Environment and Climate Change Committee
Wednesday 14th October 2026
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09:59
Baroness Sheehan
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Baroness Sheehan
Will we start? May I remind everyone that the session is webcast live , and that a transcript will be taken and made public, and witnesses will have an opportunity to review the transcript and, if necessary, make very minor amendments. Members are reminded that they should declare any relevant interests the first time they speak, and this, of course, applies equally to all witnesses. I will take the opportunity here to say that I am a director of Peers for the planet.
So on to today's business. We are very grateful to our panel of expert witnesses for making the time to be with us today. And before we proceed any further, may I ask each of our witnesses to introduce themselves? Shall we start with you? Martin Lambert.
So on to today's business. We are very grateful to our panel of expert witnesses for making the time to be with us today. And before we proceed any further, may I ask each of our witnesses to introduce themselves? Shall we start with you? Martin Lambert.
10:00
Lord Redwood
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Lord Redwood
So I'm Martin Lambert. I spent much of my career, 30 years or more working for shell, mainly in the natural gas and liquefied natural gas LNG business. I retired from shell nine years ago and do consultancy in the gas area, but for today I'm representing the Oxford Research at the Institute of Energy Studies, where I'm a senior research fellow, and I set up the hydrogen program there about five years ago now.
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10:01
Speaker 2
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Speaker 2
Hi. Good morning. My name is Brett Ryan. I'm the policy director for hydrogen UK, and we are the largest trade association representing the smallest and largest companies looking to deliver hydrogen within the UK. So we cover hydrogen production, transport and storage infrastructure and all the various end use applications. And probably very importantly for today's session is we our members are either leading or active in most of the vast majority of projects that are running through the government's various support schemes.
10:01
Baroness Sheehan
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Baroness Sheehan
Excellent. Thank you. You're very warmly welcomed again. So the first question that I'd like to start with is, the purpose of today's session is to understand low carbon molecular storage technologies, namely hydrogen, biomethane and gas storage with carbon capture and storage. So may I start by asking each of you to give your perspective of molecular storage technologies and their potential to help mitigate the risk of intermittency during duncalfe later events.
As the grid decarbonises. I'm. Which of you would like to start?
As the grid decarbonises. I'm. Which of you would like to start?
10:02
Speaker 1
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Speaker 1
I'm happy to start. So I think it's first important to recognise that there isn't a single solution to a flatter. They will range in terms of the duration. And so it's important for us to have a portfolio of flexible technologies for us to be able to respond to the system requirements. The UK is already developing this range of technologies. So we have batteries, we have pumped storage, we have interconnectors. We are developing consumer led flexibility.
So how we shift consumption on the demand side. And Ofgem has also just announced its cap and floor regime , which is going to bring forward investment for those long duration energy storage projects. So that will be quite fundamental to how we deal with those periods of low wind going forwards. However, in a prolonged period of low renewable output, what will be important is not just the number of gigawatts that you have installed on the system, but the the number of sort of terawatt hours or gigawatt hours that can sustain the system for a multi-day or multi-week period.
And that's where molecular storage is, is particularly useful. So today we've got natural gas that provides a significant source of stored chemical energy. That and is also dispatchable generation. And so the challenge for us is to find the low carbon alternatives to that, that source that we use today. And so there are the three technologies.
So how we shift consumption on the demand side. And Ofgem has also just announced its cap and floor regime , which is going to bring forward investment for those long duration energy storage projects. So that will be quite fundamental to how we deal with those periods of low wind going forwards. However, in a prolonged period of low renewable output, what will be important is not just the number of gigawatts that you have installed on the system, but the the number of sort of terawatt hours or gigawatt hours that can sustain the system for a multi-day or multi-week period.
And that's where molecular storage is, is particularly useful. So today we've got natural gas that provides a significant source of stored chemical energy. That and is also dispatchable generation. And so the challenge for us is to find the low carbon alternatives to that, that source that we use today. And so there are the three technologies.
10:04
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10:04
Speaker 1
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Speaker 1
Yes. So hydrogen, as you mentioned, is one of the options that we are looking at as an as an alternative to, to burning gas, because hydrogen can be produced during periods where there is excess or surplus, renewable electricity. We have the benefit of a very large offshore wind fleet. And so we have the opportunity to harness some of that renewable electricity to produce hydrogen, which can then be stored in very large quantities and then transported to a hydrogen fired power station, which can then generate electricity.
So that's one option. We then have natural gas with CCS, and that's where you attach carbon capture technology to capture those carbon emissions. That's particularly useful because it obviously has the benefits of lowering carbon emissions and is also has useful applications in the industrial sector as well. And then the third option is, is biomethane, which also offers a complementary role and potentially a more near-term option because it's chemically very similar to to natural gas.
And so it can use the existing gas infrastructure without major modifications. And industry are quite confident that that can be scaled up in relatively short order, subject to gas quality checks and sustainable feedstocks. So I think the thing to sort of underscore is that it requires a range of different solutions. There isn't going to be a silver bullet. And so the core objective is trying to build that, that resilient portfolio and ensuring that we've got the market frameworks and the policy frameworks to bring forward that investment that's required to value each of those technologies that will have a different role on the system.
So that's one option. We then have natural gas with CCS, and that's where you attach carbon capture technology to capture those carbon emissions. That's particularly useful because it obviously has the benefits of lowering carbon emissions and is also has useful applications in the industrial sector as well. And then the third option is, is biomethane, which also offers a complementary role and potentially a more near-term option because it's chemically very similar to to natural gas.
And so it can use the existing gas infrastructure without major modifications. And industry are quite confident that that can be scaled up in relatively short order, subject to gas quality checks and sustainable feedstocks. So I think the thing to sort of underscore is that it requires a range of different solutions. There isn't going to be a silver bullet. And so the core objective is trying to build that, that resilient portfolio and ensuring that we've got the market frameworks and the policy frameworks to bring forward that investment that's required to value each of those technologies that will have a different role on the system.
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10:07
Lord Redwood
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Lord Redwood
Yeah, I can comprehend what Kirsch has said. So I think, first of all, I'd fully agree on the portfolio approach that you need to have a range of different options available. So there's no one single answer. So that's definitely a key takeaway on molecular storage. I'd say that it's kind of essential for covering Duncan Slaughter, because the energy density of molecular storage is so much more. So batteries can do so much.
But if you try to cover a ten day, say, Duncan flour with batteries, you need to cover a large chunk of the country with batteries to be able to do that. So that's clearly not practical or sensible. So then on the three types of molecular storage, I think Kirsch has outlined them fairly well. But a couple of points I'd add on natural gas. So we store a fair bit of it today.
But a key point in natural gas, I think, is that it flows as well as being stored. So what I mean is we get natural gas from Norway, we can import it as LNG and then we store some. So we saw some like in the rough gas field offshore north east England. And we store gas in LNG terminals. So there's a buffer, but the storage is just a buffer to smooth out the flows that we're bringing in from elsewhere.
With bio methane and hydrogen, they both need to be manufactured. And so you've got a different approach. You need to manufacture the product. And then you can use it on biomethane . First.
But if you try to cover a ten day, say, Duncan flour with batteries, you need to cover a large chunk of the country with batteries to be able to do that. So that's clearly not practical or sensible. So then on the three types of molecular storage, I think Kirsch has outlined them fairly well. But a couple of points I'd add on natural gas. So we store a fair bit of it today.
But a key point in natural gas, I think, is that it flows as well as being stored. So what I mean is we get natural gas from Norway, we can import it as LNG and then we store some. So we saw some like in the rough gas field offshore north east England. And we store gas in LNG terminals. So there's a buffer, but the storage is just a buffer to smooth out the flows that we're bringing in from elsewhere.
With bio methane and hydrogen, they both need to be manufactured. And so you've got a different approach. You need to manufacture the product. And then you can use it on biomethane . First.
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10:09
Lord Redwood
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Lord Redwood
Store it. Indeed, to answer your question on biomethane, I think just to be clear for everyone, you start with stuff called biogas. So on a farm you anaerobically digest bio waste effectively and you produce this mix of methane and CO2 called biogas. And then to make biomethane, you separate the methane and CO2, and that gives you grid quality biomethane that you can then inject with certain constraints into the grid.
