00 SGN Green Recovery Investment Prospectus

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Contents

This document sets 02 Executive summary out proposals that are intended to help inform the decisions we must 12 H100 Fife make as a country to Leading the world’s first 100% green hydrogen deliver a green economic to home network recovery. We will engage with our stakeholders to discuss these proposals, 16 Acorn carbon capture and storage explaining how we think A major clean growth catalyst the projects can support the UK economy and 18 ERM Dolphyn deliver on our net-zero Green hydrogen at scale from offshore wind ambition. We welcome comments and feedback. 20 Aberdeen Vision For further information Unlocking the hydrogen economy please contact: [email protected] 22 H100 Machrihanish A coordinated whole system approach to the decarbonisation of heat

23 Energy system transition R emoving all barriers to the large-scale rollout of hydrogen networks

24 An ambitious energy efficiency programme 02 SGN Green Recovery Investment Prospectus | Executive summary | 03

Executive summary

ORE Catapult’s SGN’s medium to long term net-zero strategy 7MW Levenmouth is to replace with hydrogen and Demonstration other green gases, enabling the decarbonisation Turbine will provide renewable of heat by 2045. power for the world-first H100 Fife project

There is no realistic scenario disruptive for customers. can be expedited now. whereby the UK can achieve And as the UK seeks to Additional investment in net-zero carbon emissions reinvigorate its domestic the other projects identified by 2050 without hydrogen economy and set out the path in this paper would result playing a key role in the to deliver net-zero, we must in the creation and support decarbonisation of large seize the potential to become of around 1,500 engineering, emitting sectors such as a global leader in renewable construction and business domestic heat, industry and and low-carbon hydrogen support function jobs in heavy transport. The need for technology. We must move 2020/21. a clean and storable alternative quickly to realise this to electricity is the basis of opportunity and achieve the Further investment in all calls for urgent investment maximum economic benefit. future phases of every project in the development, detailed in this paper has the demonstration and scale We recommend unlocking potential to create and support up of hydrogen solutions. regulatory investment in in excess of 100,000 direct and research, development and indirect jobs across the UK Peak demand for heat is more demonstration and expediting economy up to and beyond than four times that on the industrial decarbonisation 2050 and secure the long-term electricity network and 83% through key project investment. future of the UK oil and gas of the UK’s 29 million homes and manufacturing industries. are heated by boilers that burn Our key, shovel-ready natural gas. 20,000 homes demonstration project, We are not proposing a week or 1 million homes a H100 Fife, is essential for to deliver this alone. year will need to switch to the creation of the hydrogen low-carbon heat between 2025 economy. It will create a The decarbonisation of and 2050. complete hydrogen to homes our economy and heating network that will test every infrastructure requires Although other technologies aspect of green hydrogen significant coordination across will have a role to play, production, storage, network the supply chain. Unlocking hydrogen can deliver delivery, home application and the regulatory investment by decarbonisation of heat at social acceptability. incorporating this programme the scale required to meet in our next price control period, the Government’s net-zero Beyond delivery of regulatory GD2, will complement the targets in a way that is most investment, we have prepared industrial strategy and aid the cost-effective and least a list of investable projects that UK’s green recovery.

Credit: ORE Catapult 04 SGN Green Recovery Investment Prospectus | Executive summary | 05

Executive summary Continued

Project title Phase Location Investment Carbon benefit Jobs estimate Earliest Project title Phase Location Investment Carbon benefit Jobs estimate Earliest commencement commencement date date

H100 Fife Phase 1 £27.2m 662 t CO2 100 Now Machrihanish 300 customer £15m 662 t CO2 in 100 2022 demonstration phase 2 Phase 2 £15m (estimate) 1,550 t CO2 60 2022 1,000 customer £15m 1,550 t CO2 60 Phase 3 £75m (estimate) 18,000 t CO2 300 2022 demonstration Levenmouth West Scotland Phase 4 £25m (estimate) 4,000 t CO2 100 2024

Phase 5 £1bn (estimate) 1.5 Mt CO2e 6,000 2026

Energy system Over 60 named SGN, other gas Around £300m Enables the 1,200 2021 transition projects networks and decarbonisation the wider gas of UK heat and Acorn CCS Development St Fergus/ £400m 3 Mt CO2 per 1,600 2021 industry industry (Linked to of remaining Offshore North (estimate) annum Aberdeen Vision 7 sites Sea/Southern and Acorn North Sea/ £10bn 44 (47 total) Mt 42,400 2022 Hydrogen) North Welsh (estimate) CO2 per annum (sum is 44,000) Waters Energy c.£6.6bn 0.4 Mt CO2 1,891 Q3/Q4 2020 efficiency – £30bn 15-year rollout Scotland, South (Upgrading 1.1m 2,837 homes at £6k 10-year rollout 1 reformation £214m 0.4 Mt CO 800 Now and South Acorn 2 East per job – £26k Hydrogen module and per home) 4,052 (Linked to storage (supply Aberdeen Vision 7-year rollout 20% H2 blend to and Acorn CCS) Aberdeen Vision)

St Fergus/ Additional 3 Aberdeen £631m 1.2 Mt CO2 2,500 2024 reformation modules and storage (supply 100% H2 to Aberdeen Vision)

Aberdeen 20% hydrogen £100m 0.4 Mt CO2 400 Now Vision blend into (estimate) (Linked to Acorn Aberdeen CCS and Acorn St Fergus/ Hydrogen) Aberdeen 100% hydrogen £150m 1.2 Mt CO2 600 2024 into Aberdeen (estimate)

