POWER-TO-X

Can wasted wind help accelerate UK green hydrogen?

The cost of curtailment at UK wind farms is currently £1bn a year, and this could triple by the end of this decade. But could the UK use that wasted wind power to support growth in the nascent green hydrogen sector?

RICHARD HEAP

January 17, 2024

  • Wind curtailment currently costs the UK £1bn a year
  • Wasted wind power could help unlock green hydrogen
  • Curtailed 2022 wind would make 118,000 tonnes of hydrogen

 

Symbiotic relationships are among the most interesting in nature. When a bird like an egret sits on a hippo, they get an easy meal by eating parasites off the hippo’s back while the hippo benefits from the removal of potentially harmful parasites.

We may see a similar symbiotic relationship in the UK energy sector. By 2030, the UK Government has pledged to roll out 10GW of low-carbon hydrogen production and also grow installed UK offshore wind capacity to 50GW. But there are issues with both of the technologies that they may need the other to fix.

UK think tank Policy Exchange looked at these challenges in the report ‘Turning Wasted Wind into Clean Hydrogen’ that it published on Wednesday 17th January.

For offshore wind, it highlighted the growing challenge of curtailment: UK offshore wind capacity grew from under 1GW in 2009 to almost 14GW in 2022 according to RenewableUK, but investment in the grid hasn’t kept pace. This challenge will be exacerbated in the coming years as offshore wind keeps growing and onshore wind growth in the UK picks up too, particularly in Scotland.

As a result, Policy Exchange said curtailment now costs UK energy users £1bn a year, and this is set to reach £3.5bn annually. Figures like these are often used to beat the wind sector and the politicians that support it — but not this time. Rather, this report highlights that excess wind power could instead be used to help unlock investment in the nascent UK green hydrogen sector, where production needs to grow to encourage firms to invest in supporting infrastructure and growing the end uses for hydrogen. This is currently one of green hydrogen’s biggest hurdles.

 

Cutting curtailment

The report argued there is little incentive for wind farm owners to make better use of their curtailed wind power because the Contracts for Difference (CfD) regime pays in full for the power, even if it cannot be exported to the grid due to curtailment. But it said this curtailed power could have a major impact in helping green hydrogen.

The analysis, produced by LCP Delta, reported that wind energy curtailed in 2022 would have been enough to produce at least 118,000 tonnes of green hydrogen, and this could rise to 455,000 tonnes annually by 2029. There is currently around 700,000 tonnes of hydrogen used in the UK annually, of which the vast majority is produced from fossil fuels, so creating hydrogen from wind power that would have otherwise been curtailed is a great idea. Its analysis said this would be enough to decarbonise the UK steel industry; meet more than 90% of the UK’s 2030 target for sustainable aviation fuel; and deliver two-thirds of the UK electrolyser target.

We discussed UK support for green hydrogen, and the results of its recent green hydrogen tender, at the first 2024 meeting of our Power-to-X Leadership Council in London on 10th January. This showed that there are strong ambitions to grow green hydrogen production in the UK, but they should be backed by policies.

The Policy Exchange’s report also made seven recommendations that could help strengthen the links between UK wind and green hydrogen production, and which may inform debate about energy policy ahead of this year’s election. They are:

  • Constraint Management Plans: Policymakers and the industry should make plans for how often-constrained generators can manage curtailment, including by creating incentives for them to partner with green hydrogen producers.
  • Amend future CfD rounds: Generators should receive an incentive to reduce constraint payments they receive and redirect excess wind power for productive CfDs could also be amended to give advantages to power-to-X projects.
  • Flexible system charges: Energy market participants should gain incentives to reduce grid congestion, including via off-take deals with hydrogen producers, through flexible use of mechanisms including the Transmission Network Use of System (TNUoS) charge.
  • Shared constraint savings: Electrolyser operators that use power that helps reduce constraint costs should receive a proportion of the savings made, which would be determined by the transmission system operator.
  • Incentives to reduce capital costs: Policymakers should develop a financial incentive similar to the Green Gas Supprot Scheme that can help cut the capital costs of developing green hydrogen facilities in areas with most grid constraints.
  • Hydrogen industry matchmaking: The UK Government could help to match hydrogen producers with end users and renewable energy producers, similar to the US ‘H2 Matchmaker’ initiative. This could also build export opportunities. 
  • Allow strategic hydrogen blending: The UK should permit the blending of green hydrogen into the gas network on a strategic basis to help grow hydrogen production. This would be backed with policies to help pair hydrogen producers with end users, wit industrial clusters, and with long-duration energy storage.

The UK has great ambitions for offshore wind and green hydrogen. But if it is to deliver both, it should look to foster a symbiotic relationship that uses the strength of each sector to help mitigate the challenges of the other.