The role of hydrogen in meeting UK’s net-zero target by 2050

The role of hydrogen in meeting UK’s net-zero target by 2050

Dr Evangelos Gazis, Aurora Energy Research
Dr Felix Chow Kambitsch, Aurora Energy Research

Introduction and relevance to the conference theme

The UK has set the ambitious target of bringing all greenhouse gas emissions to net zero by 2050. This will require substantial decarbonisation across the energy system, including power, industry, buildings and transportation. A high degree of electrification combined with deployment of low-carbon technologies including renewable energy systems (RES), nuclear and thermal generation with carbon capture and storage (CCS) is expected to facilitate this transition. However, hydrogen is also likely to play an important role in reducing emissions in challenging energy sectors including industrial processes, heavy transport and heating applications.

This report outlines the outputs of a major multi-client study on the economics of a hydrogen GB economy. It focuses on the interplay of a developing hydrogen market with the existing power and gas markets, the competition of different hydrogen production technologies (electrolysis, methane reforming, bioenergy gasification etc.), the impact on the economics of power and gas assets, and the implications to policy, infrastructure and market design.

Methodology

For this study, we developed an integrated model that provides consistent outputs across different power and hydrogen markets. The model consists of a dispatch module that calculates the optimal simultaneous clearing of the power and hydrogen markets, and a yearly investment decision module that determines the economic entry and exit of capacity using a net present value approach to forecasted revenues and costs of different assets.

Key model inputs include technology parameters (efficiencies, ramping, capital and operational costs, cost of capital), power and hydrogen demand assumptions, and policy landscape assumptions. This set of assumptions was developed using a review of academic and grey literature, a series of interviews with industry experts and five workshops with the 18 industrial and public-sector study participants. The new model also interacts with a global commodities model, which provides the underlying projections for fuel prices.

Results and conclusions

The study analyses 4 net-zero scenarios across two dimensions: hydrogen demand and RES penetration. Outputs are compared to two baseline scenarios which assume no hydrogen demand. Key outputs of the study include hydrogen and power price forecasts, within-year price distribution, capacity and generation mix projections for hydrogen and power technologies, captured prices for different production technologies, curtailment volumes of RES generation, capacity and utilisation of power and hydrogen storage (both short-term and inter-seasonal) etc.

The study also assesses required policy interventions and expenditure on the repurposing of the incumbent gas transmission, storage and distribution infrastructure, resulting in a calculation of the total system costs under the different market scenarios.

Keywords

Hydrogen, total-system modelling, market scenario analysis

References

CCC. Net Zero – The UK’s contribution to stopping global warming. Committee on Climate Change, 2019

CCC. Net Zero – Hydrogen in a low-carbon economy. Committee on Climate Change, 2019

BEIS. UK becomes first major economy to pass net zero emissions law. Department for Business, Energy & Industrial Strategy,2019