The Liverpool-Manchester Hydrogen Cluster: a Low Cost, Deliverable Project
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The Liverpool-Manchester Hydrogen Cluster: A Low Cost, Deliverable Project Technical Report by Progressive Energy Ltd August 2017 Contents PAGE 01 1.0 Introduction, scope and objectives PAGE 03 2.0 Characterisation of infrastructure in the L-M area 2.1 Scope of the L-M Cluster Area 03 2.2 Industrial Gas Demand 04 2.3 Energy Delivered by Hydrogen/Natural Gas Blends 07 2.4 Power Generation Infrastructure and Gas Demand 08 2.5 Opportunities for Hydrogen Supply 09 2.6 Existing Gas Transportation Infrastructure 11 2.7 Opportunities for Offshore Storage of CO2 13 2.8 Existing Hydrogen, and Wider Gas Storage Infrastructure 15 2.9 Potential Carbon Reduction Benefits 17 PAGE 19 3.0 Characterisation of infrastructure on Humberside 3.1 Scope of the Humber Cluster Area 19 3.2 Industrial Gas Demand 20 3.3 Energy Delivered by Hydrogen/Natural Gas Blends 23 3.4 Power Generation Infrastructure and Gas Demand 24 3.5 Opportunities for Hydrogen Supply 25 3.6 Existing Gas Transportation Infrastructure 26 3.7 Opportunities for Offshore Storage of CO2 28 3.8 Existing Hydrogen, and Wider Gas Storage Infrastructure 30 3.9 Potential Carbon Reduction Benefits 31 PAGE 33 4.0 Comparative analysis of candidate locations 4.1 Scope, Objectives and Summary Methodology 33 4.2 Deliverability of Early Stage Demonstration Projects 33 4.3 Costs of Scaling-up to Full Hydrogen Cluster 35 4.4 Future Reductions in CO2 emissions 38 4.5 Summary of Comparative Analysis 39 Contents (continued) PAGE 41 5.0 Technical and sectoral analysis 5.1 Scope, Objectives and Summary Methodology 41 5.2 Characteristics of Hydrogen as an Energy Vector 42 5.3 Attributes of Hydrogen Use in Different Applications 49 5.4 Analysis of Potential Hydrogen use in Industry Sectors 58 5.5 Summary of Technical Constraints and Opportunities 86 PAGE 87 6.0 Practical deployment and pathway 6.1 Project Design Concept 87 6.2 Variations in Network Demand 90 6.3 Configuration of Hydrogen Supply 95 6.4 Pipeline Infrastructure 97 6.5 Matching Supply and Demand 99 6.6 Project Extension Opportunities 100 6.7 Summary of Deployment Pathway 104 PAGE 105 7.0 Costs, funding and project delivery 7.1 Modelling of Costs 105 7.2 Funding 112 7.3 Summary of Cost and Funding Analysis 117 PAGE 119 8.0 Project risks and timeline 8.1 Summary of Project Risks 119 8.2 Potential Timeline to Facilitate Project Delivery 121 ACRONYMS Acronym Full Name ASHP Air Source Heat Pump BEIS Department for Business, Energy & Industrial Strategy BOS Basic Oxygen Steelmaking BioSNG Bio-Substitute natural gas Capex Capital Expenditure CCC Committee on Climate Change CCGT Combined Cycle Gas Turbine CCA Climate Change Agreement CCS Carbon Capture and Storage CFD Computational Fluid Dynamics CfD Contract for Difference CH4 Methane CHP Combined Heat and Power CO Carbon Monoxide CO2 Carbon Dioxide CoA Cost of (CO2) Abatement COG Coke Oven Gas CoS Cost of (CO2) Storage CV Calorific Value DLN Dry Low NOx (combustors) ETI Energy Technologies Institute EU ETS European Union Emissions Trading Scheme EU IED EU Industrial Emissions Directive EU MCPD EU Medium Combustion Plant Directive DfT Department for Transport FOAK First-of-a-kind GB Great Britain GDN Gas Distribution Network (Operator) GHG Greenhouse Gas GVA Gross Value Added GS(M)R Gas Safety (Management) Regulations GWh Gigawatt-hours GJ Gigajoule ACRONYMS (continued) Acronym Full Name H2 Hydrogen HP High Pressure HSE Health and Safety Executive IMRP Iron Mains Replacement Programme IP Intermediate Pressure ktpa Thousand tonnes per annum LP Low Pressure LTS Local Transmission System MAC Marginal Abatement Cost MJ Megajoule(s) MP Medium Pressure Mt Million Tonnes MtCO2pa Million Tonnes of Carbon Dioxide per annum MWh Megawatt hour(s) MWth Megawatt hour(s) thermal NIA Network Innovation Allowance NOx Nitrogen Oxides NTS National Transmission System OEM Original Equipment Manufacturer Ofgem Office for Gas and Electricity Markets Opex Operational Expenditure RIIO Revenue = Innovation + Investment + Outputs SOx Sulphur Oxides SMR Steam Methane Reformer tpa Tonnes per annum TWh Terawatt hour(s) TWhpa Terawatt hour(s) per annum vol. By volume UK United Kingdom 01 1.0 INTRODUCTION, SCOPE AND OBJECTIVES Emissions from natural gas combustion and use are the largest source of greenhouse gas (GHG) emissions in the UK. The use of hydrogen in place of natural gas, in principle, offers a potential route to long term, widespread, decarbonisation of gas distribution networks, as shown by the Leeds City Gate (‘H21’) study.1 The purpose of considering conversion to hydrogen is to deliver widespread carbon abatement across the UK at lower cost than alternative decarbonisation strategies. The Government is to finalise and publish the long-awaited ‘Clean Growth Plan’ along with an Industrial Strategy White Paper in Autumn 2017. Conversion from natural gas to hydrogen, potentially on an incremental basis, would likely represent a major opportunity for new