Project Summary
Wales and West Utilities (WWU), is partnering with Guidehouse, National Grid Electricity Distribution (NGED), RWE and Pembrokeshire County Council to determine how co-locating hydrogen fuel production with district heating at ‘hydrogen hubs’ on parts of the electricity grid where renewable generation is frequently curtailed can lower the cost of hydrogen for consumers.
Both government and industry are looking for ways to efficiently decarbonise heat and transport. Green hydrogen fuel-cell vehicle technology is a credible option to decarbonise heavy good vehicles and buses, however the production and distribution of hydrogen is currently high cost. Additionally, the heat produced during electrolysis is in theory high enough to support the decarbonisation of district heating but is typically wasted. Addressing both needs in an uncoordinated manner would likely lead to inefficient investment in networked infrastructure. Taking an integrated approach to decarbonising heat and transport provides an opportunity to improve network usage and lower the cost of hydrogen production.
The project partners aim to explore revenue stacking and financial optimisation of electrolysers, integrating the response to multiple energy demands and facilitating efficient infrastructure provision. Specifically, this project aims to discover how the levelised cost of hydrogen production can be reduced by co-locating electrolysers at sites where there is both a need for heat for district heating, oxygen and production of hydrogen for re-fuelling, as well as access to low-cost renewable electricity that would otherwise be curtailed. The project partners will also explore the extent to which exploiting these opportunities help to de-risk development projects.
A hydrogen hub could be used by vehicles for low carbon fuel, county councils and commercial buildings looking to decarbonise their estates and renewable generators looking to use curtailed power.
The discovery phase of the project will look to review available data and technology and will consider the following areas:
how these integrated hydrogen hubs affect the economics of hydrogen production
how their location can improve the overall efficiency of the electricity network and reduce the need for overbuilding hydrogen infrastructure
the technical requirements of operating electrolysers to support both transport and heating needs.
WWU and NGED are experienced in optimising investment in and operation of gas and electricity networks. Guidehouse brings international and domestic hydrogen expertise, as well as a research and economic analysis. RWE has an in depth understanding of renewable generation and curtailment while Pembrokeshire County Council have high ambitions to decarbonise their estates heating requirements and fleet.
Innovation Justification
This project contributes to solving the problem of curtailed generation on the electricity grid, by strategically selecting regional locations where this could otherwise necessitate costly grid reinforcement. The project will also identify and evaluate revenue stacking opportunities across energy systems to maximise the value for both electricity and hydrogen consumers. These opportunities will be identified across the electricity system, hydrogen gas network, district heating systems and transport re-fuelling hubs, and through the valuation of waste heat from large scale electrolysers.
This work is inherently innovative in that the value of electrolyser waste heat has not been researched at an industrial scale before in the UK. There are some trials and demonstrators in Europe, namely in the Port of Rotterdam, that this project seeks to learn from, however there is no work to date in this space in the UK. Also, spatial optimisation of electrolyser location and the identification of revenue stacking opportunities has not been considered previously in the UK or in Europe. A methodology/tool to do this effectively would provide confidence for hydrogen production investors and kickstart the decarbonisation of transport in the WWU region and nationally. Given the cross-fuel and vertical integration of this concept, this work presents a relatively high level of risk to an energy network to pursue as BAU. Therefore, this work would not be funded from BAU activities nor as part of the regular price control mechanisms. Similarly, NIA funding was considered for this work, and it was concluded that this source of funding would be inappropriate given the need to develop the concept and perform large scale trials and demonstrators of electrolyser integration with partners which suits itself clearly to the SIF staged approach.
A hypothesis is in place that the economic and decarbonisation benefit of this work is derived from the waste heat valuation and revenue stacking that delivers a lower cost of hydrogen to transport hubs than the counterfactual of a non-integrated and non-revenue stacked configuration. From early assessment of the Port of Rotterdam trial to pursue a similar concept, there is a reasonable level of confidence that this could be a sizeable benefit. It is intended to test a number of energy integration scenarios and revenue stacking opportunities as part of the Discovery phase and to quantify the economic and sustainability benefits to achieve greater confidence in benefits across these dimensions by the end of Discovery phase.
Project Benefits
National Grid Gas Transmission’s ‘Gas & Electricity Transmission Infrastructure Outlook (GETIO)’ NIA project highlighted that integrated whole system planning can deliver £38 billion of savings to consumers when compared to siloed electricity and gas planning approaches. A range of integrated energy planning solutions such as the integrated hydrogen hub are needed to deliver these benefits.
Coordinated planning of hydrogen transport hubs that involves gas network operators, electricity network operators, transport hub developers, and heat developers will enable optimal infrastructure deployment and efficient energy use.
Using waste heat from the electrolysis process, enables homes, businesses and industry to be heated efficiently through district heating, rather than relying on new gas and electricity infrastructure required to facilitate HPs or hydrogen boilers. Ultimately, this leads to a reduction in the cost to operate the gas and electricity networks, thus achieving a direct cost saving to energy bills for consumers. The consumer benefits can be tracked by comparing the costs of siloed design solutions with coordinated integrated hub designs.
Unlocking the value of waste heat from the electrolysis process enables hydrogen hub developers to achieve new revenue streams that can lead to reductions in the cost of hydrogen for hydrogen users e.g. HGVs. Creating lower cost hydrogen at hydrogen hubs will stimulate the hydrogen market thus creating new cost-efficient opportunities for using hydrogen across many sectors. The reduction in hydrogen costs can be determined by comparing siloed hydrogen hub productions approaches with revenue stacking approaches that value the waste heat.
Direct and indirect environmental benefits are achieved in a variety of ways. The reduced need to deploy new gas and/or electricity infrastructure results in a direct environmental saving from minimising carbon emissions from construction works. The solution enables the decarbonisation of heat and transport at a lower cost, thus accelerating the decarbonisation of these sectors and reducing carbon emissions from the use of fossil fuels. Although tracking the acceleration in the decarbonising heat and transport will be challenging, it will be possible to compare carbon emissions associated with the construction siloed design solutions and coordinated integrate hub designs.
Detailed quantification of benefits and costs will form a key part of the Discovery & Alpha phases of the project. At this early ‘Pre-Discovery’ phase, if we assumed that integrated hydrogen hub delivers reduced need for gas & electricity infrastructure that equates to 1% of the benefits identified in the GETIO project, the project could achieve approx. £380 million of benefits by 2050.
