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Hydrogen in Scotland Hydrogen In Scotland The Role of Acorn Hydrogen in Enabling UK Net Zero Element Energy July 2020 1 Element Energy Limited, Suite 1, Bishop Bateman Court, Thompson’s Lane, Cambridge, CB5 8AQ, Tel: +44 (0)1223 852499 Hydrogen in Scotland Final report Authors This report has been prepared by Element Energy, a strategic energy consultancy, specialising in the intelligent analysis of low carbon energy. The team of over 60 specialists provides consultancy services across a wide range of sectors, including the built environment, carbon capture and storage, industrial decarbonisation, smart electricity and gas networks, energy storage, renewable energy systems and low carbon transport. Element Energy provides insights on both technical and strategic issues, believing that the technical and engineering understanding of the real-world challenges support the strategic work. For comments or queries please contact: Emrah Durusut Associate Director [email protected] Silvian Baltac Senior Consultant [email protected] Enrique Garcia-Calvo Conde Consultant [email protected] Acknowledgements We would also like to convey our thanks to the following individuals for valuable input to the study: Dewi ab Iorwerth, Commercial Adviser, Pale Blue Dot Energy Tim Dumenil, Creative Spirit & Hydrogen Project Manager, Pale Blue Dot Energy Jack Gomersall, Futurist, Pale Blue Dot Energy Sam Gomersall, Hydrogen Champion, Pale Blue Dot Energy Ian Phillips, Transition Energiser & Acorn Hydrogen Project Director, Pale Blue Dot Energy Clare Lavelle, Head of Energy Consultancy, ARUP Jacob Kane, Senior Consultant, ARUP Mike Dolman, Associate Director, Element Energy Richard Riley, Principal Consultant, Element Energy Chris Bronsdon, Chief Executive Officer, Eneus Energy Kevin Kinsella, Senior Partner (Energy Transition), Environmental Resources Management (ERM) Mike Smith, Chief Executive Officer, North East CCUS (NECCUS) Dagmar Droogsma, Director of Industry, Scotch Whisky Association (SWA) Peter Clark, Deputy Director of Industry, Scotch Whisky Association (SWA) David Holman, Hydrogen & CCUS Lead, Scottish Enterprise Stuart McKay, Head of Carbon Capture and Storage, Scottish Government Phil Bradwell, Energy Futures Manager, SGN Mike Copson, Hydrogen Business Development Manager, Shell Mark Jessop, Senior Project Manager, Low Carbon Technology Development, SSE Patrick Little, Chief Process Engineer, Lead Process, Total Glyn Waterhouse, Lead Architect, Development Lead, Total Niki Mackenzie, Business Negotiation Lead, Total Mark Tandy, Business Manager, Total Disclaimer This study was commissioned by the Acorn Consortium led by Pale Blue Dot Energy and comprising of industry participants Chrysaor, Shell and Total. As part of the Hydrogen Supply Competition Phase 2’s Acorn Hydrogen project, this study is funded by the UK Government’s Department of Business, Energy and Industrial Strategy (BEIS) with match funding from the industrial participants. The conclusions and recommendations do not necessarily represent the view of the commissioners. Whilst every effort has been made to ensure the accuracy of this report, neither the commissioners nor Element Energy warrant its accuracy or will, regardless of its or their negligence, assume liability for any foreseeable or unforeseeable use made of this report which liability is hereby excluded. 0 Hydrogen in Scotland Final report Executive Summary Introduction In 2019, the Climate Change Act, approved by the Scottish Government, set the ambitious target to achieve a carbon neutral Scotland by 2045, five years earlier than the UK Net Zero target. To accomplish these targets, the Committee on Climate Change (CCC) has identified hydrogen and carbon capture, utilisation and storage (CCUS) as indispensable technologies for the transition, highlighting the importance for a paced deployment of these technologies beginning in the 2020s. An early roll-out of these technologies is expected to lay the groundwork for additional future decarbonisation projects. The North Sea represents a unique asset to enable the UK and Scotland to meet their Net Zero targets whilst providing energy security. Historically, it represented the main source of oil and gas, powering the UK’s economy. More recently the uptake of offshore wind producing clean, renewable electricity has placed the North Sea at the centre of the decarbonisation agenda. During the transition to Net Zero, the North Sea will continue to be at the epicentre of decarbonisation. The extensive potential for renewable energy generation and the presence of major subsurface CO2 storage sites offer the unique opportunity to develop a Scottish economy where renewables, hydrogen and CCUS coexist and complement each other. Paving the way