ERM Dolphyn 10 MW £56m 4,000 t CO2 50 Now project demonstration

100 MW £300m 40,000 t CO2 120 2025 demonstration North/West Scottish Coast 4 GW array £10bn 1.5 Mt CO2 5,000 2028

Additional £90bn 13.5 Mt CO2 45,000 2032 36 GW capacity 06 SGN Green Recovery Investment Prospectus | Executive summary | 07

Executive summary Continued

Table justifications and assumptions Phase 5 , which represents the significant accounts for 35% of total UK development of the hydrogen gas supply, emits around 55 Mt economy in Fife. This includes CO per year at point of final Phase 2 2 H100 Fife Phase 4 integration with large industrial use). The development of Phase 5 of The town of Methil, on the Fife which will expand phase 1 to will develop hydrogen transport users (), the build- all eight sites to deliver the coast, has a rare confluence of 1,000 properties, is estimated infrastructure, which will require out of blue hydrogen production above stated capacity would H100 Fife factors that make it a unique to cost £15 million and will additional processing to ensure and integration with the require a capital investment will save 1.5 Mt involve the conversion of the hydrogen is of sufficient quality location for demonstrating electricity networks and large of £4.4 billion and an OPEX of CO2 and hydrogen as an energy carrier. existing network and expansion and pressure for use in road, offshore wind generation assets, of £6.0 billion, totalling create 6,000 of the production facility. rail and marine transport. 1 the rollout of significant £10.4 billion . It should be additional jobs With easy access to the The above ratio estimates this The development of this hydrogen transport infrastructure noted that the costings in Offshore Renewable Energy phase will create an additional phase is estimated to cost and the full rollout of hydrogen the referenced paper do not Catapult’s 7 MW Levenmouth 60 jobs. The conversion of an £25 million. Aberdeen Vision to meet all heat and industrial include the investment required Demonstration Turbine (the additional 700 customers aims to create a transport hub demands in Fife. This phase will for the capture capability at world’s largest offshore wind to 100% green hydrogen for road transport, mainly for develop a significant hydrogen individual emitters. turbine dedicated to research will provide annual emissions the city’s bus fleet – this economy which will integrate and development) and a vacant savings of 1,550 t CO2. hub is estimated to deliver with the “hydrogen coast” and The Energy Policy unit at 9ha Scottish Enterprise plot The earliest commencement annual emissions savings is estimated to require at least Strathclyde University, led by earmarked for energy of this phase is 2021. of 1,300 t CO2. This phase £1.5 billion of investment. Professor Karen Turner, has development activity, the site of H100 Fife will encapsulate We deliver around 5 TWh of reported the potential for CCS boasts a clean energy source, Phase 3 road, rail and marine transport natural gas to Fife per annum to play an important role in space for a new hydrogen will expand H100 Fife to over a larger area. Therefore, – conversion of this demand helping to sustain around production and storage facility, decarbonise non-domestic this phase of H100 Fife is to 100% hydrogen will reduce 44,000 direct and indirect customers in and around estimated to save around and a community of potential emissions by 860,000 t CO2/ Scottish jobs currently linked domestic end users within Levenmouth. There are 122 4,000 t CO2 per annum on annum. Further emissions to oil and gas and other a small geographical area. commercial and industrial completion. The investment reductions from the related industrial sectors. properties demanding 97 GWh of £25 million is estimated decarbonisation of electricity This investment will therefore Phase 1 of natural gas per annum. to create 100 jobs. and transport yields the phase be assumed to create and has been fully priced at This will require a ramp up 5 estimate of emissions savings sustain an estimated 44,000 £27.2 million and will in hydrogen production of at to be at least in the order of jobs in the UK oil and gas least ten times (either blue or decarbonise the gas demand 1.5 Mt CO2. This investment and sector across the operational of 300 homes (an average green hydrogen) and new areas rollout of phase 5 is estimated lifetime of the assets (out to UK domestic property uses of network to be constructed, to create around 6,000 around 2070). 12,000 kWh of natural gas per often to meet specific industrial additional jobs. year, at 0.184 kg CO /kwh), loads. The decarbonisation Goldeneye has been 2 of this gas demand will yield saving 662 t CO2/year. identified as the first site for annual emissions savings Acorn CCS development in 2021, requiring Our Gas to the West project of around 18,000 t CO2. Pale Blue Dot Energy’s Acorn an approximate investment of (new network construction This phase is likely to require CCS facility is expected, subject £400 million (CAPEX and OPEX in Northern Ireland) created investment of around £75 to funding, to be operational of build), if it is assumed that around 400 jobs for a million and will create 300 jobs. by 2024. The ‘Progressing every £1 million invested creates £150 million investment This phase will require the Development of the UK’s four jobs – this investment (around three jobs per £1 million build-out of production and Strategic CO2 Storage Resource would create 1,600 jobs across investment), it will be assumed geological storage. Report’ (April 2016) by Pale its lifetime. that for hydrogen projects, Blue Dot, Costain, the Energy four jobs per £1 million of Technologies Institute and Axis The table has been presented investment will be required Well Technology assessed the as a split in the repurposing to account for the innovative UK’s CCS potential. of the Goldeneye field and nature of the technologies the remaining seven sites involved. Phase 1 of the The eight high potential sites identified in storage resource H100 Fife will assessed and priced in the H100 Fife will create be the world’s assessment report. approximately 100 jobs using report have a total capacity this ratio. This project is ready first hydrogen of 1,645 Mt CO2, with a maximum Acorn CCS is closely for immediate commencement heat network, injection rate of 47 Mt CO2/year linked with our Aberdeen following investment. testing every (for reference the total Vision project. aspect of green throughput of natural gas at hydrogen production 08 SGN Green Recovery Investment Prospectus | Executive summary | 09

