New government, new policies…. Offshore wind, however, has remained a centrepiece of UK energy strategy and policy for well over a decade now and will continue to be going forward, with a target of 50 GW by 2030. Over the last three years, we have also witnessed the parallel rapid rise of hydrogen (green and blue) as a key component in the UK’s future energy mix, with an ambitious target of producing 10 GW by 2030.
The main drawback with renewable generation such as offshore wind remains the intermittency and volatility of supply. Most of the electricity generated by offshore wind today is fed into the grid, playing its part in meeting the country’s daily energy needs. At times though, there is insufficient wind and the Electricity System Operator has to buy very expensive (often fossil power generated) electricity on the spot market or off a capacity market mechanism to meet energy demand. Conversely, there are days where there is more wind energy than the grid can handle and curtailment is exercised, with wind power generators paid for the excess energy even though this is going to waste.
Nowadays, batteries are seen as a well-established technology that can address short term intra-day storage and balancing needs. They are not the answer though to the inter-day/-month/-season storage challenge. This is where hydrogen enters the picture, as it provides a possible answer to the question of how to store electricity generated over longer periods of time by converting it to hydrogen that can be used as a fuel for dispatchable power throughout the year.
Offshore wind electricity carried back to shore can be used to power an electrolyser that breaks down water to produce ‘green’ (zero carbon) hydrogen and oxygen. The hydrogen produced may be used in the short term or stored for later use in a variety of applications lowering CO2 emissions, such as:
- industrial processes, e.g. steel production, chemical industry and refineries;
- burnt in fuel cells for heavy goods road, rail and marine transport;
- powering turbines to generate electricity;
- replacing gas in heating.
Going forward we are likely to see an increase in the number of integrated offshore wind and green hydrogen production projects. The 100 MW Gigastack project in Hull is a good example, using offshore wind electricity to produce green hydrogen that will be utilised by local industry.
If the hydrogen used is green, and with no CO2 emissions (produced by electrolysis), or blue, with lower carbon emissions (produced from e.g. steam reforming of gas, with carbon capture), the hydrogen molecule becomes one of the main levers for wider scale decarbonisation.
When designing and developing a green hydrogen production plant linked to offshore wind, the size of the electrolyser will require careful consideration to take into account the wind generation range and the impact this will have on the load factor and operational costs of the electrolyser. A higher load factor will reduce the levelised cost of hydrogen. Hybridisation, combining offshore wind electricity with solar, is a possible option to ensure a steadier supply and higher load factor over time.
The roundtrip efficiency of electrolysers though remains a key challenge. More power goes into electrolysis than comes out of it (broad efficiency range 65-75%). Batteries, in comparison, generally have a round trip efficiency of about 85%. On the other hand, the hydrogen/power produced by electrolysis can be stored and used when needed over a longer period of time, unlike that of batteries.
There is a strong case for the two storage technologies to be used together. Batteries address short term balancing needs and power capacity (MW) – first response grid services and intra-day peak demand –, hydrogen helps with longer term storage needs and high levels of energy capacity (MWh), addressing multi-day and seasonal needs by means of storage along weather patterns. Eventually hydrogen turbines could replace gas peaker plants, filling gaps in peak load as main discharging power capacity.
For hydrogen to play a bigger role in the future energy mix, pricing levels will have to come down significantly. It will need to go through the same cost/price evolution that offshore wind did as it scaled up. The levelised cost of offshore wind in 2011 was 140 GBP p MWh versus the latest 2022 CfD auction at ca. 40 GBP p MWh. Offshore wind was helped on this journey by Renewable Obligation Certificates and, later, CfD auctions in the UK and similar support mechanisms in other European countries. The scaling up of offshore wind and connected green hydrogen production should also over time lead to a reduction in the levelised cost of green hydrogen from today’s 6-10 USD per tonne, to 2-3 USD, comparable with the price of grey (CO2 emitting) hydrogen in ‘normal’ times. Government policy will however have to do more to assist the growth in the number of electrolyser projects and the offtake (e.g. by industry) of green hydrogen. A price per MWh of offshore wind of about 35 USD, combined with a drop of electrolyser CAPEX costs will accelerate the commercial viability of green hydrogen production.
In addition to traditional utilities, oil and gas (O&G) majors are also showing an increased interest in integrated offshore wind and hydrogen projects. Some recent, new offshore wind project developments led by O&G companies are challenging the established practice of carrying the power back to shore through electric submarine cables and have put forward the alternative of converting electricity to green hydrogen offshore using existing platforms for electrolysis, compression and storage, to then use gas pipelines or vessels to carry the hydrogen back to shore, i.e. partially redeploying and repurposing existing O&G infrastructure as its decommissioning date approaches. This ‘life extension’ opportunity goes beyond the offshore infrastructure itself and benefits the wider O&G ecosystem e.g. project management, construction, servicing, maintenance and engineering resources and ports. Some other projects, such as the Dolphyn project in Scotland, plan to take things one step further and are looking at the integration of an electrolyser on the upper deck of the offshore wind turbine.
This alternative option of green hydrogen produced offshore would also resolve (or rather avoid) the grid connection problem that many offshore wind projects in development are grappling with today.
In the UK, another important aspect supporting the case for an integrated offshore wind and green hydrogen production business model, is the positive knock-on effect on the Levelling Up agenda, given the growth in related supply chain that it will enable and the impact this could have on local economies in depressed areas of the UK that need the economic stimulus. Activities such as the production of components, assembly, installation, use of servicing vessels, port upgrades and engineering will all lead to significant job creation. The sector offers great opportunities for towns with ports and large laydown areas such as Orkney, Hull, Grimsby and Great Yarmouth, to mention only a few.
*The views expressed are the author’s and not ICAEW’s.