to Net Zero by using resources from the North Sea, the Acorn Hydrogen and Acorn CCS projects are expected to be the first large-scale hydrogen and CCS projects to be developed in Scotland. Acorn Hydrogen would be located at the St Fergus Gas Terminal, where currently 35% of the UK’s annual gas supply enters the National Transmission System, before being transported across the country for consumption. The Acorn Hydrogen project is initially planning the construction of a circa 200 MW hydrogen production plant, that could become operational by 2025, and which would allow for a 2% hydrogen blend into the National Transmission System (NTS). The emissions from the hydrogen production would be captured, transported, and safely stored in a depleted hydrocarbon reservoir, reusing current oil and gas (O&G) infrastructure, enabled by the sister project, Acorn CCS. This study examines the role that the Acorn Hydrogen project could play in unlocking Net Zero in Scotland and the UK. The Acorn Hydrogen project is one of the key large scale hydrogen projects on the UK path to Net Zero. The project is also highly scalable, due to large volumes of natural gas feedstock available, the massive offshore CO2 storage capacity and the availability of existing offshore pipeline infrastructure. This means that large volumes of hydrogen can be generated in the 2020s and beyond, offering an opportunity to establish hydrogen infrastructure before other complementary decarbonisation technologies reach scale. 1 Hydrogen in Scotland Final report Three hydrogen growth scenarios for delivering Net Zero in Scotland There are multiple pathways in which Scotland can deliver a Net Zero economy and there continues to be debate around which pathway may eventually be pursued. However, it is widely recognised that hydrogen and CCS have a key role to play in all pathways. In order to characterise and define what the role for hydrogen (and consequently the role for Acorn Hydrogen) may be in a transitioning Scotland, three hydrogen growth scenarios have been examined. The three scenarios vary in their scale, scope and ambition. The Regional Growth scenario explores a multifaceted role for Acorn Hydrogen, in which hydrogen is injected into the NTS to help decarbonise the gas network, as well as serving as a vector for regional decarbonisation. Hydrogen would be supplied to Aberdeen City and the wider Aberdeenshire region via a dedicated pipeline in order to decarbonise domestic and commercial heating and enable hydrogen mobility through conversion of the regional gas grid. Hydrogen would also be supplied to Peterhead Power Station (PPS). In addition, the Grangemouth industrial cluster would have its own supply of hydrogen to support industrial decarbonisation, enabled by CO2 transport and storage infrastructure deployed at St Fergus. Most of the infrastructure deployment is focused in the short and medium term, and demand reaches 19 TWh/year by 2050. The Scottish Hydrogen Economy scenario builds on the expertise gathered through the regional deployment of Acorn Hydrogen, using these learnings to expand outwards and helping roll-out a hydrogen economy across Scotland. Hydrogen is adopted in the same sectors as in the Regional Growth scenario (industry, power generation, heating, and transport) but at a Scottish level, while the national hydrogen outreach allows for decarbonisation of 20% of the energy demand from the distilling sector. The infrastructure needs for a nation- wide transition to a hydrogen economy are more complex, as hydrogen would need to be transported from different points of production to demand sites. In this scenario, the role of Acorn is both regional (as in the first scenario) but also serves as an enabler for other hydrogen projects. Both blue and green hydrogen coexist and complement each other in this scenario and meet a total demand of 72 TWh/year in 2050. The European Outreach scenario reflects a Scottish hydrogen economy, but also envisages Scotland as an important exporter of hydrogen. Although there is an ongoing discussion regarding the advantages of the different options for exporting and storing hydrogen, ammonia has been chosen as the hydrogen carrier to meet export demands to other regions of the UK and to continental Europe. Infrastructure is deployed to account for the additional demand, such as both blue and green hydrogen production capacity and elements needed for the ammonia value chain necessary to support international trade. The scenario leverages Scotland’s maritime infrastructure, acknowledging that the proximity of Peterhead Port to St Fergus means that it could play a major role in international trading. In 2050, the total annual blue and green hydrogen demand would be of 121 TWh/year, of
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