Scottish Hydrogen Industry Forum minutes: October 2023

Attendees and apologies

Scottish Government ministers

• Gillian Martin, Minister for Energy and the Environment

Industry

• Peter Jones, UK Director, Scottish Power
• Greig Mcintosh, Head of Origination Power to X, SSE Rnewables
• Tim Dumenil, Hydrogen Asset Manager, Storegga
• Matthew Williamson, Director UK Hydrogen, bp
• Irene Wilson, Projects Director, Fortescue Energy
• Colin Pritchard, Sustainability Director, Ineos
• Louise Cowie, Senior Legal Adviser, Repsol/Sinopec
• Steve Boughton, Director Hydrogen, RWE UK
• Yomogi Kato, VP of Glasgow Office, Marubeni
• Stuart Mitchell, Director of Strategic Business, Hydrasun
• Fergus Tickell, Industrial Clusters and BD Lead, SGN Energy Futures
• Julian Leslie, Head of Networks, National Grid ESO
• Nigel Holmes, Chief Executive Officer, SHFCA

Scottish Government officials

• Kersti Berge, Director of Energy and Climate Change
• Margo Maciver, Head of Hydrogen Policy and Funding and Sub Surface Energy Systems
• Stuart McKay, Head of Hydrogen Policy
• Susan Wilson, Hydrogen Policy Official
• Nicola Soave, Hydrogen Policy Official

Scottish Enterprise 

• Reuben Aitken, Managing Director, International Operations
• Jamie Robinson, Hydrogen Specialist

Scottish Futures Trust 

• Andrew Bruce, Senior Associate Director

Items and actions

Ministerial opening remarks

The Energy Minister thanked members for their participation in the forum.

Ms Martin provided an overview of Scottish Government hydrogen ambition and the policy landscape. She set out her hope that the forum would provide a useful opportunity for Scottish Government and industry engagement on issues of importance to the development of the hydrogen sector in Scotland and encouraged free and frank discussion within the forum.

Round table introductions 

The Minister invited each member to introduce themselves and set out their interests in the hydrogen sector.

Forum purpose and proposed focus areas 

Margo Maciver briefly summarised the intended purpose and scope of the forum explaining that the SG intended the establishment of the forum to provide an opportunity to engage with industry on the development of the hydrogen economy and gather expert technical and commercial insights which could help inform SG policy and engagement with the UKG on the development of the hydrogen economy. The proposed focus areas for the forum were selected to assist in the identification of barriers to deployment, opportunities, and interdependences within the developing sector. Noting that not all the necessary levers required to support the development of hydrogen economy in Scotland sit with the SG, engagement with industry could help inform SG engagement with UKG on key strategic decisions coming in the next couple of years.

Forum members views were invited on the following focus areas:

• hydrogen in the electricity system
• the planning and consenting system
• regulatory requirements
• hydrogen as an enabler for offshore wind 
• stimulating demand pull in industry and transport
• In addition, storage and distribution infrastructure, and enablers for the export of hydrogen to the UK and Europe in relation to the above

Discussion

Discussion touched on the following points

Investability 

Lenders/developers will not invest/reach final investment decisions without confidence that the hydrogen project has:

• access to sufficient large-scale renewable generation to produce hydrogen
• access to significantly discounted power to produce hydrogen commercially in a liquid market
• access to large-scale, flexible, long duration storage (which isn’t currently available in Scotland)
• off takers in place e.g. blending into the gas grid, industrial user/chemical manufacturing, heavy transport, heat networks

Demand 

Noting off-taker agreements are an eligibility requirement for Hydrogen Allocation Round (HAR), it was considered demand should be one of the early areas of focus for the forum. As production projects will be demand led, stimulating demand must happen in tandem with the availability of support mechanisms for production. Early demand in industry and transport need to be encouraged with consideration to be given to potential options for policy intervention.

Infrastructure 

Several points were made in relation to the readiness of enabling infrastructure for the production, storage, transportation and use of hydrogen in Scotland.

These included: the requirement for a common strategy for the build out of regional H2 hubs; a hydrogen export strategy aligned to UKG policy, energy security and transportation of Scottish hydrogen to potential large markets in England; how to expediate first mover projects ahead of infrastructure; the requirement of an interconnecting, national pipeline network strategy (incorporating Project Union, and Scotland's Industrial Networks strategy) and how industrial hydrogen heat pilots might be expediated alongside a national pipeline strategy.

It was noted that storage infrastructure was a key issue impacting the deployment of production projects. Early projects involving producer and consumer linked by pipe could result in undersizing of the hydrogen production facility if there is insufficient access to storage sites in Scotland. Criticality of storage is not just long term seasonal storage, but access to large scale, flexible, long duration storage.

Discussion topic: the role of hydrogen in the electricity system

Stuart McKay introduced the topic and set out that the SG wished to hear industry views on how hydrogen production from constrained wind could be integrated into future electricity systems in helpful and efficient ways. This may include market opportunities for hydrogen as an integral part of a whole system approach including role for hydrogen in areas such as energy storage, peaking plant or provision of balancing services.

Discussion points

• positive decision on blending needed in short term and 100% hydrogen pipelines needed as soon as possible
• Linepack alone will not give required energy security, huge amount of offshore wind coming and limited demand and all forms of storage including hydrogen need to be maxed out
• is offshore wind at ScotWind scale economic without hydrogen production?
• need to quickly get to the point of a ‘competitive molecule’ for hydrogen
• need hydrogen pipelines from centralised locations to storage sites, co-locating windfarms and electrolysers not sustainable due to geography
• need to come to consensus on what to fund e.g. large scale, long duration storage needed
• pathfinder thinking required to unlock enduring and attractive incentivisation to support large scale hydrogen deployment in Scotland, stimulate more demand in Scotland, and options that offset traditional grid infrastructure build out and reduce curtailment i.e., incentivising more hydrogen production resulting in less electricity grid infrastructure needed equating to savings on infrastructure build-out costs and constraints payments
• access to low-cost renewable hydrogen without prohibitive grid connection charging would help H2 production projects become investible propositions, need to identify access to GW scale behind the meter power via grid connection
• grid transmission charges in Scotland are a barrier to hydrogen production, power to x has to be competitive – how can this be addressed?

Actions

SG

• Secretariat to arrange a series of follow-up bilaterals with individual forum members on power, infrastructure and cost
• secretariat to review and prioritise forum focus areas following feedback from members
• initial focus on addressing barriers to investibility: firstly, access to power in respect to infrastructure and costs, followed by barriers to accessible H2 storage, and unlocking end users demand/use, and then other identified issues including requirement for common strategy and architecture for regional H2 hubs, pipeline transportation of Scottish H2 to UK users/Europe
• bilaterals outputs to inform wider forum discussion with Energy Minister in January 
• secretariat to provide members with summary of SG engagement with Ofgem
• SG to disseminate recent SG commissioned study on hydrogen storage to members

All forum

• members were encouraged to provide views to the forum secretariat on actions to help stimulate demand
• members were invited to provide the secretariat with views on what SG/SDI needs to do to attract energy intensive users to locate in Scotland

The Minister brought the meeting to a close reflecting on the engaging discussion and thanked the group for their participation.