But you're right about the there's a limitation on feedstock, but various studies that we and others have done show that probably you could. So currently we produce pretty small amounts of biomethane. You could certainly increase it to around about 10% of current natural gas consumption. And that would still be sustainable because when you produce food, you produce waste as well. But if you produce too much, then you're right. You start to then affect agricultural land.
And so there are constraints. So biomethane, I'd say we could do more with, but there are limits on how far it can go. On on hydrogen. Just finish off on that then hydrogen has been manufactured. Two types of hydrogen, loosely called blue and green. So blue hydrogen you can make by taking natural gas using carbon capture and storage. And then you make hydrogen, which can be stored and you can green hydrogen is when you have renewable power, you can then put it into a thing called an electrolyzer.
And you can make hydrogen that way by breaking water down into hydrogen and oxygen. The problem with making hydrogen, storing it and converting it back to electricity again is that the round trip efficiency. So you put in electricity, you make it into hydrogen, you store it, make it back into electricity again, is really quite low round trip efficiency. So when you've got very cheap electricity, say surplus wind, you don't need, you can make it then.
But if you make too much of it then it becomes quite inefficient. So again, hence the need for why you want a portfolio approach. I'll stop there and let me follow up.
But you're right about the there's a limitation on feedstock, but various studies that we and others have done show that probably you could. So currently we produce pretty small amounts of biomethane. You could certainly increase it to around about 10% of current natural gas consumption. And that would still be sustainable because when you produce food, you produce waste as well. But if you produce too much, then you're right. You start to then affect agricultural land.
And so there are constraints. So biomethane, I'd say we could do more with, but there are limits on how far it can go. On on hydrogen. Just finish off on that then hydrogen has been manufactured. Two types of hydrogen, loosely called blue and green. So blue hydrogen you can make by taking natural gas using carbon capture and storage. And then you make hydrogen, which can be stored and you can green hydrogen is when you have renewable power, you can then put it into a thing called an electrolyzer.
And you can make hydrogen that way by breaking water down into hydrogen and oxygen. The problem with making hydrogen, storing it and converting it back to electricity again is that the round trip efficiency. So you put in electricity, you make it into hydrogen, you store it, make it back into electricity again, is really quite low round trip efficiency. So when you've got very cheap electricity, say surplus wind, you don't need, you can make it then.
But if you make too much of it then it becomes quite inefficient. So again, hence the need for why you want a portfolio approach. I'll stop there and let me follow up.
10:12
10:12
Lord Redwood
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Lord Redwood
10:12
Lord Redwood
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Lord Redwood
So at that point, you can use that effectively. Free electricity for making electrolysis. The question, which is a complex modelling question, quite hard to answer, is how many hours a year will you be in that position for. And that depends on many factors. But when you've got free electricity to make use of that available wind power, making green hydrogen and storing it is a good thing to do. But then you've got to have the cost.
Your electrolyzer, which may not run for that many hours. And that affects the economics as well.
Your electrolyzer, which may not run for that many hours. And that affects the economics as well.
10:13
10:13
Speaker 2
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Speaker 2
Okay. I'll I'll pick up on some of the some of the points around hydrogen as a for for, for storage. But first, I do just want to echo Kesha Martin's points that it's a portfolio approach that we need to, to ensure resilience in the, in the future energy system. When we talk about hydrogen's role, it actually in its ability to mitigate the impacts of a flatter. It actually needs, you know, several components linked together to, to, to make that happen.
So of course, first is the storage element itself. And when we're talking about the, the scale that we need to be delivering sustainable, sustained power generation over days, weeks and months that we're talking about. For a Dunkel scenario, you're really looking at.
So of course, first is the storage element itself. And when we're talking about the, the scale that we need to be delivering sustainable, sustained power generation over days, weeks and months that we're talking about. For a Dunkel scenario, you're really looking at.
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10:14
Speaker 2
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Speaker 2
Yeah. Okay. So when we talk about storage, you're looking at large scale geological formations. So looking at depleted oil and gas fields, salt caverns, lime rock caverns, and they are all technically feasible. And some are already being used for hydrogen storage as we speak. But Martin's already pointed out that you need hydrogen production upstream of that first to create those molecules in the first place. So the UK has a twin track approach, as it's called at the moment, following electrolytic production and CSE enabled production.
And once you've created.
And once you've created.
10:15
Speaker 2
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Speaker 2
So electrolytic production green is commonly called green hydrogen. And that's used by using electricity to split water into hydrogen and oxygen and CSE enabled. There are a number of different pathways, but effectively you're using a fossil fuel as a as a feedstock to split out the hydrogen and carbon. Once you've produced it, you obviously then need to transport it to those geological formations because they are in fixed locations. You can't just put them where, where, where is handy.
So you, you pipe that that hydrogen to the storage facility. And then of course, once, once the those conditions arrive and you have low renewable output, but still have high electricity demand on the system, you then withdraw those hydrogen molecules and run them through a hydrogen to power unit in the industry. We shorten it to H2 p, but those hydrogen to power units can range in size and technology. So you can have fuel cells, gas engines, combined heat and power units all the way up to your grid scale, combined cycle gas turbines, so they can be from tens to hundreds of megawatts in terms of generation capacity.
So once you have all of those elements combined, you that allows hydrogen as a molecular storage and low carbon dispatchable technology to help mitigate the Dunkel flatter. And the thing I'd like to point out here is that hydrogen is a unique advantage in this point is that it's solving the problem at both ends. You're taking the excess renewable generation from from this clean power build out, and you're absorbing some of that excess generation capacity, converting it into hydrogen, storing it for when you need it later, and bringing it back online when renewable output is low, but your electricity demand is still high.
So you, you pipe that that hydrogen to the storage facility. And then of course, once, once the those conditions arrive and you have low renewable output, but still have high electricity demand on the system, you then withdraw those hydrogen molecules and run them through a hydrogen to power unit in the industry. We shorten it to H2 p, but those hydrogen to power units can range in size and technology. So you can have fuel cells, gas engines, combined heat and power units all the way up to your grid scale, combined cycle gas turbines, so they can be from tens to hundreds of megawatts in terms of generation capacity.
So once you have all of those elements combined, you that allows hydrogen as a molecular storage and low carbon dispatchable technology to help mitigate the Dunkel flatter. And the thing I'd like to point out here is that hydrogen is a unique advantage in this point is that it's solving the problem at both ends. You're taking the excess renewable generation from from this clean power build out, and you're absorbing some of that excess generation capacity, converting it into hydrogen, storing it for when you need it later, and bringing it back online when renewable output is low, but your electricity demand is still high.
10:17
Lord Ashcombe
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Lord Ashcombe
Thank you and good morning. And I think this leads on from what you were saying. But does the UK actually have sufficient hydrogen storage required to meet the energy demand in a multi-day multi-week flash? But bearing in mind that we've got information here that people seem to think the amounts are fairly different. And secondly, I believe in a Dunkle flight, very often we're not going to have the interconnectors producing what they will, because it's highly likely it will happen in Northern Europe at the same time.
10:17
Speaker 2
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Speaker 2
So so the yeah, there are various numbers that, that are out in the public domain around, say, the technical potential for hydrogen storage capacity within geological formations. But there are all sorts of characteristics of those of the of the individual geological formations that will decide whether or not it is actually very much is technically or economically feasible to develop that that site into a into a storage. So there are apologies.
I don't have the specific reference here that will be in our written submission. There are a number of reports out there that put the technical potential in the order of 1000 terawatt hours of storage capacity within these geological formations. But once you start looking at the the site characteristics, access for whether or not you would actually get a planning consent on those sites or not, whether the whether the formation has the technical integrity to, to, to store hydrogen in great volumes over long durations, that number, of course, comes down in terms of what the system actually needs.
That's still up in the air at the moment. There are, again, various models out there that if we look at the seventh carbon budget, they have the system they expect the system to require in the order of nine terawatt hours of of hydrogen storage by 2050. Nissos future energy scenarios has a similar has a similar figure by 2050. So there is there is a strong expectation that of the. In the order of 1000 terawatt hours of potential storage that we can that we can deliver around that ten terawatt hours technically and commercially feasibly.
