Outer Hebrides Hydrogen Market Study

 

wind turbines on the Isle of LewisProject: Outer Hebrides Hydrogen Market Study
Technology: Technical report of Outer Hebrides hydrogen opportunities
Location: Outer Hebrides
CARES funding: CARES Innovation Grant £36,800. Additional match funding from Western Isles Development Trust £9,200.
Date installed/operational: Report completed/published 18 May 2020

Background

Comhairle nan Eilean Siar (CnES) is the local council for the Outer Hebrides. CnES was supported by CARES to explore the development of a hydrogen economy for the Outer Hebrides, based on the manufacture of ‘green’ hydrogen by electrolysis from renewables.

The Outer Hebrides possesses abundant renewable energy resources; the Isle of Lewis alone has the potential to generate around 80 TWh of renewable energy each year from wind and marine sources.

Following earlier work on hydrogen generation, its use, and the growing interest in the fuel across the islands, it was agreed by the hydrogen seminar stakeholder group that it would be beneficial to carry out a detailed review of opportunities in order to design and plan a way forward.

Though already home to several operational renewable energy projects - Outer Hebrides Local Energy Hub (OHLEH), for example - the development of additional projects, and onshore wind in particular, remains largely undeveloped. This is a result of the constrained nature of the local power grid and interconnector to the Scottish mainland, as well as low levels of local demand at certain times. Several proposed projects, including consented projects, remain unable to be built until a route to market can be established for developers.

CnES commissioned Wood Group UK Limited to carry out a review of policy, literature and projects in relation to ‘green’ hydrogen and to assess the opportunities for hydrogen production throughout the Outer Hebrides.

Project aims and objectives

The project’s objective was to support the advancement of a hydrogen economy in the Outer Hebrides by looking at the potential hydrogen could offer (linked to production from wind energy) as a cost effective and low-carbon fuel source across a range of sectors.

The project aimed to determine if there was an economic case, either now or in the future, for producing hydrogen from new wind energy projects to fuel the most likely sources of sectoral demand.

Wood’s tasks included:

  • looking at existing areas of energy demand in where hydrogen could play a role
  • looking at potential sources of future hydrogen demand across all sectors
  • looking at the cost/benefit analysis of generating hydrogen locally to meet this demand
  • looking at the impact regional markets would have on the viability of generating hydrogen
  • looking at market opportunities for the supply of bottled hydrogen, including whether local production could play a role in this, and making recommendations for communities and others who wish to explore these opportunities.

Outcomes and achievements

Work carried out included engaging stakeholders in an assessment of opportunities. Opportunities identified were marine transport, road transport, heat, power, and identification of demand and supply Nodes.

Wood also carried out techno-economic modelling considering the transportability of hydrogen, export markets, green hydrogen cost reduction, releasing constrained and curtailed wind power, and cost benefit analysis.

The final report’s findings suggest that heat and transport are the optimal sectors for pursuing green hydrogen from onshore wind. As well as being the largest possible hydrogen sectors, approximately 307 and 284 GWh each year respectively, the application of hydrogen technology in these sectors are either emerging (such as heat networks) or established (such as hydrogen fuel cell vehicles). Wood also geographically located known energy users on a spatial model to identify areas where demand would be clustered and hence suitable for supplying hydrogen in bulk.

The report also concluded that concentrating efforts in the transport sector would provide the greatest opportunity to improve the islands’ efficiency of energy expenditure. This is not the case in the heat sector where refined hydrocarbon fuels that are currently used have generally high conversion efficiencies of around 90% in modern home appliances.

Opportunities in the power sector - in energy storage and grid management applications, for example - were viewed as currently limited because of the uncertain position of the transmission network interconnector upgrade to the mainland. SSEN’s desire to implement a Constraint Management Zone in the Western Isles, and the yet to be determined replacement plans for the ageing fleet of SSE diesel power stations were also considered to be factors. Industrial opportunities for hydrogen deployment were also seen as limited because of the relatively small sector size and lack of hydrogen feedstock requirements by established manufacturers.

Wood’s report recommends progressing the development of hydrogen and encourages CnES and other interested stakeholders to continue pursuing the development of a local hydrogen economy because of the strong rationale and potential socio-economic and environmental benefits to the area.

The report made several other recommendations for CnES and other partners to action, including that CnES should lead on:

  • updating local policy to provide a positive consenting environment for investment in hydrogen related projects
  • pursuing a proactive and interventionist role to support new local hydrogen development
  • liaising with the Distribution Network Operator to determine future grid reinforcement and stability plans, plans to replace the existing diesel power stations, and whether dispatch-down of renewable generators can be overcome by generating hydrogen aggregated at a centralised point of production.
  • producing pre-feasibility studies to investigate the technical and commercial viability of developing hydrogen producing wind farms for chosen applications as outlined above.

Lessons learned and next steps

The Market Opportunities Study has shown the potential that the Outer Hebrides can play in the future production of green hydrogen and has identified the sectors that are worth pursuing for developing a hydrogen economy. The next step will be for CnES to progress the recommendations made in the report with local partners.