industrial growth. This might be through the longer term stability or potential expansion of existing (newly decarbonised) energy intensive industry or through business opportunities and growth created from new technologies developed to facilitate the transition to hydrogen as the UK becomes a global leader and major exporter of equipment and skills. Job creation and the resulting gross value added (GVA) to the economy could therefore be significant in delivery of the goals of the Industrial Strategy Challenge Fund (ISCF). The core requirement is to supply low carbon hydrogen in bulk, matching production to distribution network demand at an affordable cost. The H21 study concluded that to do so reliably, hydrogen is best produced by reducing natural gas in steam methane reformers (SMRs) fitted with Carbon Capture and Storage (CCS). The study proposed that the considerable inter-seasonal and daily fluctuations in network demand can be managed by storing hydrogen in underground salt formations. It concluded that the SMRs with associated carbon dioxide (CO2) capture should be located near to where CO2 transport and storage infrastructure was likely to be created and noted that candidate locations for this are Teesside, Humberside, Grangemouth and the Liverpool-Manchester (L-M) area. Two of these, Humberside and the L-M area, are within the Cadent Gas Ltd (‘Cadent’) network and are also industrial ‘clusters’ with significant populations. The work reported here builds upon the approach proposed in the H21 project by focussing on defining ‘low carbon’ hydrogen supply and distribution systems in Humberside and the L-M area at a system scale sufficient to supply a large city.2 Both the Humber and L-M clusters are close to salt deposits which are suitable for both daily and inter-seasonal storage of hydrogen (for initial or expanded projects). Furthermore, new large-scale gas Combined Cycle Gas Turbine (CCGT) plants, widely assumed as likely anchor projects for CCS infrastructure, have been consented in both cluster areas, confirming that they are both strong candidates as locations for the first CCS clusters and hence as locations for a hydrogen supply system. 1 Northern Gas Networks (2016) H21 - Leeds City Gate, July 2016 http://www.northerngasnetworks.co.uk/document/h21-leeds-city-gate/ 2 The term ‘low carbon’ hydrogen is used to define hydrogen that is produced and distributed without significant emissions of CO2 02 Government policy on CCS is under review but it is noteworthy that both cluster areas have a strong technical case for hosting the first CCS network. Demonstration of the business case for a hydrogen supply system at either location would strengthen the CCS business case, and as CCS is essential for deployment of hydrogen on the network, either would enhance the prospect for the hydrogen conversion initiative. This study specifically examines a strategy for a pathway to hydrogen conversion of the network. This starts by delivery of a complete project involving domestic, industrial users along with bulk hydrogen production from natural gas. It also seeks to justify the inclusion of CCS infrastructure as part of the core project, thus avoiding the need to rely on the assumption that CCS will progress as a result of a revitalised CCS strategy driven by the power sector. In summary, the objectives of the study are to: n Provide a clear view of current infrastructure in both the L-M area and Humberside, which might be repurposed to enable supply, transport, storage and industrial use of hydrogen and associated CO2 from hydrogen production; n Based on the analysis of existing infrastructure, to determine which, of the L-M area or Humberside, represents the most attractive ‘area’ for the development of a hydrogen network; n Explore the technical and engineering issues associated with the use of hydrogen to reduce CO2 emissions from manufacturing industries and to provide guidance on its potential as an emissions reduction approach; n To determine how the use of hydrogen in industry might function as an enabler for the wider use of hydrogen in the natural gas network to supply both the commercial and domestic sectors; n Determine the potential for the use of hydrogen in large-scale power generation and to give high-level consideration to the role such use might have in managing seasonal and daily supply and demand fluctuations; n Provide guidance on the most cost-effective configuration for low carbon hydrogen production, supply and transport in the selected area, recognising technical, commercial, market and financing issues; n Scope the practicality of CCS infrastructure for a standalone project not predicated on major infrastructure created as part of a major power generation scheme, given the uncertainty in current policy; and n Outline the next steps to advance towards a first deliverable project proposition. 03 2.0 CHARACTERISATION OF INFRASTRUCTURE IN THE L-M AREA The content of this section is based on engagement with industry in the L-M area, along with review and analysis of secondary data.