I don't have the specific reference here that will be in our written submission. There are a number of reports out there that put the technical potential in the order of 1000 terawatt hours of storage capacity within these geological formations. But once you start looking at the the site characteristics, access for whether or not you would actually get a planning consent on those sites or not, whether the whether the formation has the technical integrity to, to, to store hydrogen in great volumes over long durations, that number, of course, comes down in terms of what the system actually needs.
That's still up in the air at the moment. There are, again, various models out there that if we look at the seventh carbon budget, they have the system they expect the system to require in the order of nine terawatt hours of of hydrogen storage by 2050. Nissos future energy scenarios has a similar has a similar figure by 2050. So there is there is a strong expectation that of the. In the order of 1000 terawatt hours of potential storage that we can that we can deliver around that ten terawatt hours technically and commercially feasibly.
10:19
Lord Ashcombe
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Lord Ashcombe
Thank you. I should have declared that I do work for an insurance broker that does a lot of work with with with hydrogen. So what have we got today is my first question. And then how easy is it, and is it realistically possible to repurpose natural gas storage for hydrogen? And I know you can do it for biomethane, but.
10:20
Speaker 2
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Speaker 2
So we have very little today. There are some small salt caverns that have been in use on Teesside since the 1970s. They are the. They are around the. About 25GW gigawatt hours of storage capacity. But one thing to note is that because they've been used to support the chemical industry, they haven't been subject to the fast injection and withdrawal rates that we would be expecting for for supporting the power sector.
So the cavern itself has proven it's, it's, it's technical and technical integrity and ability to store hydrogen over long durations, but it hasn't gone through that same injection and withdrawal rates that we would expect for for future, for future use. That being said, the the technology is being proven elsewhere at the moment. So one of our one of our members is supporting a project in America called the Aces Delta Project. They have a.
They have two salt caverns that are storing hydrogen, each one at about 150 gigawatt hours of capacity, and they are using it to feed. Grid scale gas turbines using the blending that hydrogen with with natural gas at about 30%. So they are proving the the technical ability to, to, to store hydrogen in salt caverns and withdraw it for, for the power sector. Sorry if you give me the second half of the question was.
So the cavern itself has proven it's, it's, it's technical and technical integrity and ability to store hydrogen over long durations, but it hasn't gone through that same injection and withdrawal rates that we would expect for for future, for future use. That being said, the the technology is being proven elsewhere at the moment. So one of our one of our members is supporting a project in America called the Aces Delta Project. They have a.
They have two salt caverns that are storing hydrogen, each one at about 150 gigawatt hours of capacity, and they are using it to feed. Grid scale gas turbines using the blending that hydrogen with with natural gas at about 30%. So they are proving the the technical ability to, to, to store hydrogen in salt caverns and withdraw it for, for the power sector. Sorry if you give me the second half of the question was.
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Speaker 2
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Speaker 2
The repurposing? Absolutely. It is. It is technically technically feasible. And part of the the there are two aspects to it. One is converting the cavern, the subsurface, the subsurface itself. That is absolutely technically feasible. Similarly, you have to address the the topsides equipment. So you'll have compressors and gas conditioning equipment, things like seals on your on your on your pipework. All very well known, all technically possible.
It becomes it comes down to the commercial frameworks to be able to do that economically. So
It becomes it comes down to the commercial frameworks to be able to do that economically. So
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Speaker 2
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Speaker 2
Yeah you're right. So so so rough. The offshore gas field is, is a, is an order of magnitude bigger than most of the caverns that we're looking to, to, to, to use onshore. Centrica absolutely has a plan to, to be able to repurpose that for, for storing hydrogen, as long as they have the right investment signals and certainty that that, that that would be required. And yes, that's I said they, they, they're doing a lot of that technical feasibility work to, to ensure that that is possible.
10:23
Lord Redwood
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Lord Redwood
I think maybe if I could just add a couple of points on that, I think it's important to distinguish between hydrogen storage in salt caverns and hydrogen storage in depleted hydrocarbon fields. And storage in salt caverns has been proven for years. I see I did it when I still existed back on Teesside, so hydrogen storage in salt caverns, absolutely proven technology. No issue with doing that. The other comment on Salt caverns is in the UK , we are very blessed with lots of structures to be able to turn into.
Well, we've got several existing and we've got a lot more potential for more salt caverns in the UK. If you contrast that.
Well, we've got several existing and we've got a lot more potential for more salt caverns in the UK. If you contrast that.
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10:24
Lord Redwood
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Lord Redwood
So some would. So. So the current salt caverns. Some have been used for hydrogen in the past. Many of them have been used for storing methane today, but they could be relatively easily reconverted back to storing hydrogen. I don't have a figure on how much you would store, but but they could be converted. Storing hydrogen in depleted hydrocarbon fields is quite a different proposition altogether. There are some tests being done so in Austria.
So Rag Austria, a company there are doing some tests with that at the moment. But if you think about it, the issue with putting hydrogen in a hydrocarbon field is you put hydrogen in your expensive hydrogen you produced, and you're not quite sure what comes back again. And from my conversations with the people in Austria, they get back some hydrogen and but it's mixed. So it needs to be treated when it comes out again.
So I think to be honest, I was looking at the UK, given we are so blessed with solid structures, I think we should explore that first. And converting a hydrocarbon field feels like a second order priority.
So Rag Austria, a company there are doing some tests with that at the moment. But if you think about it, the issue with putting hydrogen in a hydrocarbon field is you put hydrogen in your expensive hydrogen you produced, and you're not quite sure what comes back again. And from my conversations with the people in Austria, they get back some hydrogen and but it's mixed. So it needs to be treated when it comes out again.
So I think to be honest, I was looking at the UK, given we are so blessed with solid structures, I think we should explore that first. And converting a hydrocarbon field feels like a second order priority.
10:25
Lord Ashcombe
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Lord Ashcombe
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10:25
Lord Redwood
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Lord Redwood
Go next. So you can move hydrogen in pipelines. That's been done for ages. Their existing hydrogen pipelines fairly small scale, but in the US and in Northwest Europe, on the continent, Belgium, Netherlands, northern Germany, hydrogen pipelines do exist. The harder bit is you can't automatically convert a natural gas pipeline to hydrogen. You can eventually convert it normally, but it depends on the metal used in making the pipeline, the seals, the valves, and so it requires a fair bit of expenditure to upgrade a former gas pipeline to make it suitable for hydrogen.
And so natural gas transmission, they've got this project union, I think it's called. They're doing quite a lot of work on looking at what would be required to convert the pipelines to hydrogen. So yes, it could be done, but it's not an overnight switch you need to put some investment in in order to make the transition.
And so natural gas transmission, they've got this project union, I think it's called. They're doing quite a lot of work on looking at what would be required to convert the pipelines to hydrogen. So yes, it could be done, but it's not an overnight switch you need to put some investment in in order to make the transition.
10:26
Speaker 2
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Speaker 2
And maybe just a bit on that. So so the the government has set up the, the they've been developing the hydrogen transport and storage business models with the intention that they will be rolled out together as a, as a network. So there was a commitment that the first regional hydrogen transport and storage network that that allocation would would launch later this year. And ideally, it would target commercial operations by the 31st of December in 2033.
So and that's due to the long lead times for, for, for such major infrastructure. So there, there are plans to do that. But unfortunately, we've as industry, we've seen a bit of a slowdown in terms of the development of those business models and the and, and the launch of that first allocation. So that's a key thing for our members. I said we've got members developing plans in various parts of the country with different options for for what that first regional network could be.
But it does it does bring together the storage and the transportation by pipeline elements that that you mentioned.
So and that's due to the long lead times for, for, for such major infrastructure. So there, there are plans to do that. But unfortunately, we've as industry, we've seen a bit of a slowdown in terms of the development of those business models and the and, and the launch of that first allocation. So that's a key thing for our members. I said we've got members developing plans in various parts of the country with different options for for what that first regional network could be.
But it does it does bring together the storage and the transportation by pipeline elements that that you mentioned.
