Is cheap UK hydrogen on the horizon?

A new report by RenewableUK and Hydrogen UK, Splitting the Difference – Reducing the Cost of Green Hydrogen to Accelerate Deployment, outlines measures to drive down the cost of green hydrogen from £241 per MWh (2023) to under £100/MWh. The UK has significant potential to use renewable electricity for hydrogen production, but key steps are needed to unlock economies of scale. Recommendations include removing barriers to locating hydrogen production at renewable energy sites, incentivizing electrolysis during low-cost electricity periods, and reforming the hydrogen production business model. 

The report emphasizes reducing the cost of electricity, which currently accounts for 70% of the price of green hydrogen, and cutting grid access charges for developers. The goal is to make hydrogen affordable, helping decarbonize sectors like steel, chemicals, and shipping, while creating jobs and economic growth. For hydrogen to fulfill its potential, collaboration between the government and industry is crucial to attract investment and establish effective business models.

A key point made by the authors in relation to the UK Government's Clean Power Action Plan 2030 is that hydrogen, by its very nature, “is an energy intensive process, but it is a process that will reduce economy-wide emissions by replacing fossil fuels in industry, heat, transport and power. However, its production is subject to the same taxes and levies as other energy industries, including carbon-intensive industries, which are designed to reduce emissions. This is counterproductive, and adds unnecessary costs to the production of green or electrolytic hydrogen. These levies need to be removed.” 

Another important factor not considered by the UK Government's Action Plan is how intellectual property can play its part in driving down the cost of green hydrogen and accelerating the UK's transition to net zero. While this might seem counter-intuitive because patents enable the owner to stop others from exploiting the patented technology, they are a reward for innovation and help innovators attract investment for future research and development. Without such investment, the R&D needed to develop new technologies for the more efficient production and distribution of green hydrogen will not materialize, and the transition will stall. As for any R&D intensive business, it is crucial that intellectual property forms a fundamental part of planning for the future.

Marks & Clerk will be attending the upcoming Hydrogen Week event at the Spine in Liverpool on 26 February. It will be great to hear about the progress being made in the North West and how this is influencing national strategy.