Scottish hydrogen: assessment report

5 The development of Hydrogen in Scotland

Although hydrogen has been used in some industrial applications for decades, it is in its infancy as an energy vector. It does however have the potential to significantly contribute to delivering a net-zero economy in Scotland, the UK and globally. It seems likely that hydrogen will play some role as an energy vector, what is currently uncertain is the extent of that role. 

There are different options for how hydrogen will be produced, transported and used. To explore these various options, a literature review was undertaken, in conjunction with extensive stakeholder engagement with those likely to be involved in the future hydrogen sector in Scotland and further afield (see Section 1 for more on the stakeholder engagement conducted). What emerged is a varied picture with a number of different potential options for hydrogen deployment, but with some common themes.

5.1 Production

It is generally considered that given its resources Scotland could, if there was enough demand, become a major producer of hydrogen, both blue and green. The majority of stakeholders considered that the hydrogen produced would be 'mainly green' or a 'mixture of blue and green' production. 

1. Blue only (no stakeholder selected)
2. Mainly blue
3. Mixture of blue and green
4. Mainly green
5. Green only

Green hydrogen

The majority of stakeholders agreed that green hydrogen production will be an important part of Scotland's future. 

Initially production is expected to be small to medium scale, up to circa 200 MW per unit, primarily using onshore wind. This production would likely be co-located or near to end users. 

“Scotland can produce as much hydrogen as it has the ambition to produce from offshore wind using as much existing infrastructure as possible while at the same time building for the future”

Stakeholder questionnaire opinion

Numerous stakeholders raised the prospect of producing hydrogen from constrained renewable generation. For example, when grid constraints mean that a wind farm cannot export its energy to the grid at certain times, it could switch to hydrogen production. This would enable many renewable energy projects that would otherwise not be possible to be brought forward. 

In the long term hydrogen production from offshore wind was believed to be the main way to achieve large scale production and is viewed by many as an exciting opportunity to unlock more of Scotland's offshore wind potential. Both offshore and onshore wind could also provide further opportunities in remote or island locations where the wind resource is particularly strong. Two production options were discussed: hydrogen produced on offshore platforms and piped to the shore, potentially avoiding the need for costly offshore electricity connections; or connected by electric cable and produced onshore, giving the operator the opportunity to produce hydrogen or supply electricity to the grid, which may have commercial and system wide benefits. 

Other renewable energy resources, particularly wave and tidal, could play a role as the technologies are commercialised and scaled up particularly in remote or island locations. Green hydrogen could allow these areas to be energy independent. Some stakeholders also mentioned hydroelectric power as a potential technology for green hydrogen production. 

Whether large scale green production can be viable depends on the hydrogen demand and unit cost of producing hydrogen. If demand is high enough and costs could be reduced, then many stakeholders thought that Scotland's offshore wind resources and skills are likely to be able to meet Scottish or UK demand and potentially an export market. However, it is likely that this will only be achieved through either government support mechanisms and/or clear targets to support the development in the short term. It was thought that support for green production at this early stage would accelerate deployment and enable more of the value chain to be captured in Scotland.

“Hydrogen provides the opportunity for parts of Scotland to become energy independent with a combination of remote demand for conventional energy (making it expensive) and natural energy resources being abundant - Highlands and islands for example. There is a constraint in terms of demand being sub-scale and subcommercial, but the social benefits are strong”

Stakeholder questionnaire opinion

Blue hydrogen

It is thought that Scotland has the skills and infrastructure, both in gas supply and potential carbon storage facilities, to enable large scale blue production. However, stakeholders were divided on the role of blue hydrogen production in Scotland with only around half the stakeholders interviewed saying that blue production should play a significant role. 

If blue hydrogen is to be produced, most literature and stakeholders consider that it will be a transition fuel in the medium term. Blue hydrogen could supply relatively low cost hydrogen, in the large scales needed to enable a hydrogen economy before eventually being phased out in favour of green. However, a key uncertainty is when that transition will happen. 

Given the scale needed for blue production and the investment life-time of the assets, it is thought that if blue hydrogen facilities were to be built in the next decade or so they would likely still be operational in 2045, with the phasing out in favour of green production happening later. If blue hydrogen facilities were required to close by 2045, before the end of their asset life, the unit cost of hydrogen would increase. Investors would need to recoup the significant upfront capital investment over a shorter period, unless a form of Government assistance or subsidy was provided. If this progressed, the carbon that is emitted from blue production would need to be offset in other parts of the energy system, for net-zero in 2045 to be achieved. It was thought that this offsetting could potentially be achieved by having a percentage of biogas within the methane stream.