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10:28
Speaker 1
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Speaker 1
Agree with agree with what others have said. I think the only thing that we would add is that repurposing gas, salt caverns for hydrogen, whilst technically possible, would be quite economically challenging. And so it would need to be done on a case by case basis. Our members have suggested that it would probably make more sense to develop the salt caverns specifically for hydrogen, rather than trying to repurpose, and that's also because you need to plan whether you need that gas in the cavern for system resilience.
And if it's still useful in the system, then that sort of needs to be coordinated before we start to repurpose it for something else. The other thing is just to reiterate the point about the sort of entire hydrogen value chain, it is very difficult to develop storage without a really clear view of having sufficient volumes of hydrogen production. And producers also need the confidence that there will be demand. And so that needs to be done in coordination with developing the hydrogen fired power stations that will ultimately produce or use the hydrogen to generate electricity.
And so there are lots of different things, and it ends up in a sort of chicken and egg situation. And so the business models that that Brett mentioned are really key to this and are what are required further development in order to allow that investment to come forward.
And if it's still useful in the system, then that sort of needs to be coordinated before we start to repurpose it for something else. The other thing is just to reiterate the point about the sort of entire hydrogen value chain, it is very difficult to develop storage without a really clear view of having sufficient volumes of hydrogen production. And producers also need the confidence that there will be demand. And so that needs to be done in coordination with developing the hydrogen fired power stations that will ultimately produce or use the hydrogen to generate electricity.
And so there are lots of different things, and it ends up in a sort of chicken and egg situation. And so the business models that that Brett mentioned are really key to this and are what are required further development in order to allow that investment to come forward.
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10:30
Speaker 1
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Speaker 1
So it takes roughly 6 to 10 years, I think, to develop a hydrogen salt cavern. So the lead times are very long, and those investment decisions need to be made as soon as possible. We would suggest that we make those decisions ahead of need. There are obviously various useful indications about the range of hydrogen that we could have on the system. So there's Nissos future energy scenario pathway that was published last year, and that suggests three terawatt hours by 2035.
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10:30
Speaker 1
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Speaker 1
Three three terawatt hours by 2035. And the Climate Change Committee's balanced pathway is three terawatt hours by 2040. So a slight difference in those two. Scenarios. I guess the key thing is how do we turn those projections? Because they're not policy targets. They're just scenarios. So how do we turn those scenarios into investable frameworks in order to facilitate that investment that is needed? Because, you know, 2035 isn't that far away.
And if it takes ten years to develop, then we really need to be making those decisions. Now.
And if it takes ten years to develop, then we really need to be making those decisions. Now.
10:31
Lord Krebs
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Lord Krebs
Just very briefly, and mine follows directly from what you were just saying, Keisha, about both the time scale and the scale of hydrogen storage that might be needed. And I wonder if you can either you or maybe Brett can shed a bit of light on this, because the National Grid says we need between 12 and 51 terawatt hours by 2050. Of hydrogen, Royal Society concluded we need between 60 and 100 terawatt hours by 2050.
Infrastructure Commission says we need 25 terawatt hours by 2040. And as you've just said, the SEC says we need three terawatt hours by 2040. So it's pretty confusing. I mean, there's sort of orders of magnitude difference. And given what you've just told us about the timescale to develop this, if we're heading thinking comfortably, that three terawatt hours is what we need by 2040, and actually the number is ten times that, then we're going to completely off track.
So can you explain why we get these vastly different estimates of how much is needed either or? Brett.
Infrastructure Commission says we need 25 terawatt hours by 2040. And as you've just said, the SEC says we need three terawatt hours by 2040. So it's pretty confusing. I mean, there's sort of orders of magnitude difference. And given what you've just told us about the timescale to develop this, if we're heading thinking comfortably, that three terawatt hours is what we need by 2040, and actually the number is ten times that, then we're going to completely off track.
So can you explain why we get these vastly different estimates of how much is needed either or? Brett.
10:32
Speaker 1
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Speaker 1
I'm happy to go first. I think from an industry perspective, we tend to use the Climate Change Committee and the Nyiso scenarios as our sort of main barometers of how much is likely to be required. I think what's also really important is that back to that sort of portfolio point, is that the the amount of hydrogen that we're going to need on the system will very much be dictated by the future generation mix. And so it does also depend on the extent to which we have managed to scale batteries, long duration energy storage, pumped storage, biomethane, interconnectors, because that will all have implications for the the amount of hydrogen that we need on the system.
So I think we would tend to on the sort of slightly more modest end. And that's one of the things that we we've been calling on government for is for them to set out their view on how they see the role of hydrogen in the future system, and being really clear about where it adds most value in the system, where the end uses are likely to be, because it depends on how much of it will be used by industry or other sectors.
The extent to which we've electrified across the economy. So I think it's worth taking that sort of whole systems view.
So I think we would tend to on the sort of slightly more modest end. And that's one of the things that we we've been calling on government for is for them to set out their view on how they see the role of hydrogen in the future system, and being really clear about where it adds most value in the system, where the end uses are likely to be, because it depends on how much of it will be used by industry or other sectors.
The extent to which we've electrified across the economy. So I think it's worth taking that sort of whole systems view.
10:34
Speaker 2
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Speaker 2
Yeah. Just to just to build on what Kesha was saying. They're absolutely right. The I mean, to your point, some of the studies that you mentioned there with, with some of the targets, they're possibly a little bit outdated, some of the thinking in terms of how far electrification can and will go have changed some of the thinking around which sectors hydrogen could and should be used in have also changed. So that has a big impact on the volume of or the capacity of hydrogen storage that the system will require to, to Kesha's point, the some of the models that that are out there with by from the Climate Change Committee and even within those future energy scenarios, modelling that are pessimistic, shall we say, around the around the role that hydrogen will play, they show certainly a non-zero requirements for hydrogen storage.
And when you look at the trajectory that's needed, if the long duration, long development times to be able to get these projects off the ground, even the first allocation that government is planning to do for hydrogen storage business model, it doesn't set a specific target. It just has a minimum criteria of 50 gigawatt hours of storage capacity, and that would come online in 2033. Now, to get from 2033 at 50 gigawatt hours, it may be more. But if they if they just go the minimum to anywhere close to three terawatt hours by 20 by 2050 is a is a huge curve.
I
And when you look at the trajectory that's needed, if the long duration, long development times to be able to get these projects off the ground, even the first allocation that government is planning to do for hydrogen storage business model, it doesn't set a specific target. It just has a minimum criteria of 50 gigawatt hours of storage capacity, and that would come online in 2033. Now, to get from 2033 at 50 gigawatt hours, it may be more. But if they if they just go the minimum to anywhere close to three terawatt hours by 20 by 2050 is a is a huge curve.
I
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Baroness Sheehan
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Baroness Sheehan
think this is an interesting avenue of inquiry, and we'd be very grateful for further information about the underlying assumptions around those and the robustness of the targets for hydrogen storage that the government is working to. I'd be very grateful for that. I will move on in short order to Lord Jay's question, but can I just probe a little bit further about Salt Cavern? Because I think it's very important that we understand challenges there, that once salt caverns are created, there's a 6 to 10 year lead time.
I understand how long do they last?
I understand how long do they last?
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Lord Redwood
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Lord Redwood
I think I'd say. So once they created, they can last pretty much indefinitely because they're in the geology. And so they don't kind of wear out. So the existing ones I mentioned that I see I created, I'm guessing slightly, but they might have been like 40 years ago. They created them and they're still going strong.
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Speaker 2
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Speaker 2
So just to give you a context, each each cavern will be a different will have a different capacity. It's, it's, it's down to the physical size of that cavern itself. It's down to the pressures that it can withstand in terms of being able to compress and inject that hydrogen into it. So you're looking at, I think there was a study earlier this year that we will reference in our written submissions that assumes a salt, an individual cavern storage capacity of in the region of 20 to 50 gigawatt hours per cavern.
Now, each facility may have multiple caverns to make up to to make up an individual facility. So if we look at six planned hydrogen storage projects, that first cavern is in the order of 20 gigawatt hours of storage capacity. But there are there are nine caverns within that development that could take that total storage capacity to in the order of 300 gigawatt hours.
