SSE Thermal becomes joint owner of Kellas’ blue hydrogen project in Teesside

SSE Thermal, an operator of energy storage assets, has acquired a 50% stake in H2NorthEast, a blue hydrogen project being developed by Aberdeen-based energy infrastructure company Kellas Midstream in Teesside, UK.

By acquiring a 50% stake, SSE Thermal has become a joint owner of the project. Through this partnership, SSE THermal and Kellas will jointly develop the hydrogen production facility with carbon capture and storage (CCS) that could help kickstart a hydrogen economy in Tees Valley.

The agreement is for an initial consideration of <£10 million ($12.5 million) to Kellas Midstream with further contingent consideration due should the project reach a financial investment decision.

In its first phase, H2NorthEast could deliver up to 355 MW of blue hydrogen production capacity from 2028 with plans to scale up to more than 1 GW. Offtakers would include heavy industry and power generation, either through blending into existing assets or in new hydrogen-fired plants. Kellas has already concluded the first offtake agreement with Statera Energy.

As part of the East Coast Cluster, the project will also have the opportunity to secure a connection to shared CO2 pipelines through the upcoming Track 1 Expansion process. This would allow emissions from the hydrogen production process to be captured and transported before being safely stored under the Southern North Sea.

With an anticipated minimum carbon capture rate of 97%, H2NorthEast meets both UK and EU low-carbon standards. Specifically, the hydrogen produced via H2NorthEast would be fully compliant with both the UK’s Low Carbon Hydrogen Standard and is expected to be aligned with the EU Taxonomy for sustainable activities, the developers said.

Following the funding secured through the Net Zero Hydrogen Fund in March this year, Kellas recently partnered with two service companies Worley and Johnson Matthey to kick off the FEED phase of the project.

The final investment decision (FID) for H2NorthEast is targeted for 2025, and commercial operation and first hydrogen production are planned for 2028.