen technology and export expertise around the world​.

Strategic focus areas

To maximise this opportunity, we’ve identified four priority areas for UK hydrogen innovation:

1. Production of hydrogen: Scaling up hydrogen production, by various pathways, quicker than government ambitions. Also, the conversion of hydrogen into transportable forms.
2. Transport: Developing hydrogen-powered systems for heavy-duty and long-distance travel.
3. Storage and distribution: Building the infrastructure to store and distribute hydrogen safely and efficiently across the country at various scales.
4. Industrial use:
   1. As a feedstock and for heat production: Supporting hydrogen as a feedstock and energy source in sectors like manufacturing.
   2. Electricity production: Producing electricity for baseload or peaking.

The road ahead

We’re at a critical juncture, with the next decade key to establishing the UK as a hydrogen powerhouse. This will take investment, public-private partnerships, and coordinated support across the board to turn this vision into reality. The groundwork HII is laying – from detailed sector planning to financial frameworks – is creating the foundation for a vibrant hydrogen economy that brings energy security, new jobs, and Net Zero emissions within reach.

By driving hydrogen innovation forward today, we’re not only addressing urgent decarbonisation goals but also seizing a future where the UK can lead in one of the 21st century’s most transformative, high-potential technologies.