Now, each facility may have multiple caverns to make up to to make up an individual facility. So if we look at six planned hydrogen storage projects, that first cavern is in the order of 20 gigawatt hours of storage capacity. But there are there are nine caverns within that development that could take that total storage capacity to in the order of 300 gigawatt hours.
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Baroness Sheehan
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Baroness Sheehan
Thank you again. Any further information on Salt caverns and how they can help us meet this challenge would be much appreciated. Before we move on again, I'm very interested in specialist tanks and storage vessels for hydrogen. Are they expensive and how big can we make them and where would they fit into that chain that we need to deliver hydrogen, hydrogen, sensible hydrogen strategy?
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Speaker 2
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Speaker 2
Are you talking about about pressurized storage containers? Okay. So apologies. I don't have the numbers off the top of my head here, but the, the it's not expected that they were going to give the scale that's needed to that we're talking about for, for supporting and mitigating a flatter event there. I am aware of one developer who is looking to try and deploy effectively. High pressure storage cylinders buried below, buried below the surface.
But that is still to be proven at the at the commercial scale. But the.
But that is still to be proven at the at the commercial scale. But the.
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Lord Jay of Ewelme
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Lord Jay of Ewelme
Thank you very much. I wanted to turn the attention back again to gas, if I may. Existing gas plants in the UK are ageing and many, as I understand it, are due to reach the end of life in the early 2030s. But gas is expected to remain on the grid until the 2040s or thereabouts. Even that, though at a rather less lower scale than at present. And I wondered if you could say a question about costs, really, whether you could say anything about the cost of retaining and upgrading existing gas fired power stations, or indeed a building new ones? And most important, how those costs compare with the cost of other potential solutions, such as developing hydrogen storage and hydrogen to power, or indeed of using biomethane.
Who would like to go first on that?
Who would like to go first on that?
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Speaker 1
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Speaker 1
So I think it's very important that we plan for the capacity that the system requires, rather than assuming that the current gas fleet will remain in operation through the 2030s, or that it will retire ahead of that time. Designers did a piece of the Department for Energy Security and Net Zero, did a piece of analysis that was published earlier this year that recognised that much of the fleet could potentially continue to remain in operation throughout the 2030s.
But I think what's really key is that owners and operators of those assets need to have early visibility of of what is actually required, how much of that capacity needs to be retained so that they can make investment decisions about whether to invest in maintaining, upgrading, extending the life or repowering those, those assets. And there are also substantial lead times for those decisions as well. So so those decisions need to be made urgently.
But I think what's really key is that owners and operators of those assets need to have early visibility of of what is actually required, how much of that capacity needs to be retained so that they can make investment decisions about whether to invest in maintaining, upgrading, extending the life or repowering those, those assets. And there are also substantial lead times for those decisions as well. So so those decisions need to be made urgently.
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Speaker 1
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Speaker 1
So there are significant supply chain constraints currently for certain parts including turbines and transformers. And there are some estimates of around seven years for waiting for those parts. So again these are decisions that need to be made with with some urgency on cost. I think extending the life of the current fleet is generally seen to be the lower cost option rather than building new gas generation. So just to give you some sort of ballpark figures, it's it's thought that it would cost around £140 million to extend the life of a ccgt by about five years to repower a site is about £900 million.
And that's where you sort of replace much of the existing key parts of the equipment. And then a new ccgt that's about 1700MW would be somewhere in the realm of £1 billion to £1.5 billion. So a significantly more expensive both will have advantages. So for extending the life of a current gas fired plant, it would be quicker and cheaper, particularly where there is already a gas connection. There is gas infrastructure and operating arrangements.
The benefits of a new build would obviously have modern equipment. It would run more efficiently and it would have a longer operational life. But that needs to be assessed on a plant by plant basis. And fundamentally, all of the options require significant upfront capital costs. And given supply chain constraints internationally, those decisions would need to be made as soon as possible. So ultimately, there needs to be a clear transition plan from government.
And that's one of the things that we have certainly been asking them for, so that they can set out how much capacity they anticipate will be required based on the pace and scale of development of those low carbon alternatives that will be coming through to replace our current dependence on gas for electricity generation.
And that's where you sort of replace much of the existing key parts of the equipment. And then a new ccgt that's about 1700MW would be somewhere in the realm of £1 billion to £1.5 billion. So a significantly more expensive both will have advantages. So for extending the life of a current gas fired plant, it would be quicker and cheaper, particularly where there is already a gas connection. There is gas infrastructure and operating arrangements.
The benefits of a new build would obviously have modern equipment. It would run more efficiently and it would have a longer operational life. But that needs to be assessed on a plant by plant basis. And fundamentally, all of the options require significant upfront capital costs. And given supply chain constraints internationally, those decisions would need to be made as soon as possible. So ultimately, there needs to be a clear transition plan from government.
And that's one of the things that we have certainly been asking them for, so that they can set out how much capacity they anticipate will be required based on the pace and scale of development of those low carbon alternatives that will be coming through to replace our current dependence on gas for electricity generation.
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Lord Jay of Ewelme
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Lord Jay of Ewelme
What about the the the cost of alternatives? I mean, that's very helpful. What you said about the cost of extending the life of existing plants and the difference between extending the life and building new ones. That's very clear, but can you give any sense of how that would compare with other ways of.
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Speaker 1
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Speaker 1
the power station level, the turbines that are used for gas generator gas power stations and hydrogen power stations are broadly very similar. So they, they, I think are expected to be a similar price point, although there is an expectation that there could be a cost premium, a modest cost premium for a turbine that operates 100% hydrogen ready. And it will also be subject to reliability standards and efficiency standards, etc., which may be a slight increase in cost.
But I think the Non-fuel operating and maintenance costs are broadly the same. I think the biggest difference is the fact that the hydrogen like value chain is, is where you need to consider the total system costs because it requires production in sufficient volumes. It requires storage. So the salt caverns that we talked about that are also you need to take into consideration that cost. It requires transporting and that that transport and storage network also needs to be accounted for.
So it's the it's the entire value chain that needs to be considered when you're comparing those costs.
But I think the Non-fuel operating and maintenance costs are broadly the same. I think the biggest difference is the fact that the hydrogen like value chain is, is where you need to consider the total system costs because it requires production in sufficient volumes. It requires storage. So the salt caverns that we talked about that are also you need to take into consideration that cost. It requires transporting and that that transport and storage network also needs to be accounted for.
So it's the it's the entire value chain that needs to be considered when you're comparing those costs.
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Speaker 2
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Speaker 2
Yes, yes. If I can just come in very quickly because I think to, to, to put some data on it. Baringa did some analysis on behalf of Disney's around hydrogen to power costs, and they put that premium for new build , 100% hydrogen turbines that are at less than 10%. So that's we can we provide that data point within the within the evidence and similarly, that some of the new build plants that are built, hydrogen ready, you're looking at approximately 5% of your total CapEx to be able to retrofit later down the line, to be able to, to, to handle hydrogen.
Keisha's point around the you've got to take account of the upstream infrastructure as well, the hydrogen production and the transport and storage infrastructure. So the infrastructure, some of those costs will be borne out by other users of the system as well. The power sector will not be the only user of that infrastructure. You'll have heavy industry and other e-fuels production using that, using the system for capital cost recovery and on the on the hydrogen production aspect, one of the things that we've been working with Disney's on recently, very much recently, is improving hydrogen producers ability to access low cost renewable power.
When the system, you know, when the system is, is operating with with excess generation, it's not something that the that the market allows for at the moment with the business models. So it's, it is something we're looking to improve so that you can materially bring down that cost of hydrogen that will be used to, to, to generate power further down the line.
Keisha's point around the you've got to take account of the upstream infrastructure as well, the hydrogen production and the transport and storage infrastructure. So the infrastructure, some of those costs will be borne out by other users of the system as well. The power sector will not be the only user of that infrastructure. You'll have heavy industry and other e-fuels production using that, using the system for capital cost recovery and on the on the hydrogen production aspect, one of the things that we've been working with Disney's on recently, very much recently, is improving hydrogen producers ability to access low cost renewable power.