“If we are living through a climate crisis we should be forgetting completely about blue and focussing on green” “With the right support, by 2030 bulk hydrogen could be being produced at scale, with a key role for both blue and green hydrogen. By 2045 the role of blue hydrogen would be expected to be eclipsed by green”

Stakeholder questionnaire opinion

Another relevant factor raised by stakeholders is the purity of hydrogen. The green production process would result in high purity hydrogen of +99.9% that can be used in hydrogen fuel cells, particularly in transport applications. Blue hydrogen production gives lower purity, ~98% which can be used in combustion applications, boilers, cooker, industrial heating etc., but would need to be cleaned for use in fuel cells. It was considered that this could give rise to different grades of hydrogen, high purity green hydrogen and lower purity blue hydrogen which may have different markets and different prices. 

5.2 Demand

Transport

Both the literature and stakeholders supported the view that hydrogen was going to play some role in the transport sector. Significant commitments are being made within Scotland on both policy and implementation of hydrogen in transport. The Automotive Industry Advisory Group has been established by Transport Scotland with a strong emphasis on hydrogen. Both the Hydrogen Accelerator at St Andrew's University⁶⁰ and the Michelin Scotland Innovation Parc⁶¹ are centred on hydrogen as a part of sustainable mobility.

Larger, heavier vehicles were consistently identified as particularly suited to hydrogen. This includes buses, coaches, HGVs, water transport as well as trains where the network is not already electrified. Hydrogen's superior weight to energy ratio and the speed and ease that vehicles can be refuelled are considered to be the main reasons for hydrogen's use in heavier vehicles as opposed to an electric only drivetrain. Hydrogen in aircraft fuel was also identified as an option though it was thought that it would be some time before a hydrogen powered aircraft would emerge. 

Fleet based vehicles, particularly those operated and contracted by the public sector, were identified as the low regrets option, that would lead the way in hydrogen conversion. Even if hydrogen was not to emerge as a mass option, using hydrogen would still be considered a good way of decarbonising fleet vehicles. Converting a whole fleet creates a level of demand, justifying the investment needed to produce and supply hydrogen at sufficient scale to central refuelling stations. These refuelling stations could potentially be opened to other users, thus serving more than one transport sector. Buses in particular were identified as an ideal end user for hydrogen. Hydrogen buses already operate within Scotland and more are currently on order.

1. 0% (no hydrogen)
2. 10% - 20%
3. 30% - 40%
4. 50% - 60%
5. 70% - 80% (no stakeholder selected)
6. 90% - 100%

“Hydrogen offers compelling solutions for some forms of transport, for example road freight, hydrogen trains on lines which would be very expensive to electrify, buses, and shipping. An optimal solution for the UK is likely to involve hydrogen for applications such as these and electrification of other transport vectors such as private vehicles”

“Hydrogen use within the transport sector should complement battery electric vehicles rather than competing with them. EVs are particularly useful for urban areas, cars and public transport within cities as well as busy train routes (such as Edinburgh-Glasgow etc). Hydrogen technology could address more challenging areas which are difficult for EVs to enter. This includes shipping, rural train routes, long distance bus routes, heavy-duty transport etc”

Stakeholder questionnaire opinion

Aberdeen Buses Case Study

The Hydrogen Bus Project in Aberdeen involves the whole hydrogen system from generation to end use. The project’s 10 hydrogen buses are serviced by a refuelling station in Kittybrewster with the capacity to produce 360 kg of hydrogen a day^[62]. The refuelling station was also opened to the public in 2018 supplying green hydrogen to private vehicles as well as a fleet of vehicles used by the NHS, a local car club and Aberdeen City Council^[63].

This project was brought up frequently and positively throughout stakeholder engagement, including referring to the project as a strong evidence base for introduction of successful hydrogen refuelling facilities in urban areas. Additionally, stakeholders noted the project had demonstrated a high level of public acceptability for hydrogen within transport.

Whether hydrogen will be used in smaller personal vehicles is more open to question. The majority of stakeholders thought that hydrogen would play no or only a relatively minor role in personal transport. EVs are now established in the personal vehicle market, making it more difficult for hydrogen vehicles to break through. A comprehensive hydrogen refuelling network will be needed to allow for a hydrogen personal vehicles market to grow. Investment in that refuelling network is unlikely unless there is an existing market to serve. 

