What is the future of Hydrogen as an energy source?

What is the future of Hydrogen as an energy source?

Hydrogen will be part of creating a world that is no longer reliant on fossil fuels. When burnt, hydrogen produces no carbon emissions and has the potential to make the decarbonisation of energy production a reality.

Hydrogen has an energy density three times that of heavy fuel oil and approximately hundred times that of Lithium-ion batteries, meaning significantly more energy can be stored in a set volume. The goal of the UK Government’s hydrogen strategy is to facilitate low-carbon hydrogen production and thus allow hydrogen to be used, for example, as a heat provider in manufacturing processes or as feedstock for chemical production.

In turn, this will help to:

  • Decarbonise the manufacturing sector
  • Reduce the UK’s reliance on energy from overseas resources

Expert support for Hydrogen Companies

We work with organisations that are driving progress in the hydrogen industry, using our extensive experience gained from working with businesses across the energy and resources industries. Our specialist team can support your business, however you engage with the hydrogen industry.

We can provide expert financial modelling and scenario planning for your company, helping you to navigate economic challenges and the huge opportunities available in the hydrogen sector with knowledge and foresight.

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As your business grows, we can support your corporate finance needs with specialist valuations, due diligence and M&A services. If you need to finance your growing operation, we can also help you to find the right private equity investment, or help your business prepare for an IPO. If your business has cross-border capabilities or ambitions, we can help to match you with a private equity firm that specialises in the energy and resource industry. Partnering our clients for mutual success is what we do.

Research and development opportunities in the industry are integral to successful growth and innovation strategies – our R&D team support innovation by helping clients access all the financial support that is available for companies that are creating new technologies and intellectual property. Please get in touch to discuss your R&D activities and how to access all the support that is available.

We also provide a full range of tax advice, and can help you build a strong tax strategy.

Our specialist audit team can also provide robust and high-quality independent audit for hydrogen businesses.

Get in touch with our Hydrogen experts here.

Developments in the hydrogen sector

At the end of July, the UK and Australian governments announced a joint funding call to accelerate their hydrogen economies. The joint program, which will be launched in October 2023, was schemed to fund British and Australian companies to collaborate on R&D projects for green hydrogen production and subsequent scaling up.

The initiative demonstrates that the UK sees green hydrogen as a vital component of the UK’s energy transition and diversification, with companies hoping for further funding announcements.
It has been a busy week for hydrogen and the aerospace industry.

Firstly, the Hydrogen in Aviation (HIA) alliance was established to achieve zero-carbon aviation. The alliance is made up of Airbus, Rolls Royce, GKN Aerospace, easyJet, Ørsted, and Bristol Airport, and the group are focusing on conducting R&D to enable hydrogen as an option for powering shorter trips.

Following this, German company H2FLY (a subsidiary of US-based Joby Aviation) completed its first flight for its liquid hydrogen-powered electric aircraft. The flight took place in Slovenia, and results suggest that using liquid hydrogen instead of gaseous hydrogen will extend the maximum range of their hydrogen fuel cell aircraft from 750 km to 1,500 km.

These are significant steps in the long journey to using hydrogen as a realistic alternative to carbon-intensive aviation fuels.

Limited freshwater resource is preventing mass production of green hydrogen. Compared to other variations of hydrogen production, green hydrogen, which uses electrolysis, has the largest water requirement. With the UK’s target of 5GW production capacity to come from electrolysis, this will equate to 1-2% of the UK’s annual water demand.

In January 2023, a research team led by the University of Adelaide split seawater without any pre-treatment to produce green hydrogen, through an inexpensive catalyst in a commercial electrolyser. With the catalyst being constructed from a non-precious metal, scaling up is a near-future possibility. Given the UK’s significant seawater accessibility, this breakthrough is pivotal in meeting the UK’s purified water demand for green hydrogen production.

British engineering firm Rolls Royce, with EasyJet’s support, have recently run a landmark ground trial to run a hydrogen-powered jet engine. This is the world’s first hydrogen demonstration on a modern aero engine, signalling a major milestone in hydrogen technology.

Although these initial tests only prove hydrogen can power engines at low speeds, it is certainly a starting point that will provide answers to establish zero-carbon aviation fuel.

If you are a UK-based company conducting development and/or testing in your field of expertise, you may be eligible to claim R&D Tax Relief to de-risk the financial burden of such work. 

Following the excitement of the UK announcing their hydrogen strategy last summer, questions have been asked over the UK’s presence in the hydrogen race, with other countries’ policies and incentives being referenced in such debates.

For instance, the France 2030 investment plan pledges €1.9 billion for the hydrogen sector, compared to the UK’s £240m of funding (via the Net Zero Hydrogen Fund). Leaders in the industry have also suggested that the US’ green projects policies and funding have moved ahead of the UK.

However, international competition is healthy for the progress of hydrogen technology, and it will certainly pressure the UK to provide further investment.

On 12th August 2022 it was announced that Equinor's H2H Saltend (Hydrogen to Humber Saltend) project will progress through to Phase 2 of the BEIS' CCUS (Carbon Capture, Usage, and Storage) cluster sequencing process. H2H Saltend, based along the Humber Estuary, is a project centred on producing hydrogen combined with CCUS. 

Five UK clusters (carbon transport and storage networks) were announced last summer as part of Phase-1. H2H Saltend is part of the East Coast Cluster, which connects Teeside and the Humber estuary through CO2 transport and storage infrastructure. In turn, CO2 emissions will be captured and safely stored in the neighbouring North Sea.

Numerous companies set to be involved in the H2H Saltend project will benefit from this news. One benefit will result from the significant R&D required for the plant’s technologies and processes. R&D tax credits can help fund the projects to resolve the technological challenges and accelerate the UK’s emerging hydrogen industry.

Between April and September 2022, 13 new members were added to Hydrogen UK, which now boasts 46 partners. The organisation was formed in December 2021 to establish a network of expertise across the hydrogen value chain, aiding the deployment of the hydrogen economy. Members have an array of specialisms, from production and storage, to transport and applications/technologies.

Hydrogen UK sets out to accelerate the emerging hydrogen economy, which will continuously present new engineering opportunities and therefore challenges for companies, including companies outside of Hydrogen UK.

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