Date: 1st December 2022.

HI-ACT responds to recent government consultation on new business models for hydrogen transportation and storage infrastructure.

Following on from the government’s commitment in the British Energy Security Strategy to design new business models for hydrogen transportation and storage infrastructure by 2025, we asked our HI-ACT Cardiff team to consider the recent government consultation on the proposals for hydrogen transport and storage business models.

Q&A Session

Our HI-ACT team in Cardiff comprises of Professor Jianzhong Wu who is a Co-Investigator for HI-ACT and leads WP1, The Way Forward and is the International Theme Champion. Dr Meysam Qadrdan is a Co-Investigator on HI-ACT for WP1, The Way Forward and WP2, Whole Systems Understanding. He is also the EDI Theme Champion. Dr Modassar Chaudry is a Senior Research Fellow in the School of Engineering at Cardiff University.

 

Q) Do you agree with Government’s analysis and vision for hydrogen network evolution through the different phases as described?

 

R) We agree with the broad principle that across the various parts of a ‘hydrogen eco-system’ one must start small-scale (production, pipelines, storage, and end users) with the likelihood of clustering around other parts of a hydrogen system or around industrial sites. From mid to late 2020s we also envisage various several clusters potentially joining together to form quasi-regional systems and emerging interactions with the other energy vectors such as the gas and electrical systems. By early 2030s, as envisioned by National Grid Project Union (National Grid, 2022), connection of regional clusters and hydrogen production centres to industrial, heat, transport, and power consumers could develop a national hydrogen backbone as large parts of the gas network are repurposed.

 

National Grid (2022), Project Union, Launch report, May 2022 National Grid

 

 

Q) In your view, do you agree that uncertain demand and supply and limited user base will be the predominant barriers in a growth phase of hydrogen network development?

 

R) We agree these will be the predominant barriers in a growth phase for development of hydrogen networks. Both (National Grid, 2022) and (ENA, 2022) envisage initial supply and demand to develop for industrialised clusters which then extends to blending (important for de-risking investments) for heating purposes in mid 2020s. Beyond this timeframe, a decision on 100% hydrogen for heat must be made in 2026 as this will set in motion decisions on the future of the gas network (how, where and when the gas system can be repurposed) and how hydrogen could complement the expected growth in electrical systems. This will also ensure the ‘demand’ and ‘limited user base’ issues are addressed which would in turn give confidence to investors.

 

National Grid (2022), Project Union, Launch report, May 2022 National Grid

ENA (2022), Britain’s Hydrogen Blending Delivery Plan’, Energy Networks Association, 2022

 

Q) Do you agree that government should develop a dedicated business model for hydrogen storage (subject to value for money and need) and that it should be designed to be technology-neutral?

 

R) We agree that a dedicated business model for hydrogen is required. Given that each storage is technologically different and are at various levels of maturity, we believe that this should be reflected in the level of support. For instance, above ground compressed hydrogen containers are more established and potentially require less support (operationally and in terms of project lead times) than large scale underground storage facilities in former depleted gas/oil fields. Additionally, aspects such as cushion gas will also need to be accounted for in a dedicated business model for hydrogen storage. The various volumes of cushion gas as a percentage of capacity were highlighted in the Gas infrastructure Europe report on Hydrogen storage (GIE, 2021).

 

GIE (2021), Picturing the value of underground gas storage to the European hydrogen system, Gas Infrastructure Europe, June 2021

 

 

Q) Do you agree that business model support should focus on larger-scale storage, or is there a need to provide further support for small scale storage? Please explain your answer and provide any relevant evidence.

 

R) Support should be provided for all types of hydrogen storage. Large scale storage needs more support as the development lead times are much longer and there is likely to be a requirement for cushion gas (GIE, 2021). There is a direct analogy with the gas system, where we have fast response and multi cycle storage facilities that can operate flexibly and on the other hand, we have seasonal capability which for example was provided by the Rough storage facility (Budinger et al, 2015; Fevre, 2013). Both types of storage facilities have served the UK well with different operating criteria. With renewable generation set to increase and demand becoming more difficult to predict, the flexibility provided by fast response hydrogen storage facilities (most likely be smaller scale) are likely to be important. Additionally, the value that large-scale hydrogen storage facilities could provide to security of supply should also be considered in any support package.

 

GIE (2021), Picturing the value of underground gas storage to the European hydrogen system, Gas Infrastructure Europe, June 2021

Budinger Keith, Harding Colin, Evans David (2015), Fast cycle gas storage, British Geological Survey, Sustainable Exploitation of the Subsurface Conference, 20-21 May 2015

Fevre (2013), Chris Le, 2013, Gas storage in Great Britain, Oxford Institute for energy studies, 2013

 

Q) In your view, should the build out of hydrogen transport infrastructure evolve through either a) a solely a market-led approach, b) a form of strategic planning, or c) neither?

 

R) We believe that a hybrid approach would combine the advantages of market and strategic-planning approaches. Allowing the market to innovate and develop hydrogen systems but supported by government through a strategic planner who can provide coordination and general direction in order to move hydrogen from stand-alone-clusters to regional and potentially national system. Like the UK, Germany also has ambitious hydrogen plans (Bundesministerium, 2020) which they hope to implement through a national hydrogen council (involves research, regulators, production, infrastructure owners and users) to co-ordinate the role out. In The UK, initially (early years) we support a market led approach to provide a multitude of ideas but as we move to more integrated systems, technical complexity (and across areas such as energy quality, blending, safety etc) will increase and this will require a strategic direction (co-ordinated approach involving inputs from users and owners of hydrogen infrastructure) to the development.

 

Bundesministerium (2020), The National Hydrogen Strategy, Federal Ministry for Economic Affairs and Energy (Germany), 2020

 

Q) In your view, should the build out of hydrogen storage infrastructure evolve through either a) a solely a market-led approach, b) a form of strategic planning, or c) neither? Please explain your answer and provide any relevant evidence.

 

R) If the overall hydrogen transport infrastructure is provided with strategic direction, we don’t believe it also necessary for storage. Storage is a very important component within hydrogen system development, especially the ability to manage supply and demand (short term and seasonally). If the overall strategic direction and planning is implemented for the overall transport infrastructure, storage will most likely be provided by the market to meet specific needs (balancing etc). But it will still require appropriate support from government (support for large scale storage to valuing the flexibility provided by fast cycling storage facilities).

 

The HI-ACT team continue to engage with government on policy in the lead up to the launch of the HI-ACT hub (currently planned for May 2023). Please watch this space for updates.

 

Please contact HIACT@newcastle.ac.uk if you have any queries.