Assessing the regional demand for geological hydrogen storage

Building a Strategic Case for Investment in theEast Coast Cluster Contents Appendix A: Hydrogen Storage Demand Modellingfor the East Coast ClusterExecutive SummaryMethodologyIndustry SectorHeat SectorPower Generation SectorTransport SectorOverarching AssumptionsResultsSensitivity AnalysisConclusionsAppendix B: Geological Hydrogen Storage CapacityModelling for the East Coast ClusterExecutive SummaryLiterature ReviewMethodologyAssumptionsLimitations & OpportunitiesDetailed FindingsConclusionsAppendix C: References505154586264717478868889911011041051088711149 Section 1: Executive Summary3 Section 2: Introduction11 Section 3: Strategic Context13 Section 4: Research OutputsDemand Modelling for the East Coast ClusterCapacity Modelling for the East Coast Cluster171828 Section 5: Market Barriers37 Section 6: Interventions41 Section 7: Conclusions and Next Steps46 Executive Summary Strategic Context While the detailed roadmap to achieve these legally bindingcommitments is still in development, it is widely acceptedthat low carbon hydrogen will play a critical role in any futuredecarbonisation energy system, helping to bring down emissionsin vital UK industrial sectors and providing flexible energy forpower, heat and transport. Hydrogen storage is a critical building block of the hydrogennetwork with its ability to deliver the scale and duration oflow carbon hydrogen demand expected. Hydrogen storage is a key component of theUK’s decarbonisation plans, as it unlocks theability to hold the significant reserves neededto meet growing energy demands throughoutan energy system transition. Without governmentintervention, the hydrogen storage market willnot be able to deliver the necessary storage at pacewith demand, thereby threatening the delivery ofthe government’s 2030 and 2035 goals on the pathto Net Zero by 2050. It is likely that hydrogen storage will be required for thefollowing roles: •Providing capacity to allow hydrogen producers and end-users to reduce supply risks resulting from demand andproduction mismatch, particularly for electrolytic hydrogen. •Supporting the decarbonisation of the power systemby 2035 through avoiding curtailment of renewablesand supporting dispatchable power generation throughhydrogen-fuelled powerplants.•Supporting the need for strategic storage to underpina resilient and secure energy system as the UK shiftsto energy independence. While the scale of hydrogen’s role is still to be determined,analysis by the department for Carbon Budget 6 suggests250-460 TWh of hydrogen could be needed in 2050, makingup 20-35% of UK final energy consumption. [1] The East Coast is a strategically important area for production.To date the UK has announced over 20GW of hydrogenproduction with 11.6GW potentially being located in theEast Coast Cluster. For almost two decades, the UK has been a global leader in climateprotection, recently moving forward its already ambitious goals bycommitting to a 78% reduction in emissions by 2035 (from 1990levels) as an interim milestone towards Net Zero by 2050. The criticality of hydrogen lies in its ability to be storedat significant scale and duration. This makes it a versatilereplacement for high-carbon fuels used today and allowsit to underpin an energy system comprised of other energysources without the same capability. It is widely acknowledged that it will take a diverse portfolioof technologies to reach Net Zero, diversification being thefoundation to a strong, secure, and resilient investment strategy. Strategic Context Setting the strategic context for further investment in critical storage infrastructure Given the barriers to the development of large-scale hydrogenstorage within salt caverns, further compounded by immaturityof alternative technologies, it is considered by the authors of thisreport that there is a risk of market failure associated with theability of the UK to deliver the necessary hydrogen storagewithin the required time frames. Put simply, without action,our assessment has indicated that we will not be able to developenough storage at pace with demand–the delay in the deliveryof this critical infrastructure could threaten the government’sambition to have 10 GW of low carbon production capacityby 2030, a decarbonised power system by 2035, and ultimatelyour legally binding Net Zero target. There are a variety of estimates of hydrogenstorage requirements in published literature,which are revised and updated as the evidencebase grows and uncertainty is removed. Therequirement for storage is intrinsically linked todemand for hydrogen, and the ultimate end useof hydrogen. The uncertainty associated withthe demand mix for hydrogen explains the largeranges for storage requirements that are reported. At present, the only proven technology for storing large volumesof pure hydrogen is within underground salt caverns formedthrough solution mining of suitable geology. The UK currentlyhas 0.025 TWh of salt cavern hydrogen storage, w