Ultimately the personal vehicle market with its global supply chains, depends on developments at a global level, rather than any decisions that can be made in Scotland, or in the UK. If hydrogen vehicles and the hydrogen refulling infrastructure were to emerge globally, Scotland could be well placed to supply its own, as well as other countries, with the high purity green hydrogen the market would require.

Heating

Hydrogen could be used to replace natural gas as the main fuel for domestic and commercial space and water heating in Scotland. However, electrification of heating does provide a credible alternative. It was clear that stakeholders believe that decarbonising our domestic heat demand is very challenging. This is reflected in their differing views as to which method would be the most cost effective and practical way of decarbonising heat, with advantages and disadvantages to both^{[4, 29, 64, 65]}. 

1. 0% (no hydrogen)
2. 10% - 20%
3. 30% - 40%
4. 50% - 60%
5. 70% - 80%
6. 90% - 100%

Stakeholders are quite split on the role of hydrogen in domestic and commercial space and water heating. Many believe that hydrogen could replace natural gas in the distribution network and be the primary method of decarbonising heating. However, others think that electrification, using air or ground source heat pumps alongside district heating systems in more urban and/ or heat dense areas, is a more cost efficient alternative. The potential for hybrid systems, such as heat pumps that include a small hydrogen boiler to raise the temperatures beyond what a heat pump is capable of, was also raised as a potential use for hydrogen^[29]. 

A potential regional approach to using hydrogen for domestic and commercial heating was discussed, in which case some areas would keep a gas network and use hydrogen, whereas others would switch to electrification with heat pumps, and district heating may provide other options. The areas where hydrogen would be used would be where hydrogen can most easily be produced and/or stored or, where there were also large industrial users of hydrogen, so continuing a network would be more viable. 

“It’s entirely feasible that every domestic and commercial boiler can be changed to 100% Hydrogen… When being sold at scale, it is unlikely that a Hydrogen boiler would cost much more than a current natural gas boiler so the cost to the homeowner both in outlay and intrusion and remedial costs to the existing heating system and home is very small if anything more than they experience today with a boiler change. This contrasts significantly with electrification and heat pumps where both the home and the heating system would need significant remedial work”

Stakeholder questionnaire opinion

Some stakeholders questioned the benefit of feeding green hydrogen in the gas network, where it is likely to pick up impurities, to then be used in combustion boilers. This was highlighted as an ineffective use of what should be considered a 'higher grade' product. It was suggested that more value could be gained from using high purity green hydrogen in other applications, such as fuel cells. Blue hydrogen has a lower purity level than green hydrogen, it could potentially be considered lower grade and used in the distribution network for heating. 

Blending hydrogen into existing natural gas networks may be considered as part of the gradual step towards the transition to a net-zero economy. Up to 20% by volume, can be blended without changing existing appliances^[66]. However, as hydrogen has a lower density 20% hydrogen would only amount to a carbon saving of 7%^[67]. 

“Blending hydrogen into the gas networks will give substantial benefits to emissions reductions but heat pumps offer potential electrical solutions also. Blending highvalue high purity hydrogen in the gas network seems to miss the point”

Stakeholder questionnaire opinion

Industrial and power generation

Hydrogen is already produced in Scotland for use as a feedstock in chemical production. This hydrogen is currently 'grey' and would have to switch to blue or green in the future. The potential role of hydrogen in industry is significant. It is thought that hydrogen could replace natural gas for industrial users connected to the gas network in Scotland. Like with domestic and commercial heating, this could initially be a blend of hydrogen with natural gas, before full conversion to 100% hydrogen. 

1. 0% (no hydrogen)
2. 10% - 20%
3. 30% - 40%
4. 50% - 60%
5. 70% - 80%
6. 90% - 100%

Many stakeholders thought that using hydrogen in industry and/or within industrial clusters could act as a demand baseload, enabling hydrogen production at scale which could then enable wider hydrogen usage.

Grangemouth Case Study

Grangemouth is an industrial cluster and refinery that represents a potential high demand for hydrogen. It currently produces its own ‘grey’ hydrogen through steam methane reforming and could be encouraged to switch to green or blue hydrogen. Numerous stakeholders highlighted the potential of Grangemouth for a transition into low carbon production of hydrogen.

It was also mentioned that smaller industrial users, outside large industrial clusters, such as food and drink production, could use hydrogen. There may be opportunities for co-location of small scale green hydrogen production particularly in rural or island areas. As an example the whisky and distillery industry was mentioned by some stakeholders as a potential opportunity for decarbonisation with hydrogen. Distillery sites are often remote and not connected to the gas distribution network. 

