Westwood: Future of UK’s bountiful hydrogen pipeline rests on government shoulders

In its latest hydrogen whitepaper, Westwood Global Energy, an energy market research and consultancy firm, warns that lack of certainty in government policy could hinder the progress of projects in the UK’s hydrogen pipeline.

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Westwood’s Hydrogen Scale-up white paper, which explores the key factors priming hydrogen for success in the UK, highlights 45 projects in the country with 17 GW of capacity projected to come online by 2030.

However, the research points out that only a small number of demonstration-sized green hydrogen projects have reached final investment decision (FID) so far. Furthermore, it underlines that strong, streamlined and timely government policies will be key to the hydrogen industry’s success.

Following Russia’s invasion of Ukraine one year ago, the UK government doubled its original 5 GW low-carbon hydrogen production and took a two-pronged approach supporting both blue and green hydrogen.

Westwood’s analysis shows that blue hydrogen currently accounts for the lion’s share of announced capacity (14.3 GW out of 17 GW), and traditional oil and gas players are leading the way.

Courtesy of Westwood

Shell stands out as the largest participant in the development of blue hydrogen projects in the UK, involved in three projects that will develop 3.3 GW.

Vertex Hydrogen, a joint venture between Essar and Progressive Energy, is developing 3.3 GW through Hynet while Equinor’s two projects will add another 1.8 GW.

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In contrast to blue, green hydrogen accounts for a much smaller capacity of around 2.6 GW in total; capacity is much more fragmented, with smaller project sizes and a higher number of developers, the analysis reveals.

However, according to Westwood, political instability and a lack of government clarity around future support, unfinalised definitions and the approval of business models could stunt growth potential.

The insight follows the appointment of Joyce Grigorey to her newly created role in November 2022 and the launch of Westwood’s latest New Energies intelligence solution, Atlas New Energies, in September 2022.

Joyce Grigorey, Director of Hydrogen, Westwood, noted on the analysis: “Global competition is quickly heating up and any delay in the government’s steer could have adverse consequences for the UK’s hydrogen ambitions should investors believe they can gain higher returns elsewhere.

“But with a collaborative push the UK could become a leader of a successful hydrogen economy, with significant strides already being made across blue and green hydrogen, and carbon capture and storage.”

David Linden, Head of Energy Transition, Westwood, commented on opportunities for the sector: “There is significant potential for hydrogen and carbon capture and storage in the UK. There is no shortage of money or willingness across the industry; however, stakeholders are under no illusion that it will still take a herculean effort to ensure the success it’s capable of.

“As part of our wider Energy Transition offering, we’re tracking projects across the whole hydrogen ecosystem in the UK and Norway through the Atlas New Energies platform. With our in-house specialists, we support our clients with the strategic, technical and commercial concerns they have as the industry continues to take shape.”

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