Scotland’s green hydrogen supply chain: overcoming barriers through innovation

SHINe is one of the many initiatives that will help to expand the deployment of hydrogen solutions in Scotland. However, why are initiatives like SHINe needed, and what are the barriers to hydrogen deployment across the UK?

Why hydrogen?

Hydrogen can provide a versatile low-carbon energy vector that can improve flexibility within the energy network and decarbonize hard-to-electrify sectors. Scotland is well-positioned to become a world leader in low carbon hydrogen production, with great geological assets and abundant renewable resources. 

Hydrogen storage can also provide greater energy security with long term storage, reducing our dependency on volatile energy markets while providing backup power for use during wind troughs. According to Hydrogen UKopens in a new window, hydrogen deployment across the UK by 2030 could support:

• Approximately 30,000 direct jobs
• Contribute more than £7 billion annually to the UK economy
• Hard-to-decarbonise sectors such as industry, heavy transport, and power generation

The key barriers

A joint studyopens in a new window by Energy Systems Catapult and the University of Birmingham helped to identify the opportunities and barriers for hydrogen deployment. The key themes included:

• A need for greater risk taking within policy
• Low levels if innovation for hydrogen storage and flexibility
• The need for a skilled workforce to scale up the deployment of hydrogen
• Low levels of planning coordination across whole energy systems
• A distinct lack of standardisation across the hydrogen transition
• A lack of capacity to cope with increased levels of applications within the sector

While hydrogen will play a large role in decarbonising Scotland’s energy use, the cost and planning required for hydrogen infrastructure development is high. Without coordination and support from the whole value chain and driven investment from policymakers, Scotland will struggle to reduce its dependence on fossil fuels. 

Overcoming these barriers

Innovation within the hydrogen space is key to overcoming deployment barriers. Innovation drives technological advancements in hydrogen which can lower cost, increase safety, improve performance and prove concepts. These improvements are essential to enable to the deployment of hydrogen. 

Central to overcoming these barriers is the need for both funding to strengthen innovation, and industry commitment to the technology across the value chain. 

One of SHINe’s goals is to provide guidance on innovation funding opportunities to support the innovation sector in carrying out research which makes technology advancements in hydrogen. 

Current funding opportunities include:

Clean Hydrogen Partnership

Countries like Germany see Scotland as a potential big supplier of low carbon hydrogen. The Clean Hydrogen Partnership is a unique private and public sector partnership supporting research and innovation in the hydrogen sector in Europe. 

The aim of the project is to contribute to the EU Green Deal and Hydrogen Strategy. So far, the project has provided support across a range of projects in production, storage, end-uses, and across the supply chain. 

Strategic Innovation Fund (SIF)

SIF aims to provide support to help transform gas and electricity networks for a low-carbon future. The scheme is delivered by Ofgem in partnership with Innovate UK. Innovative projects that are eligible for funding include those that will help accelerate progress towards a net zero energy network, embed resilience, grant greater flexibility and faster energy network development. 

Net Zero Hydrogen Fund (NZHF)

The NZHF, worth up to £240 million, is a UK Government initiative funding the development and deployment of new low carbon hydrogen production projects. The aim is to support projects that can de-risk investment in hydrogen technology and reduce lifetime costs. 

The scheme is split into Stand 1 and Strand 2. Strand 1 provides development expenditure (DEVEX) support for front end engineering design (FEED) and post-FEED activities. Strand 2 provides capital expenditure (CAPEX) support, if projects can demonstrate that they can develop a credible project that can scale up hydrogen production.

Other European Union (EU) initiatives

As part of the Hydrogen Public Funding Compass, the EU budget supports the large-scale development of green hydrogen across 10 different funding programmes. These cover support for projects across the value chain, including for production, transport, industry applications, and for research and development costs. 

Some of the schemes supported by the EU include Horizon Europe, REACT-EU, InvestEU, and the Innovation Fund. The European Commission websiteopens in a new window provides more information on the types of funding available. 

What's next?

SHINe exists as a platform to help accelerate innovation across the Scottish hydrogen landscape. We guide companies and investors towards opportunities within Scotland’s existing hydrogen industry and point them towards existing innovators that can help to accelerate deployment across the supply chain.

View our capability directory to find out more, or contact the SHINe team for any other information or queries.