Although there seems to be a good case for using hydrogen in industry to replace natural gas, there are potential alternatives. It was thought that some large industrial users and/or cluster of users could continue to use natural gas with CCUS rather than using hydrogen. Electrification is an option for some industrial processes, such as lower grade heating, but efficiency and technical constraints are a barrier to electrifying higher grade industrial heat applications. Biogas and biomass are also options but could be subject to supply constraints.

A number of studies and projects have explored the potential for hydrogen in power generation, replacing fossil fuels such as natural gas, in thermal generation^68–70. However, most stakeholders felt that hydrogen was only likely to play a limited 'peaking' role in power generation in Scotland helping to balance renewable generation.

“Large industrial demands for heat in processing could be supplied by hydrogen gas, as these are likely… to have close access to the existing gas network (which by 2045 could be 100% hydrogen based). Distilling tends to be in more rural areas and therefore not likely to be able to access to the gas network, but could use locally generated hydrogen from local renewable energy sources which could create a significant demand/market for community owned energy assets”

Stakeholder questionnaire opinion

“Hydrogen use within industry to deliver high-grade heat is likely to represent a very important role, since power cannot efficiently meet this demand. On the power generation side, hydrogen could replace gas peakers to meet spikes in electricity demand only. Otherwise most electricity consumption will be met from a combination of renewables”

Stakeholder questionnaire opinion

Export potential

The potential for Scotland to become a net exporter of hydrogen, to the rest of the UK and wider Europe, was a common and key topic in stakeholder discussions.

1. Low
2. Medium
3. High

Many stakeholders felt that Scotland's abundant natural resources, particularly in offshore wind, offered a route to large scale hydrogen production, potentially much more than Scotland could consume domestically. Hydrogen would therefore be a route to 'unlocking' offshore energy, allowing it to be exported to generate revenue for Scotland. It was thought that hydrogen could become a major export product, allowing Scotland to continue its energy tradition and at least partially replace the role that O&G currently plays in the Scottish economy. However, there is an alternative view that export of hydrogen, is less of a priority than decarbonising the domestic economy. 

Many stakeholders thought that Scotland could become a major exporter of hydrogen to the European market. 

Export further afield was considered less likely given the cost of transportation and alternative international sources. 

There are several countries in Europe, Germany for example¹⁷, where hydrogen is expected to play a major role but which do not have the same level of renewable resource as Scotland. However, other countries/regions that could mass produce green hydrogen, are also in proximity to the future major European hydrogen markets. Portugal and North Africa were mentioned as potentially producing green hydrogen from solar at a lower cost than in Scotland. Some stakeholders felt that an export market would take time to develop and that a domestic market in Scotland and in the UK would be the primary market in the short-medium term. 

Although Scotland has the potential to produce both blue and green hydrogen, most stakeholders thought it unlikely that Scotland would produce blue hydrogen for export outside of the UK. 'High grade' green hydrogen was seen as a product that other countries would want to import to fully decarbonise their own energy demands. Blue hydrogen can be produced by other countries themselves nearer to the point of use from imported natural gas negating the need to export.

“The bulk of the green hydrogen produced will be exported within Europe. There is a possible scenario where Scotland could become the main producer of green hydrogen for the UK domestic market if onshore wind is also used”

Stakeholder questionnaire opinion

“Concerned that the current emphasis on exporting hydrogen at scale from offshore electrolysis or from SMR + CCS will only replicate the situation where the main benefits will go to the energy multinationals and will bypass the Scottish economy”

Stakeholder questionnaire opinion

5.3 Summary of conclusions

Given the diverse and often competing views including factors described above, it is challenging to accurately predict which applications will transition to hydrogen in the short, medium and long term. From the literature and the stakeholder engagements a picture of overall themes or options are emerging. 

In the stakeholder engagement, a regional split in how hydrogen is used and produced was also discussed. In areas where hydrogen can be more easily produced, it could be used across different sectors giving rise to local hydrogen networks. In other areas hydrogen would be used less, with alternative decarbonisation methods, primarily electrification, used in others.

There are three broad options for the supply of hydrogen: 

• Small scale green production using local renewable energy and co-located or very near to demand; 
• Large scale green using offshore wind that connects to some form of network; and 
• Blue hydrogen, which would be large scale and supply a hydrogen network. 

Which production options emerge will depend on the scale and type of demands.

These different options give rise to many ways that hydrogen could develop in Scotland out to 2045. These were used to form potential scenarios, which is discussed in the next section.