When the system, you know, when the system is, is operating with with excess generation, it's not something that the that the market allows for at the moment with the business models. So it's, it is something we're looking to improve so that you can materially bring down that cost of hydrogen that will be used to, to, to generate power further down the line.
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Lord Redwood
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Lord Redwood
I think maybe just to add, I mean, so I think to Keisha's point, keeping existing natural gas fired generation going through the 2030s is certainly going to be the lowest cost option. So there will be some carbon emissions when it's running, clearly, but we're not yet at the net zero target by. So through 2030, 2040, natural gas has got to be the lowest cost way of keeping it going. And it's probably the only realistic option in that timescale.
I think estimates I've seen suggest that perhaps around 35GW of gas fired capacity will be required through the 2030s. And so for that, gas is the only option. And in terms of some costs, I had some numbers. So the current rather high cost of gas after the the war in the Strait of Hormuz issue. So we're currently looking at gas prices around about in pounds per megawatt hour, sort of £65 per megawatt hour.
If you go back a year, they were more like £35 per megawatt hour.
I think estimates I've seen suggest that perhaps around 35GW of gas fired capacity will be required through the 2030s. And so for that, gas is the only option. And in terms of some costs, I had some numbers. So the current rather high cost of gas after the the war in the Strait of Hormuz issue. So we're currently looking at gas prices around about in pounds per megawatt hour, sort of £65 per megawatt hour.
If you go back a year, they were more like £35 per megawatt hour.
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Lord Redwood
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Lord Redwood
And hopefully if we can sort out the Strait of Hormuz crisis, then well, in fact, they could go even lower because looking at the global gas market, there is a widely a glut of natural gas coming. So the US is building LNG export very rapidly. And so there are expectations that gas prices on the world market will go quite low. So in the medium term we think gas prices will be low assuming Strait of Hormuz gets sorted.
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Baroness Sheehan
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Baroness Sheehan
Indeed. But are you in that economic scenario, building in the cost of carbon capture and storage and abated gas? Because we are looking here at low carbon solutions to meet the Clean Power Action Plan at 20 2030. So projecting ahead from where we are today, assuming no changes is not really what we're after. What we're looking for is the alternatives . And the production of abated gas as a transition fuel.
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Lord Redwood
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Lord Redwood
Hydrogen storage, we could do, but we also need scale hydrogen production. So the government had a target of ten gigawatts of electrolysis capacity by 2030. That's clearly not going to happen. If you're really lucky, you might get one gigawatt. So the first hydrogen allocation round, which has gone through, awarded 125MW, the second round, which seems to have gone into limbo, would be taking up to one one gigawatt.
So so it's actually rather small compared to the ten gigawatt target. So scaling up hydrogen production is a real challenge and will take time, which is why I said through the 2030s there's no real realistic option apart from gas. And in parallel, you can do two things you can scale up by methane production, which will lower the carbon footprint of the methane that you use. And you can scale up KSI s.
So and on that transition pathway, you want to go as fast as you can with all of those routes effectively. So scale up by methane, scale up KSI s but as an insurance policy, don't throw away the gas power plants yet.
So so it's actually rather small compared to the ten gigawatt target. So scaling up hydrogen production is a real challenge and will take time, which is why I said through the 2030s there's no real realistic option apart from gas. And in parallel, you can do two things you can scale up by methane production, which will lower the carbon footprint of the methane that you use. And you can scale up KSI s.
So and on that transition pathway, you want to go as fast as you can with all of those routes effectively. So scale up by methane, scale up KSI s but as an insurance policy, don't throw away the gas power plants yet.
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Lord Redwood
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Lord Redwood
Yes. Thank you. I accept that there will be low efficiency if you use electricity to create hydrogen, and then burn the hydrogen in a power station to create electricity, can you just give a number on how much loss there would be from the original electrical power, and how does that compare with the inefficiencies of burning direct gas in a conventional gas power station? So if you I'd say if you start from renewable power, you turning into hydrogen, it has an efficiency of about 75%.
And then putting it into a combined cycle. Gas turbine is probably about 55, 60%. So overall, if you multiply those two together, you're somewhere a bit below 50, say 40% efficiency. So roughly.
And then putting it into a combined cycle. Gas turbine is probably about 55, 60%. So overall, if you multiply those two together, you're somewhere a bit below 50, say 40% efficiency. So roughly.
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Speaker 2
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Speaker 2
Yeah. And there is absolutely no getting away from the from the physics of that. There is a limitation. But what I would say is it's really important where you draw the boundary for for measuring efficiency and system cost. There are a number of studies out there. Again, we'll reference within our written submission that show the integration of hydrogen, long duration storage and dispatchable power generation alongside renewable generation and and gas actually delivers the lowest total system cost.
So there is yes, there is an efficiency point, but it's around the total system efficiency and cost, I think is the is the important factor, particularly for these larger events where you you don't have other options available to you, right.
So there is yes, there is an efficiency point, but it's around the total system efficiency and cost, I think is the is the important factor, particularly for these larger events where you you don't have other options available to you, right.
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Speaker 2
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Speaker 2
Go for it. I'm happy to go first, as I mentioned earlier, that the I guess the trump card for for for hydrogen is a molecular storage option is that you're using domestically produced renewable electricity to produce that that hydrogen in the first place. So it is it is it is reducing your exposure to some of those, those international markets for, for gas and power, the.
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Speaker 2
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Speaker 2
We not at the moment, no. The the renewable generation build out is happening. But as I'm glad you asked, that now is. At the moment we are. We are curtailing a lot of the renewable generation because we don't have the. Either the demand or the transmission infrastructure to be able to handle that excess generation capacity. So if we if we start rolling out electrolysers in strategic locations, to be able to absorb that, we can start maximizing the use of our renewable generation assets.
So some of Nisos modelling has pointed curtailment could reach in the order of 10% of total renewable generation by the mid 2030s. So something in the order of 35 to 40 terawatt hours per year that a lot of that could go into electrolytic hydrogen production, that could be transported and stored and used again later. Of course, in terms of the physical assets. So the hydrogen to power, so the turbines and compressors, of course, the UK is is still exposed to that supply chain, international supply chain pressures.
Keisha's already given some, some indication that that there is competition within that market already, even within traditional gas turbine gas equipment. And we're expecting to see that also for for hydrogen equipment moving forward.
So some of Nisos modelling has pointed curtailment could reach in the order of 10% of total renewable generation by the mid 2030s. So something in the order of 35 to 40 terawatt hours per year that a lot of that could go into electrolytic hydrogen production, that could be transported and stored and used again later. Of course, in terms of the physical assets. So the hydrogen to power, so the turbines and compressors, of course, the UK is is still exposed to that supply chain, international supply chain pressures.
Keisha's already given some, some indication that that there is competition within that market already, even within traditional gas turbine gas equipment. And we're expecting to see that also for for hydrogen equipment moving forward.
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Speaker 1
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Speaker 1
Yeah, it's one of the key priorities for for, for NI. So there's, there's an Ofgem at the moment. One thing that again another another positive for, for the use of hydrogen is that you can you can move more energy. cheaply via hydrogen pipelines than the equivalent energy capacity through through power cables. I think it was a study by by Martin's organisation, and it's backed up by a similar study done by academics in in the States.
Is that for a given for a given energy output, you can you can move it more cheaply via pipeline than you can via.
Is that for a given for a given energy output, you can you can move it more cheaply via pipeline than you can via.
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Speaker 2
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Speaker 2
We absolutely will. Thank you very much. Anything to add? Yeah. Just to add that, I don't think we should assume in terms of hydrogen imports that that they will be. reliable in the sufficient. volumes that we would probably need if we were to assume that it would be a significant part of the future system. Very few countries are currently. producing sufficient. quantities where there is a sort of buoyant export market.
There was some work published by the International Energy. Agency this year that found that less than 8% of. announced hydrogen export volumes had reached. operation or committed investment. So it's worth just bearing that in mind. And I would just reiterate the point that Brett made, which is that we have the. opportunity to produce hydrogen domestically. So before thinking about, you know, which countries we might want to consider as a reliable source of supply, we should absolutely think about exploiting our own domestic production.
abilities first and absolutely trying to make or get as much value of the current renewable generation fleet that we have available to us. So yeah, just. underscoring the point about resilient.
