Development of hydrogen projects in Scotland

The report is structured as an introduction to the three individual projects and an analysis of lessons learned as outlined by interview respondents from the projects.

The full report is available to download as a pdf at the end of this page. A summary is provided here: 

The three projects considered are:

  1. Levenmouth. A full smart microgrid incorporating solar and wind to produce hydrogen for a fleet of vehicles and power for businesses on the business park.
  2. Surf ‘n’ Turf. Establishing a supply chain for hydrogen that also helped to address renewable electricity curtailment.
  3. Outer Hebrides Local Energy Hub (OHLEH). A circular economy project developing a demand for hydrogen for heat, power, and transport in the Outer Hebrides.

The projects were supported by the Scottish Government Local Energy Challenge Fund. The projects were intended to be truly innovative and therefore carried a higher risk (technical, commercial and financial) than other CARES funded community projects.

The projects had three common themes:

  • Demonstrating the use of curtailed renewable energy to produce hydrogen.
  • Using green hydrogen (hydrogen generated from renewable energy) for transport applications.
  • Establishing a market for hydrogen as part of the project.

Major learning themes that came out of this analysis work were:

There is a need to build a hydrogen market for projects of this type. A range of different use cases were explored by the projects. Examples included energy storage for later generation, hydrogen for transport and oxygen for aeration purposes. Unlike conventional energy generation projects funded by CARES at that time which looked solely at the supply side, there was a requirement to consider the use of the hydrogen, so looking at the demand side as well as the supply side.

There is a risk that new technology will function unreliably. All three projects have suffered from problems with the electrolysers. Although electrolyser technology is not new, at this scale and for this application the designs were new. The technology is becoming more reliable but in an innovation project, the project delivery team should consider the impact of unreliable technology in the project planning phase and be aware of the track record of equipment suppliers.

Long timescales of two years or more are likely to be required to establish operational hydrogen projects. This is due to the time it takes to establish contracts between partners and technology suppliers, long lead times on equipment particularly electrolysers, time to complete project design, receive planning permission and meet market regulations. Time delays add to the expense of the project and this should be considered in the timeline and budget allocation of the project.

Project management is key. The project manager is key to making the project successful and it can be difficult to get the ideal project manager. Selecting project managers from within the existing project team may mean that they do not have the necessary expertise to deliver the project and external project managers may leave; as happened on the Levenmouth project who had three different project managers.  Skills that were outlined for the project management role were excellent project management skills in managing complex projects. This could be further enhanced by general engineering skills and, ideally, a hydrogen or gas handling background.   

Site design for operation and maintenance needs to be considered in detail. The technology developers and the site need to understand the practicalities of site design as this can save re-engineering later.  Examples include turning circles on vehicles, access for operation and maintenance and interfaces between equipment (whether this is communication protocols or pipe sizing). Design for maintenance can also reduce downtime of the installation, this may raise initial design costs but operating costs for the projects’ lifetime may be reduced. Involving local partners who can bring their specific local area knowledge can help ensure success.

Funding challenges. The project partners were initially required to complete the project in a one-year time frame. This created time pressure and the projects completed on a two-year time scale. Additionally, there was no allowance for contingency which meant that the projects had to request further funding.

Awareness and knowledge of hydrogen projects. At the time of these projects not many green hydrogen projects (hydrogen generated from renewable energy) had been undertaken. The industry is still assimilating collective learning. Education, dissemination of results from projects and training will be required to develop the industry further.

The projects met and overcame many different challenges:

  • The Levenmouth project team had many issues arranging contracts within a reasonable time frame and suggested development of standardised contracts would be beneficial. They also had issues continuing the project after installation due to higher than expected costs in the operation phase and have suggested that the market for the hydrogen needs to be secured.
  • The Surf ‘n’ Turf project also had issues with establishing a hydrogen market as they had originally intended to fuel the ferries. There is potential for hydrogen injection as part of HyDime but the Surf ‘n’ Turf project was resolved by cold ironing (providing electricity from hydrogen for the fuel cell to run auxiliary services from the quay at Kirkwall for ferries) and also moving forward new regulations in respect of the transportation of hydrogen with the Maritime and Coastguard Agency (MCA). 
  • The Outer Hebrides Local Energy Hub project ran relatively smoothly. The main challenge was the breakdown of the electrolyser, for which replacement funding is currently being sought, and the breakdown of the digestion process due to the introduction of fish waste into the anaerobic digester.

The future of hydrogen appears to be bright, as one part of the overall future energy solution with a number of countries (including Australia, Germany and the Netherlands) and the EU making bold statements on a hydrogen future and backing this with significant funding. For instance, Germany have committed to a £9 billion package for hydrogen projects and major companies have taken shares in fuel cell and electrolyser companies. This could lead to significant cost reductions in equipment as there is a move from bespoke manufacture to mass manufacture and an increase in efficiency. This would be expected to shift the economics of hydrogen generation. There is likely to be competition over the next few years between renewable energy generated hydrogen (green hydrogen) and hydrogen generation from fossil fuels with carbon capture and storage.

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