Executive summary Continued

Acorn Hydrogen An additional three 200 MW Aberdeen Vision Dolphyn Our Aberdeen Vision project reformer modules would The success of Acorn Hydrogen ERM’s Dolphyn project aims to (in partnership with Pale Blue provide sufficient supply for and all other blue hydrogen establish industrial scale green 3,000 Dot Energy) aims to develop Aberdeen to convert to 100% production is dependent on hydrogen production through and roll out a hydrogen hydrogen, this would require the successful development the design, construction and economy in Aberdeen and the a further investment of of Carbon Capture and Storage demonstration of floating jobs surrounding area. The feasibility £435 million. Additional (CCS) infrastructure (Acorn offshore wind turbines with could be created study and required investment hydrogen storage requirements CCS). The success of blue integrated electrolyser green through phase 1 and in this project will deliver a gas of 650 GWh would require hydrogen production is hydrogen production. This 2 of Acorn Hydrogen. network infrastructure an additional investment of dependent on the extent of project will commence initially (transmissions and distribution) £196 million. The total cost a demand, which is realised by with a smaller scale 2 MW capable of delivering 100% of this phase is therefore the transition of current natural turbine demonstration as hydrogen to the city of £631 million. This investment gas demand to hydrogen a proof of concept, followed Aberdeen and the surrounding is estimated to create around demand. This requires the by a larger 10 MW turbine area. The projected costs do not 2,500 jobs. These jobs are repurposing and transition of demonstration. The initial £80 account for the construction of closely linked with the gas distribution infrastructure stages of this project have the blue hydrogen production macroeconomic benefits to deliver up to 100% hydrogen. secured funding through assets at St Fergus and the and jobs created by investment the BEIS hydrogen supply in Acorn CCS. million required hydrogen storage. Aberdeen Vision will repurpose competition. The design, gas distribution infrastructure permitting and Aberdeen Vision will enable The Aberdeen Vision Phase in Aberdeen and construct a The 2 MW demonstration 1 Final Report estimated that construction of the hydrogen demand and therefore hydrogen transmission pipeline followed by the 10 MW 100% hydrogen stimulate hydrogen production. a 2% by volume injection into from St Fergus to Aberdeen. demonstration will require an pipeline to Aberdeen This new demand for hydrogen the NTS at St Fergus will The emissions savings from investment of £56 million and is estimated to require reduce emissions by around will be supplied from blue Aberdeen Vision are directly will deliver around 4,000 t CO2/ an investment of hydrogen production through 320,000 t CO2/year, with linked to the emissions savings year (total 12 MW capacity). around £80 million. Pale Blue Dot’s Acorn a 20% by volume blend described in Acorn Hydrogen This phase has now commenced Hydrogen. Acorn Hydrogen of hydrogen and natural gas and are not in addition to and is suitable for immediate will reform natural gas at St into the Aberdeen distribution these savings. investment concluding in 2026. Fergus to produce hydrogen network coupled with for transport through the increased transport utilisation The design, permitting and The Dolphyn project will then gas network infrastructure reducing emissions by around construction of the 100% look to develop a 100 MW to customers. 80,000 t CO2/year. The first hydrogen pipeline to Aberdeen demonstration (array of phase therefore will reduce is estimated to require an 10x10 MW turbines). This One 200 MW reformer module emissions by an estimated investment of around will require an investment at St Fergus will produce 0.4 Mt CO2/year. £80 million. Modifications to of around £300 million and sufficient hydrogen for a the distribution infrastructure reduce emissions by a further The second phase, where 2% injection to the National in order to enable 20% 40,000 t CO2. This phase Transmission System (NTS) 100% of demand in Aberdeen hydrogen by volume blending is expected to be ready and supply up to 20% of is met by hydrogen, is in Aberdeen is estimated to for investment and Aberdeen’s demand (by estimated to reduce emissions cost around £20 million. This commencement by 2025 volume) through a dedicated by an additional 1.1 Mt CO2/year. overall investment in phase and completed by 2030. hydrogen transmission pipeline It is assumed that an additional 1 of around £100 million is from St Fergus to Aberdeen. saving of 0.1 Mt CO2 will be assumed to create and support ERM will then look to progress The cost of this module was realised from a further uptake approximately 400 jobs in to full scale industrial green estimated in the Aberdeen of hydrogen fuelled transport. Aberdeen. To enable the phase hydrogen production through Vision Phase 1 Final Report This second phase will therefore 2 conversion to 100% hydrogen the construction of a 400 to be £145 million. To ensure reduce emissions by a further is estimated to require a further turbine array at 4 GW. This security of supply, 229 GWh 1.2 Mt CO2/year (Total of investment of £150 million, array is estimated to require of hydrogen is required in this 1.6 Mt CO2/year). creating and supporting an a £10 billion investment and Phase, at an estimated cost additional 600 jobs. will deliver emissions reductions The construction of the first of £69 million. The total cost of around 1.5 Mt CO2/year. of this phase is therefore reformation module and This is expected to commence £214 million. If it is assumed supporting storage is assumed construction in 2028 and will that for every £1 million to be ready for investment now, be completed by 2034. invested, four jobs are created, with the second phase ready this phase will create around in 2024. 850 jobs. This is linked with the jobs created in the Acorn CCS investment. 10 SGN Green Recovery Investment Prospectus