There was some work published by the International Energy. Agency this year that found that less than 8% of. announced hydrogen export volumes had reached. operation or committed investment. So it's worth just bearing that in mind. And I would just reiterate the point that Brett made, which is that we have the. opportunity to produce hydrogen domestically. So before thinking about, you know, which countries we might want to consider as a reliable source of supply, we should absolutely think about exploiting our own domestic production.
abilities first and absolutely trying to make or get as much value of the current renewable generation fleet that we have available to us. So yeah, just. underscoring the point about resilient.
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Speaker 3
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Speaker 3
I think is a good source of secure domestic. production based on local production from farms in the UK. So that's worth looking at as well on hydrogen. A couple of points to add. One is that. transporting hydrogen over long. distances is. challenging and expensive. So I said before. pipelines have been. proven at fairly small scale.
Transporting hydrogen by ship has been tried, but that's really very difficult. So in the UK, perhaps worth noting, we already produce about. 13 terawatt hours of hydrogen. Today it's all high carbon hydrogen. So in. refineries and.
Transporting hydrogen by ship has been tried, but that's really very difficult. So in the UK, perhaps worth noting, we already produce about. 13 terawatt hours of hydrogen. Today it's all high carbon hydrogen. So in. refineries and.
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Speaker 3
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Speaker 3
it's nearly all used pretty much adjacent to where it is produced. And so there's a. evolution that could happen to migrate from current high carbon. hydrogen to lower carbon hydrogen. And that's something which could also kick start the industry in some way. So hydrogen we talked about for today, but there's a wider . Angle on
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Speaker 3
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Speaker 3
They're exposed, I guess, to terrorist acts against them. So in that security sense, but perhaps the bigger question is are they. commercially and economically justifiable? And that's still an open question, I think. And the answer may well be that you're better off making hydrogen and using it locally. And I don't see a sort of . A
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Speaker 1
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Speaker 1
UK to to Europe. pipelines would would arrive. Of course, Europe has some pretty. Ambitious targets for hydrogen consumption in order to be able to wean itself off Russian gas. So there, there could be a possibility that we could be. producing more hydrogen than we need. domestically with the. opportunity to, to, to sell into Europe rather than . The other
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Speaker 2
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Speaker 2
any point of maturity. Yes. So you're right. CC us has moved from policy development stage into the early. construction phase. So the government's initial programme is supporting two track one clusters. So there's the east coast. cluster in Teesside. And then there is the Hynet cluster in the northeast. And that's currently backed by. £21.7 billion worth of funding over 25 year period.
And construction has started on those projects, and they're expected to be in.
And construction has started on those projects, and they're expected to be in.
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Speaker 2
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Speaker 2
I think 2030. But I will I can come back and confirm those numbers for you. And that. includes the. associated transport and storage infrastructure that's also required to enable that. I think some of the barriers are quite similar to what we've heard in hydrogen, where there is a need for support, supporting and enabling. infrastructure in order for these projects to be in operation. So the power station is only one part of the project.
You can build the power station with the with the carbon capture technology onto it, but you also need to build the CO2. transport network in order to transport that captured CO2 out into the depleted North Sea oil field, oil and gas field. And that.
You can build the power station with the with the carbon capture technology onto it, but you also need to build the CO2. transport network in order to transport that captured CO2 out into the depleted North Sea oil field, oil and gas field. And that.
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Speaker 2
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Speaker 2
And that is the Acorn project in Scotland and Viking in the Humber. So things are moving in the right direction. But that's not to say that those projects have reached financial investment decision. There are still a lot of negotiation. And as you've mentioned, these are very capital intensive. projects that also require a lot of coordination. So those are the sort of key barriers that we see. I think the key priority for us is to to turn this into what is a first of a kind.
technology for us in the UK and to something that is. scalable and to move it from that sort of. nascent market into something that's slightly more.
technology for us in the UK and to something that is. scalable and to move it from that sort of. nascent market into something that's slightly more.
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Speaker 1
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Speaker 1
Yeah, yeah. I would just build a little bit. One of the things actually to remember is that with the with the projects, they're a huge scale. So if we, if we, if we compare. So e t. hydrogen's hpp one project within Hynet is looking to develop in the order of. 300MW of hydrogen production from that one.
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Speaker 1
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Speaker 1
As Martin mentioned, the total capacity that's been approved through Ha one for electrolytic hydrogen is only 125MW. So it is at a very different scale in terms of being able to to get a single project. And Keisha mentioned it's coordinated. execution that is needed. So you've got the capture project itself. Then you've got the CO2 pipelines, you've got the stores, you've got the commercial contracts that all have to hang off each other and be delivered, delivered in parallel.
So there is progress. But it is,
So there is progress. But it is,
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Speaker 3
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Speaker 3
It is it is a difficult task for sure. I think just to add. So carbon capture and storage is essential for reaching our net zero target. So we need to make it work if we're going to achieve net zero. And but it does seem to scale up a lot. And the UK the track one projects are a great step forward for doing that because we need to try out . Does it actually work?
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Speaker 3
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Speaker 3
The Gorgon project there for its environmental permit, said it would capture 4 million tonnes of CO2 per year and inject it. They've had loads of technical issues on the storage side and at best I think they stored about. 1.5 million tonnes a year. So KSI s we need to make it work. Technically it should be okay, but it's not without its. challenges in order to make it work.
And we haven't talked much about the carbon price today. So I think for a project in the UK to work, it probably needs a carbon price around about. 150 to £200 per tonne of CO2. I think last time I looked the current market carbon price is about. 60 or £70 a tonne. So we need to raise the carbon.
And we haven't talked much about the carbon price today. So I think for a project in the UK to work, it probably needs a carbon price around about. 150 to £200 per tonne of CO2. I think last time I looked the current market carbon price is about. 60 or £70 a tonne. So we need to raise the carbon.
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Speaker 3
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Speaker 3
I think if you're. injecting CO2 into a known disused. hydrocarbon field, then the geology is understood and you can inject it and you probably. understand how it will work. In the Gorgon case, they injected into an aquifer. So where there's water stored. underground and they intended the water as they pump CO2 in would get displaced. But the reality was the pressure built up.
So they then had to drill . Some
So they then had to drill . Some
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Speaker 3
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Speaker 3
Decarbonising potentially actually is. Yeah. So I spoke about blue. Well, so current hydrogen production in the UK is largely done in. refineries and. petrochemical works from fossil fuels. And that emits carbon. I mean, rough number ten tonnes of carbon per tonne of hydrogen you produce. So but with this so-called blue. hydrogen you can. capture most of.
But not all, but most of the CO2 that you emit in making hydrogen. So. So you can you can capture that. carbon and you can then with CCS, you can store it. So there are ways to mitigate that. I think in general, with CSE, even direct use of CSE in power. generation is important to note that CSE can capture a large. majority of the.
But not all, but most of the CO2 that you emit in making hydrogen. So. So you can you can capture that. carbon and you can then with CCS, you can store it. So there are ways to mitigate that. I think in general, with CSE, even direct use of CSE in power. generation is important to note that CSE can capture a large. majority of the.
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Baroness McIntosh of Pickering
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Baroness McIntosh of Pickering
To Parliament from the Climate Change Committee, which stated that. 12 to 20GW of low carbon dispatchable capacity will be needed to replace unabated gas by 2035. They recommended that the government should adopt should develop a. portfolio based. strategy that includes. hydrogen and gas with . CSE. But then the Royal. Society's report on large scale electricity.
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Baroness McIntosh of Pickering
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Baroness McIntosh of Pickering
use of gas with carbon capture and storage, and they went on to say that it would lead to. unacceptable emissions of CO2 and methane, and also to higher costs. So it's leading up to my question to the panel, in turn, whether you see hydrogen to power, being able to compete with gas, with CS abated gas as the. decarbonised dispatchable power source for. 2040 and beyond. Or could both.
technologies play different roles?
technologies play different roles?
