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Stage 3
Stage 2
Stage 1
Stage 4
Industry Industry recognition, market design and Industry building, market testing and Industry operation, cost reduction and Industry growth, establishment of
Growth Stage project demonstration community scale deployment national scale deployment export markets and the deployment
of international trading infrastructure
The establishment and funding of a joint • Liaison between the joint industry • Implementation of the hydrogen • Liaison with UK’s trading partners to
government and industry working group to working group and other similar groups deployment plan within the context of the establish common standards and
govern and direct the growth of the working to develop complementary UK Decarbonisation Strategy hydrogen trading arrangements.
hydrogen industry in the following areas: infrastructure to support the • Grant funding of the design, build and • International investment to build and
• Safety assurance and standards development of a UK decarbonisation operation (for a limited period) of operate the infrastructure needed to
development. strategy. centralised geological storage and facilitate cross-border hydrogen trading.
Government • • Market regulation and cost reduction. • Continued grant support to the delivery • transmission networks. • Once geological hydrogen storage
of the strategic projects identified as
becomes available and hydrogen
Market support for the development and
Skills development and capacity
Support building. necessary by the joint government and operation of hydrogen infrastructure production may be disassociated with
industry working group.
projects that incentivise the
demand, replace the ROC based system
Required Grant funding: • Grant funding of the design, build and decarbonisation of gas demand. For of support with a system involving reduced
To support a portfolio of strategic
•
projects identified as necessary by the operation (for a limited period) of example: market support with increased competition
joint government and industry working multiple local community projects in • Enable GDNOs to invest in production and for the development and operation of
group. return for cost and performance data storage infrastructure and to trade hydrogen infrastructure projects that
• To encourage knowledge sharing (via that is useful to design future market hydrogen on their own networks (as per decarbonise gas demand (e.g. Contracts
the joint industry working group) from support mechanisms. the SIU model). for Difference (CfDs) vs. a strike price and
new and existing projects. • Provide ROCs set at different rates linked auctions for access to limited funds).
to the carbon saving impact of the project
• Development of a hydrogen deployment (e.g. green hydrogen would attract a
higher ROC rate than blended grey
chapter in a UK Decarbonisation
• Agreement by all projects receiving Strategy that is coherent with similar hydrogen).
public funds to share safety related work on related technology areas such • Reduced LCH for hydrogen infrastructure
information (e.g. the results of as: • Development of a policy, a regulated projects until they become competitive with
experiments, trials and incident • Electrification of heat. market and associated market support for decarbonised market alternatives.
investigations). the scale up and cost reduction of • Energy independence and export of
• Identification of regulatory support • • Electrification of transport. hydrogen infrastructure. nationally produced energy to trading
Grid reinforcement and power storage.
Return on initiatives required to enable the first • CCUS deployment. • Reduced LCH for production facilities partners
through the use of centralised geological
Government • community projects. • • Carbon pricing. storage and market support that maximises • GDNOs no longer need to build and
Shared project costs and performance
operate their own production facilities,
A database of cost and performance
decarbonisation impact.
Investment data to inform the establishment of a data, the analysis of which may: • Increased scale of deployment enabled by since their networks could be plugged into
standard method for calculating the
centralised storage. This increases
Levelised Cost of Hydrogen (LCH) for all • Inform the establishment of an initial. the introduction of private sector finance. competition and reduces costs for
benchmark cost for the LCH.
UK projects. development projects and enables the
• Establishment of training standards and • • Identify cost reduction opportunities. trading of hydrogen to be opened up to
Inform the development of a regulated
the development of accredited vocational market for producing, distributing and competition as it is for natural gas at
and occupational training courses and trading hydrogen. present.
working practices.
• Inform the development of appropriate
policy and market support mechanisms.
FIGURE 2 FLOW CHART OF RECOMMENDED GOVERNMENT SUPPORT AND THE PREDICTED RETURN ON THAT INVESTMENT
changes can one answer questions such steps will involve deploying hydrogen infrastructure to national scale.
as: “At what point does the benefit of infrastructure at increasing scale and It will enable the UK government
producing hydrogen outweigh other in increasing numbers of collaborative to support the development of an
uses of renewable power and how projects. However, producing hydrogen industry by introducing competitive
should the market support for each of is not commercially viable at present, markets in a staged approach using
these forms of generation/production so it will therefore need government well understood market structures.
be tailored to find the right balance?” support to increase and facilitate Working jointly with industry will
necessary projects until the scale of encourage the cross-industry sharing
Recommendations hydrogen infrastructure becomes of non-sensitive information (e.g.,
The lessons of the past offer useful comparable with that of natural gas. hydrogen safety research results).
lenses for the future. The successful The funding of these projects should It will enable the industry to develop
growth of the offshore wind industry be designed to facilitate the growth of skills and build capacity according to
and the associated reduction in project a new industry whilst decarbonising a plan linked to real projects. In turn
costs provides a useful template for the UK’s energy system, bringing down this should reduce the potential for
designing the necessary market and costs and increasing competition. conflicts of interest.
industry support to introduce hydrogen The staged approach to industry Kiwa is a notified body and
into our energy system at scale. A support recommended in this paper specialises in a range of testing,
staged approach is recommended will provide the following benefits, inspection, consultancy and training
whereby the support provided at each using an approach that has already services across the world for hydrogen
scale of deployment is informed by proven successful in growing the and other renewable technologies.
the analysis of cost and performance offshore wind industry, to the success The hydrogen services offered by Kiwa
data from the previous stage and story seen today: today span the whole spectrum of a
by comparison with similar data It will create the market conditions hydrogen infrastructure landscape and
from related technology areas. The necessary to enable lower risk are summarised below:
proposed approach, outlined in Figure private investment in hydrogen
2, follows the historical approach production by:
used successfully by government and • Incentivising scale and cost
the Crown Estate to encourage the reduction with public sector support
establishment and growth of the UK’s linked to the decarbonisation impact
offshore wind industry across the UK. of production and public investment – FUEL CELL +
Hydrogen could follow a similar path. in geological storage. Feasibility Research Consultancy
• Providing benchmark cost and Hydrogen KIW A SER VICES
Systems
Systems
Integration
Conclusions performance data against which International Network Support Development
Integration
STORAGE DELIVERY & NETWORK PRODUCTION FUEL CELLS AUTOMOTIVE
Within the UK, Kiwa is working across project developers may assess the
a number of hydrogen projects such as merits of their particular scheme.
Hy4Heat, HyDeploy, and H100. These It will provide the UK government
and the H21 project are assessing the with the information necessary to
technical feasibility of substituting design appropriate market support for
natural gas for hydrogen. The next the deployment and scale-up of such
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