Executive summary Continued

The final phase of this rollout Machrihanish & will construct a further nine Campbeltown 4 GW arrays (total 40 GW), A FEED study was conducted which will represent a 1,500 to consider the site at The Macrihanish significant volume of green Machrihanish as a possible hydrogen capable of supplying location for the H100 project will reduce a large proportion of GB heat jobs demonstration. Despite not CO2 emissisions and industrial demand. The being chosen, we seek to by 662 tonnes, could be created development of nine further develop this site as a route in 2020/21 through arrays will require an investment creating and into West Scotland for supporting 100 investment in of up to £90 billion (this is likely hydrogen. Required investment key projects. to be lower due to economy of in this site to enable the first jobs in rural Argyll scale and efficiency savings of phase build-out is estimated industrial scale manufacturing). to be £15 million. This phase The construction of these can be started now and will further arrays could commence supply 300 homes with green in 2032 and, upon completion, hydrogen and enable the 1,000 reduce emissions by a further installation and testing of 13.5 Mt CO2/year. alternative downstream renewable technologies. This homes A study conducted by Energy phase will reduce emissions by and Utility Skills2 estimated that 662 t CO2/year and create and The Machrihanish growth in the UK offshore wind support 100 jobs in the region. & Campbeltown sector (to an overall capacity site could supply of 35 GW) by 2032 will directly Phase 2 of this project will green energy support 36,000 jobs – this expand the network to to 1,000 homes. equates to around 1,000 jobs 1,000 customers and require per GW of capacity. a further £15 million investment, saving an additional 1,550 t CO2 For green hydrogen production, and creating and supporting due to the added element and a further 60 jobs in the area. complexity of electrolysis and This phase will likely be ready the more remote locations, it in 2022. will be assumed that 1,250 jobs will be created and supported The project has significant per GW of offshore green growth potential similar hydrogen production at the to H100 Fife, which will be industrial scale. For the 10 MW quantified following investment demonstration, due to the in phase 1. This includes the smaller scale, it is estimated up development of a hydrogen to 50 jobs will be created and economy in West Scotland. supported. For the 100 MW demonstration, it is estimated that 120 jobs will be created and supported (based on the Energy system transition above ratio). Investment in each The investment of around array is estimated to create and £300 million in the RIIO-GD2 maintain 5,000 jobs. programme will conduct the necessary work to enable the decarbonisation of the energy delivered through the network. This investment is estimated to create and support 1,200 jobs, both in SGN and wider project partners in the gas industry. This work can commence in 2021. 12 SGN Green Recovery Investment Prospectus | H100 Fife | 13

H100 Fife

Levenmouth in Fife, home This is an area of high By securing and constructing H100 Fife phase 1 to the town of Methil, offers deprivation, and is recognised a hydrogen demonstration in a location that is unique for to be within the 5% of most Levenmouth, a location has demonstrating hydrogen as deprived areas according to been selected that is ideal for an energy carrier. It provides the Scottish Index of Multiple evidencing the replacement of access to an existing 7 MW Deprivation (SIMD). The natural gas with hydrogen and wind turbine (owned by waterfront at Levenmouth has the wider rollout of hydrogen ORE Catapult), and a vacant been an area steeped in the in the energy system. In addition 9ha plot owned by Scottish energy industry for decades, to the phases discussed in this Oshore Green electricity Safely Zero-carbon heating Enterprise that is development with Methil being appointed paper, the location of the H100 wind produces hydrogen stored for homes land for energy activities. as a new coal exportation dock Fife project lends itself to a This site, identified for the in the 1870s. With this came a range of opportunities, including: hydrogen production and wave of jobs and employment storage facility, as well as opportunities linked to the • A central Scottish location, the hydrogen demonstration export of coal from Fife, creating close to motorway connections facility, is located adjacent a mining town and coal port and only 40 minutes from to the potential domestic with a wagon line built to Edinburgh airport. end users. bring coal to the dock from the collieries. At one point, • The presence of Fife College, Methil was Scotland’s main which demonstrates an coal export dock. excellence in energy courses and has a campus located Moving into the 1970s, oil in Levenmouth. Transported field exploitation in the North through network Sea brought a new form of • A platform of renewables employment to the area and a and hydrogen education major facility for the construction delivered by Bright Green of platforms was established. Hydrogen that can be built Energy Park Fife, as it is know upon in higher education. today, still hosts contributors to the offshore market with • Aligning with Fife Council’s links to fossil fuels but also targeting of mid-Fife as a renewables, including Biba. priority area for investment This site has seen the and economic rejuvenation, transformation of old energy with 2019 statistics reporting to new, starting with coal Fife’s unemployment rate to mining and exporting, through be 4.1%, compared to 3.5% for The location of to oil platform fabrications and Scotland and 4.0% for the UK more recently offshore wind (Defined as: % of working age the H100 Fife turbine jacket structures. (16–64) residents who are out project lends of work). In April 2020 the itself to a range The presence of the 7 MW wind claimant rate in Levenmouth of opportunities turbine on site demonstrates rose by 8.6%, the highest the inclusion of clean energy increase in Fife. into the function of the park and sets the context for the delivery of the next innovative advancement in the energy sector – hydrogen delivered from offshore wind to customers through our H100 Fife project. 14 SGN Green Recovery Investment Prospectus | H100 Fife | 15

H100 Fife

H100 Fife is seeking to (c) Within Energy Park Fife Phase 5 (f) Hy drogen from offshore The H100 map deliver a first-of-a-kind 100% is the offshore jacket (estimate £1 billion) wind is a valuable process hydrogen network, supplying manufacturers, BiFab, who that is being demonstrated around 300 domestic properties have fabricated infrastructure Whole systems and at Levenmouth, opening a in phase 1. This will be a new for the offshore oil and gas Hydrogen coast: market solution for hydrogen Hospital Diageo Packaging purpose-built generation and industry as well as offshore (a) Hydrogen could integrate production at scale. storage solution, supplying a wind turbines. with the power network, Diageo pipeline network, comprising providing storage and (g) Neighbouring offshore wind Distilling H2 Haulage Anticline H2 of fully tested common natural (d) Close to Levenmouth supporting transport. activity off the coast of Fife Storage gas components and fittings, is the Coaltown of Balgonie There is an opportunity to is accelerating with the laid in parallel to the existing anticline, that has the expand on the ‘East Neuk’ Neart na Gaoithe (NnG) Mossmorran gas network delivering an storage capacity for project undertaken with 450 MW wind farm and Grangemouth end-to-end hydrogen system. hydrogen to serve Energy Cierco’s 12 MW–53 MW 300 homes 1,000 homes 100% H2 network 100% H network Phase 1 will be delivered 250,000 homes. Networks to roll out whole development next to Energy 2 through an investment system solutions. Park Fife. Existing and Leven Rail of £27.2 million. (e) Levenmouth Water future developments in the Station Treatment Works is nearby; (b) The rollout of property offshore wind market close H2 Transport The growth potential of the there is future opportunity connections could expand to Energy Park Fife offer H100 Fife site is significant, to generate hydrogen from to supply an extended the opportunity for power Electrolyser LOHC H2 Trials and can be summarised in waste water. decarbonised east integration for hydrogen Storage four expansion phases: coast network. production.

O2 Demonstration (f) Options for utilising the Storage Facility Phase 2 oxygen for both fisheries (c) Mossmorran’s Natural Liquid (h) F orth Ports are the (estimate £15 million) and medical applications Gas and Ethylene Plant main port owners in Fife, Oshore wind are also being explored. is located 25km from including those at Methil, development Oshore wind 1,000 properties: Levenmouth and produces Burntisland, Kirkcaldy, development (a) Expanding the initial industrial hydrogen as a Rosyth and also Industry in Levenmouth 300 connections to 1,000 Phase 4 by-product of ethylene neighbouring ports Marine customer connections in (estimate £25 million) production. In addition, in Dundee and Leith Port phase 2. This could include there is an existing liquid (Edinburgh). Marine activity a conversion of existing Transport: natural gas pipeline between is still prominent in Fife and natural gas assets, forming (a) Levenmouth was originally St Fergus and Mossmorran. Forth Ports are key players one of the regional served by a rail link that was in all tiers of the renewables conversion demonstrations. decommissioned decades (d) H100 Fife is proposing sector. Marine applications ago. Funding has now been a fully green solution to are already being looked announced by Transport hydrogen networks through at by the hydrogen sector. Phase 3 Scotland for reinstating electrolysis. However, (estimate £75 million) the Levenmouth rail link. in the future of heat, the A hydrogen alternative gas networks must adopt Industrial and commercial: to diesel or electric will be a technology agnostic (a) Exploring integrating a explored. This infrastructure view to the production of hydrogen supply solution upgrade will further hydrogen. The inclusion for industry through improve the connectivity of of Grangemouth into the collaboration with Diageo, Levenmouth with key routes wider rollout of hydrogen one of the world’s largest and cities, as well as locally. represents large scale distillers, who have their decarbonisation through the main packaging site and (b) Hydrogen powered reformation of natural gas a distillery in Levenmouth. haulage logistics also to produce hydrogen with These are located 2–3km offers a possible transport carbon capture. from the hydrogen opportunity, in addition to production site. new or existing hydrogen (e) With the production of fleet vehicles. hydrogen using electrolysis, (b) 52 manufacturing derived from offshore businesses operate in (c) As the site is located wind, the hydrogen the Levenmouth area. next to a marine port, system at Levenmouth is there is the prospect demonstrating a world first for marine hydrogen power to gas zero-carbon transport or hydrogen solution for domestic heat. powered vessels. 16 SGN Green Recovery Investment Prospectus | Carbon capture and storage – Acorn CCS | 17

Carbon capture and storage – Acorn CCS

Carbon capture and storage CCS also enables BECCS (bio (CCS) describes the process energy and CCS) which produces of capturing carbon dioxide negative carbon emissions – 78 emissions from processes emissions from biomethane which would otherwise have are part of the natural carbon vented the waste gas to cycle, and therefore if captured, billion atmosphere. CCS enables the emissions are effectively removed use of natural gas in a net-zero from the atmosphere. BECCS world by removing the CO2 will be critical in eliminating tonnes emissions from its use. The emissions from sectors of the Potential storage production of blue hydrogen economy which cannot be capacity for offshore practically transitioned fully requires CCS for the energy C02 in the UK. produced to be classified as away from fossil fuels, such low carbon. as aviation. Whilst green hydrogen The UK’s CCS potential is (hydrogen from electrolysis) significant. Pale Blue Dot’s must provide the bulk of Strategic UK CCS Storage hydrogen supply in the long Appraisal Project, funded by 100 term as natural gas supplies the Department of Energy diminish, blue hydrogen, and and Climate Change, concluded by default CCS, provides a step that there are no major years change to that end goal (green technical hurdles to storing 15% of this potential capacity would hydrogen generation capacity industrial scale CO2 offshore in to satisfy all heat and industrial UK sites3. The project identified capture all UK With this important pipeline The project is led by Pale Blue emissions for over infrastructure already in place, Dot Energy, with funding and demand will require the build- 20 specific CO2 storage sites 100 years. out of significant offshore wind (this only represents a small Acorn CCS can be started support from industry partners generation assets and other proportion of overall national with just a modest amount (Chrysaor, Shell and Total), the of existing CO2 emissions – UK and Scottish Governments, renewable generation assets, potential with a combined 4 which will take decades). capacity of 78 billion tonnes captured directly from the gas and the European Union . processing units at the St Acorn CCS and Acorn of CO2). The top 15% of this Blue hydrogen production potential capacity would Fergus gas terminal. The first Hydrogen are closely linked allows the continued use of capture all UK emissions phase of Acorn CCS offers a with our Aberdeen Vision natural gas in a net-zero world, for over 100 years. The UK low capital cost start, with an project and together will securing the prosperity and undoubtably possesses a CCS investment decision planned in spearhead the development future of the natural gas supply capacity well in excess of its early 2021, that can be delivered of the hydrogen economy chain and those employed in it, practical needs and a capacity by 2024 – establishing the in the north east of Scotland. whilst moving towards net-zero marketable on a global scale. critical CO2 transport and emissions with economically storage infrastructure required The full industrial development produced energy, allowing the Pale Blue Dot’s (Aberdeen based) for the wider Acorn build-out, of CSS is critical to the large scale build-out of green Acorn CCS facility is a carbon including Acorn Hydrogen and decarbonisation of the UK hydrogen from offshore wind capture and storage project the import of CO2 to St Fergus economy and will require a (and the subsequent cost specifically designed to overcome from ships at Peterhead Port multi-billion-pound investment competitiveness through its one of the acknowledged blockers and from Scotland’s industrial over decades. economy of scale) and to CCS deployment in the UK – Central Belt. stimulating the CCS industry. the high capital costs involved The initial phase of the in getting started. Based at the Designated a European Project development of Acorn CCS St Fergus gas terminal in North of Common Interest (PCI), will see the repurposing of East Scotland, Acorn CCS can Acorn is an important catalyst the Goldeneye pipeline in the repurpose existing gas pipelines for clean growth opportunities North Sea for carbon dioxide in Scotland and in regions transportation, with future to take CO2 directly to the Acorn where CO2 transport and phases developing a further CO2 Storage Site (the first CO2 storage licence to be awarded storage is limited. Acorn can seven high potential sites. by the Oil and Gas Authority). help transform the UK’s carbon intensive industries into low-carbon industries and sustain jobs. 18 SGN Green Recovery Investment Prospectus | Green hydrogen – ERM Dolphyn | 19

Green hydrogen – ERM Dolphyn

Whilst blue hydrogen must, farms generating electricity ERM was awarded UK This project at scale could UK wind installations and will, play a significant role are optimally located nearer Government funding to further transform the UK energy capacity (MW) in the decarbonisation of heat demand (this is due to the fact develop their Dolphyn Project5. industry and become the and industry, the reformation electricity is kinetic energy, as The first of a kind Dolphyn primary source of energy for the of natural gas does still require opposed to chemical energy, project is an innovative UK economy. Green hydrogen natural gas, which is a finite which is more practical to integrated system combining production at scale will drive resource. The end state of the transport long distances) – all of the technologies required down the price of energy. This UK gas industry must be one this is not always in locations to bring together the latest technology is critical in the supplied by as close to 100% where the greatest wind floating wind turbine and future success and longevity green hydrogen as is resource is. The greatest and electrolyser technologies. of the hydrogen economy and practically possible. most consistent wind speeds The project aims to create a provides a route to a self- in the UK are typically found 2 MW prototype by March 2021, sufficient, zero-carbon energy Green hydrogen is produced in deep water locations around providing a proof of concept. supply from a secure and infinite by the electrolysis of water into the Atlantic Coast and the If successful, ERM aim to resource. This will bring oxygen and hydrogen and is North Coast. Building out wind significantly scale up the significant macroeconomic powered by renewably generation for electricity at production of green hydrogen benefits, export potential, IP generated electricity. Renewable these locations is unlikely to to arrays of 10 MW floating for British industry and energy is practically infinite and be practical or economical electrolyser wind turbines manufacturing and enduring reliance on it in a fully scaled due to power transmission (arrays of 400 – 20 by 20). job security. solution (with sufficient requirements. Each array, with a generation generation capacity and storage capacity of 4 GW, capable of Full rollout of this technology capacity) will provide a secure Producing hydrogen with supplying heat to 1.5 million and the development of green supply of zero carbon energy. renewable energy in remote homes. The potential of this hydrogen production is highly Whilst 2050 targets can be locations allows instant energy project is tremendous, and its desirable and essential to achieved through the use of blue storage to chemical energy, success has the potential to hydrogen security of supply in and green hydrogen, green which can then be delivered unlock green hydrogen the long term. This represents hydrogen is the only form of long distances through gas production in remote locations, a multi-billion-pound investment hydrogen generation which can pipes (which equivalently deliver potentially utilising offshore oil requirement in the very best reach a point of no security significantly greater quantities and gas platforms (enabling their interests of the UK economy, of supply issues (blue hydrogen of energy than electrical cables repurposing) and stimulating the job market and environment. is reliant on natural gas supply) at a fraction of the cost). offshore wind industry to a and should be fully depended significant hydrogen market. on beyond 2040. Green hydrogen enables the oil and gas model of transporting The UK is a world leader in stored energy ashore (rather offshore wind energy which than generating energy where is currently dedicated to it is needed as is the case with electricity generation. To electricity generation) to be optimise costs and minimise applied to the offshore wind transmission losses, wind energy sector. 20 SGN Green Recovery Investment Prospectus | Aberdeen Vision and Acorn Hydrogen | 21

Aberdeen Vision and Acorn Hydrogen

Aberdeen is Europe’s leading The opportunity to develop a The strategic location of St Fergus oil and gas centre, with over hydrogen economy along the Aberdeen (close proximity half a century of heritage in east coast of Scotland will to oil and gas infrastructure, delivering energy to the UK require significant infrastructure natural gas supply chains, high economy. In its 50 years as repurposing and build-out in potential CCS sites, high potential the UK’s energy capital, it has and around key locations for offshore wind locations and a developed capabilities and IP hydrogen production to deliver highly skilled workforce across that have generated trillions in deep decarbonisation, which engineering and construction) exports and inward investment includes Aberdeen as a and its strong links to critical into the UK. The nearby port at strategic location. Through a hydrogen projects makes it an St Fergus is where 35% of the range of initiatives including essential area for investment UK’s natural gas is brought to Aberdeen Vision, H100 Aberdeen as part of the Green Recovery shore. As we strive towards our feasibility, Acorn CCS, Acorn in the coming years. The net-zero emissions target, the Hydrogen and ERM’s Dolphyn consequences of not investing development of a hydrogen project, Aberdeen continues in this area, and industry, would economy and supply chain to be a hub of activity for result in the missed opportunity in Aberdeen and the north hydrogen deployment. to develop a world-leading east of Scotland presents a hydrogen economy in the tremendous opportunity to put The uses of hydrogen in UK, which would be highly the region at the leading edge transport have also been detrimental to not only the of the zero-carbon supply pursued in Aberdeen, which is economy of the north east chain, maintaining its status as now home to one of the largest of Scotland, but the UK’s ability a world-leading energy centre and most varied hydrogen to achieve net-zero targets. in a net-zero world. road transport fleets in the UK including buses, hydrogen refuelling stations and hydrogen Our Aberdeen Vision project electrolysed offshore wind This project has the potential fleet vehicles available to aims to unlock the hydrogen (Dolphyn project) would be to deliver at least 1.5 million businesses as part of a car club. economy in Aberdeen and injected into a dedicated 100% tonnes of CO2e emissions Furthermore, The Event Complex the surrounding area. Acorn hydrogen pipeline, laid to reduction per annum (with a Aberdeen (TECA) is a world- Hydrogen will supply the Aberdeen, allowing an initial 100% hydrogen Aberdeen Local class, £330 million facility and hydrogen for this project with 20% blend by volume to the Distribution Zone (LDZ)), and is recognised as the UK’s most Aberdeen Vision enabling network increasing to 100%. in the process provide a sustainable venue, all powered the demand through the The pipeline would supply the significant boost and growth by an onsite energy centre and construction and repurposing existing and proposed refuelling stimulus to the north east of anaerobic digestion plant using of the infrastructure required solutions in Aberdeen. There Scotland and the city renewable energy sources and to transport it. Phase 1 of this is also future opportunity of Aberdeen; an area and city features the largest hydrogen project has concluded and to blend into the National heavily reliant on the oil and gas fuel cell installation in the UK. assessed the feasibility of Transmission System. industry. Early investment in this constructing a 200 MW Steam project, which is planned to roll Methane Reformer (SMR) at The full build-out of this out to 100% hydrogen by St Fergus (as part of Acorn project will require an around 2028, will provide Hydrogen), constructing a 100% investment of around £100 welcome economic and hydrogen pipeline to Aberdeen million to achieve enough decarbonisation benefits to and developing Aberdeen’s gas capacity for a 20% blend in the area and industry, and will network infrastructure to enable Aberdeen City with further afford this critical project the up to 20% by volume into the investment required to achieve maximum chance of success. energy blend. a 100% hydrogen distribution.

A hydrogen SMR blue hydrogen production, This project provides a route which will be built out as part of for the decarbonisation of heat, economy in Pale Blue Dot’s Acorn Hydrogen industry and transport in the Aberdeen would project, will separate natural north east of Scotland. The maintain its status gas from St Fergus gas terminal creation of hydrogen demand as a world-leading into hydrogen and carbon (enabled by a repurposed gas energy centre in dioxide using steam, with the infrastructure) will enable the CO2 by-product captured and repurposing of the North Sea a net-zero world stored permanently at Pale Blue oil and gas industry to produce Dot’s Acorn CCS facility in the blue and green hydrogen. North Sea. Hydrogen both from reformed natural gas and 22 SGN Green Recovery Investment Prospectus | Energy system transition | 23

Machrihanish hydrogen Energy system transition demonstration

Machrihanish Airbase We have ambitions to build out In RIIO-GD2, we aim to prove The execution of this Community Council (MACC) all three sites in time. The site and demonstrate the safe and programme of work as part is the proposed area for a at Machrihanish is of particular efficient transportation of up of the whole suite of R&D 100% secondary H100 demonstration interest (the site at Aberdeen to 100% hydrogen through our is essential in enabling the In RIIO-GD2, we site, following on from the has been incorporated into the network, enabling the rollout repurposing of the GB gas aim to prove and progression of H100 Fife. Aberdeen Vision project) due of 100% hydrogen networks network infrastructure demonstrate the The site is the former RAF to its remoteness and variation in 2026 at strategic locations. to enable the hydrogen safe and efficient Machrihanish which was in renewable supply (wind and We proposed a highly ambitious economy. transportation of up operated as a military airbase solar). The build-out of this site, and far reaching programme of to 100% hydrogen. between 1918 and the 1990s, which will likely require an work to Ofgem in GD2, the located around five miles to investment in excess of £15 detail of which can be found in the north west of Campbeltown. million, aims to produce the RIIO-GD2 business plan and hydrogen from the electrolysis supporting appendices. Campbeltown is one of of renewable energy sources five Statutory Independent to supply a 100% hydrogen This programme of work, 60 Undertakings (SIUs) operated network to around 300 which contains over 60 named Number of projects by SGN and is supplied by customers in Machrihanish. projects, intends to tackle the needed to tackle liquefied natural gas (LNG), A further £15 million would technical and safety knowledge technical and safety which is shipped in via road lead to an expansion to 1,000 gaps and subsequently remove knowledge gaps to tanker. The site operates as a customers in Campbeltown. all barriers preventing the pave the way for a business park and community large-scale rollout of hydrogen large-scale rollout of facility, comprising of 137 In parallel, the project would networks in GB. The programme hydrogen networks. households and 21 commercial seek to install a range of will also consider regional premises. These are connected downstream renewable strategy in order to ready and to a private wire network technologies, such as air source identify frontier towns suitable supplied by National Grid heat pumps, to compare the for the first rollout of 100% through MACC as the landlord. operation of heat pumps and hydrogen networks. There is no existing gas hydrogen boilers at the same infrastructure at this site. location. This would represent There is also 250kW of solar an ideal test bed to determine PV developed on site which the suitability of various heating supplies the private wire, with technologies to feed into a a further 1 MW consented. coordinated whole system Beyond a hydrogen network, approach to the decarbonisation features of this site offer the of heat with electricity networks. option to explore hydrogen The remote west coast location solutions for aquaculture, of this site does not tie into the industrial demand, proposed east coast of Scotland decarbonising haulage routes hydrogen coast concept; and marine applications. however, it does present itself as a useful test bed for low- H100 Fife will be the world’s carbon heat technologies. first 100% hydrogen heat network. This site was chosen Investment in this project would following a comprehensive stimulate the local economy and and competitive process provide an invaluable opportunity between different bidders and to develop a hydrogen economy 1 Progressing Development of the UK’s 4 https://theacornproject.uk/ Strategic Carbon Dioxide Storage locations. Feasibility studies in the west of Scotland, Resource – a summary of results from 5 https://www.erm.com/news/erm-gets- were conducted for sites in providing a route to the the Strategic UK CO2 Appraisal go-ahead-to-develop-green-hydrogen- Aberdeen, Machrihanish and at decarbonisation of the wider Project – April 2016, Costain, Energy at-scale-from-offshore-wind/ Levenmouth. Machrihanish and area, including the city of technologies Institute, Pale Blue Dot and Axis Well Technologies. https://www.modernpowersystems. Levenmouth were progressed Glasgow. This project is likely com/features/featuregetting-green- to FEED and Levenmouth was to have the same growth 2 https://renewablesnow.com/news/ hydrogen-production-into-deep-water- ultimately selected for the potential as H100 Fife, with study-sees-260-growth-in-uk-offshore- the-dolphyn-project-7780776/ H100 demonstration. similar access to offshore wind wind-jobs-by-2032-severe- featuregetting-green-hydrogen- competition-for-talent-632330/ production-into-deep-water-the- potential. The economic growth dolphyn-project-7780776-503836.html and development of the area, 3 Energy Technologies Institute, if this project is progressed to Strategic UK CCS Storage Appraisal full completion, is tremendous. – https://www.eti.co.uk/programmes/ carbon-capture-storage/strategic-uk- ccs-storage-appraisal 24 SGN Green Recovery Investment Prospectus | Executive Summary | 00

Energy efficiency programme

The delivery of a national A major driver for energy In the short term, estimates energy efficiency programme efficiency is the associated suggest 66,000–86,000 new for UK households would carbon savings and reductions jobs could be sustained annually create jobs; substantially in consumer bills. The The across the UK. While some reduce carbon emissions and Committee on Climate Change resources could quickly start support net-zero targets, (CCC) estimate that the annual and carry out activities such reducing the impact of climate direct emission savings from all as survey work, there is a change; and help customers residential energy efficiency requirement to either up-skill with rising energy bills and could be 6 MtCO2 by 2030. our existing resources or recruit SGN affordability challenges in It is also believed that total additional resources in order St Lawrence House the wake of the COVID-19 energy use could be reduced to undertake all of the activities Station Approach pandemic. by approximately 25% by requried for a full energy Horley, Surrey 2035 through cost-effective efficiency upgrade. RH6 9HJ Energy use in homes accounts investments in energy efficiency, for approximately 14% of UK with related consumer savings Deployment of energy efficiency sgn.co.uk greenhouse gas emissions. on annual domestic heating in households is likely to be more These emissions need to fall energy bills through energy efficient if a ‘street by street’ by 24% by 2030 to meet efficient insulation. approach is adopted where decarbonisation targets, scope and scale efficiencies suggesting a major improvement Previous energy efficiency can be realised, enabling in housing energy efficiency is schemes have seen challenging very targeted customer required. Whilst energy efficient levels of customer take-up even communications to help win white goods, lighting and when it has been offered for customer support. Local networks consumption monitoring/ free due to the perceived have significant experience metering (e.g. smart meters) hassle factor (i.e. clearing lofts). of through managing the Iron are becoming increasingly However, this was before net- Mains Replacement Programme commonplace, improvements zero and increased evidence and which was mandated by the in housing infrastructure and acceptance of climate change Health and Safety Executive insulation are less advanced impacts and affordability in 2002, their established and could provide significant pressures due to rising customer processes and approach currently improvements in energy bills. A programme now sees replacement at 70–75% efficiency with respect to accompanied with a targeted based on 2002 levels and will household heating. communications plan could complete in 2032. drive a significant improvement in consumer take-up. Local authorities, charities and energy suppliers could be A national, network-led required to provide additional programme could be an effective customer information and work way to establish a least cost with networks to support solution which could be quickly customer engagement and established using existing communication. This could help infrastructure. Local networks target and prioritise local areas could utilise existing supply to drive maximum benefits and chains creating a significant protect vulnerable customers number of local jobs and whilst helping to engage providing benefits to the customers and drive higher wider economy. take-up.