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Speaker 1
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Speaker 1
So. Mr.. Mr.. Ryan, I'm happy to start. They will play different roles. We've already mentioned at the start of the the very start of the panel about the portfolio of options that are needed to be able to provide true. resilience across the differing timescales of how long you need that, that dispatchable power on the system, even some some recent modelling by the UK Energy Research Centre, and he came out in the last couple of months.
It'll be it'll be in our written submission. It shows that you you need both.
It'll be it'll be in our written submission. It shows that you you need both.
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Speaker 1
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Speaker 1
Both technologies in terms of power, CCS and hydrogen to power. The the, the point where hydrogen to power really comes in is that. 100 hour plus. duration of , of generation. And I think that's where they've started to coin the term ultra long duration energy storage. Keisha mentioned earlier the the Ofgem, excuse me, cap and floor, long duration energy storage that maxed out at about. 22 hours in terms of.
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Speaker 2
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Speaker 2
And that is a. combination of both gas with Q s and hydrogen to power. I agree that that these technologies are not competing. They're definitely serving different different purposes and system requirements. I think the really important thing is that there needs to be a clear plan from government on how it intends to facilitate the investment in in these technologies and how we're going to actually bring them onto the system.
And the key challenge is that without that.
And the key challenge is that without that.
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Speaker 2
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Speaker 2
And we end up either prematurely retiring the gas plants that we have or investing in gas further unabated gas without a really clear pathway of how that how that gas fleet. decarbonises going forward. So I would say that it's not an either or choice. Again, we support a portfolio of technologies that will each have different. characteristics and and system requirements. But the key thing is .
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Earl Russell
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Earl Russell
happy to answer that. Thank you. Earl Russell, your question. Good. Thank you. Good morning. Thank you for your evidence. My questions really. I mean, I think everybody agrees that we need long term and ultra long term energy storage as part of our energy mix. And that's kind of almost regardless of the dunk or flatter. But my question is really about market.
mechanisms and what can be done to help improve those to support these emerging. technologies and the particular issues. We've all talked about the need for market . certainty and in terms of investment. And obviously these are new technologies. They're high risk. There's obviously different problems between long term and ultra long term storage. We've we've had in June, we've had an announcement of.
7.6GW for LDS and a cap and floor mechanism. I think energy UK has been critical of the limitations of cap and floor. And then as we move to ultra long term storage, those problems compound. So what more can and should we be doing to help improve the the market mechanisms for investment to bring these. technologies to fruition? I
mechanisms and what can be done to help improve those to support these emerging. technologies and the particular issues. We've all talked about the need for market . certainty and in terms of investment. And obviously these are new technologies. They're high risk. There's obviously different problems between long term and ultra long term storage. We've we've had in June, we've had an announcement of.
7.6GW for LDS and a cap and floor mechanism. I think energy UK has been critical of the limitations of cap and floor. And then as we move to ultra long term storage, those problems compound. So what more can and should we be doing to help improve the the market mechanisms for investment to bring these. technologies to fruition? I
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Speaker 2
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Speaker 2
don't know if you want to start maybe. Yeah, sure I can. I can kick us off. So I think it's important that markets are able to. value adequately value the, the services that these assets provide, even if they are running infrequently. So for the low carbon alternatives like hydrogen to power and power, CCUs, the expectation is that they're not going to be providing a significant amount of power generation.
They are going to be used in those dunkle flatter periods where there is low renewable output. So the capacity market, which is the.
They are going to be used in those dunkle flatter periods where there is low renewable output. So the capacity market, which is the.
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Speaker 2
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Speaker 2
You know, something like a strategic reserve. I think the other thing to consider, though, is electricity. capacity and gas storage being two very sort of different things. When you're thinking about strategic reserves. So for example, a power station can provide electricity for as long as there is fuel available. And we've already said that we, the UK, benefits from quite a diverse supply of of gas around the world, but declining domestic gas means that we should be absolutely stress testing how we have, how resilient the system is in more extreme scenarios.
And so there is potentially a case to be made about whether the government could look at what market. mechanisms should be shaped in order to. support sort of. strategic energy. infrastructure that is used.
And so there is potentially a case to be made about whether the government could look at what market. mechanisms should be shaped in order to. support sort of. strategic energy. infrastructure that is used.
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Speaker 2
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Speaker 2
that provides. insurance in those periods where it's highly valuable during an extended period of system stress. This is something that the government is looking at currently in their gas systems transition work. They published a. consultation last year, which we responded to and suggested that that they should look at if.
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Speaker 3
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Speaker 3
response. I should get hold of that. I think I'd say I mean, sort of the easy answer is to encourage investment. You need the. investors enough revenue. confidence in order to make the investment. And there's different ways that policy can do that. A couple of examples relevant to this. We talked before about the European hydrogen backbone. The only part of that that actually progressed anywhere is in.
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Speaker 3
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Speaker 3
Where they're building the so-called cairn nets, their core network, which is essentially backed by the German federal government. And there's arguments about whether it's actually worth doing or not, but is and it's quite expensive for government to do so. I think the trade off clearly is the extent to which government backs it. directly and funds it. Or do you pass it on to consumers? But in some way you need to find a way in order to give the investors confidence.
And we in the UK with contracts for difference for renewable power, we've achieved that fairly well. Again, I'm not pushing buy methane too strongly, but if you wanted to encourage more buy.
And we in the UK with contracts for difference for renewable power, we've achieved that fairly well. Again, I'm not pushing buy methane too strongly, but if you wanted to encourage more buy.
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Speaker 3
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Speaker 3
That would be another contract for difference approach could work for there because right now the current support schemes ending. So there's no confidence in what proceed. Similarly for carbon. pricing but uncertain carbon pricing. Again, Germany introduced a carbon contract for. difference that gives revenue certainty. That could work quite well as well. So thinking of ways of revenue certainty is kind . Of the
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Earl Russell
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Earl Russell
Or is or are there particular. problems there that need other market. mechanisms is. And I guess the other side to that is the government doing enough in terms of the actual market systems that it's. providing for the the development of ultra long term energy? Or is there more thinking that government . Needs to do in
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Speaker 1
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Speaker 1
Into that financial sort of relationship. I'd really echo the point that Kesha made right at the start of this question. It's, it's being able to adequately value the service that that storage is providing. So as I mentioned earlier, the power sector is, is but one use of the hydrogen storage. Those storage developers will have options to be to be using hydrogen to be stored for other sectors like industry. So there has to be a market mechanism that.
values not just the, the megawatt.
values not just the, the megawatt.
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Earl Russell
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Earl Russell
Government, financial mechanisms. And just going back to your point on the Rab and gas, I guess for me, when I saw that proposal, that was also about dispatchable power and gas in the unit price as the. dispatchable power. So that's technology, but it's also the market. mechanisms and. transcending price from that unit that sets. dispatchable power, I guess for me. So that's . Yeah,
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Speaker 2
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Speaker 2
Our perspective is that we're not at that place where we are, where we can credibly. consider taking gas generation or dispatchable power out of the electricity market because it plays such a fundamental role currently, given that we it produces over a third of our electricity generation today. So I think when we get to a point, perhaps in the.
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Lord Trees
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Lord Trees
over time. Thank you very much, Lord trees, your question. Thank you very much. This session is about molecular storage and hydrogen, natural gas and biomethane. We've said very little about biomethane. I'll come to. hydrogen strategy in a minute. But could I ask you particularly, Martin, you've mentioned. biomethane several times in a relatively positive way that would be derived from crops. Right. But what is is there a.
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Speaker 3
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Speaker 3
deprive us of food. And so there are trade offs. No, because it should be bio waste become. So you grow the crops for crops, you know, you grow sweet corn, for example, you eat the sweet corn, but the green stuff that goes around it, you don't want. So you can put that into a digester. And that's true. And so you get it's a waste that comes along with growing crops.
It's. And what you want to avoid is. repurposing land that otherwise would grow food . For,
It's. And what you want to avoid is. repurposing land that otherwise would grow food . For,
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Speaker 2
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Speaker 2
Let me go first. Yeah. I just want to quickly, very quickly, just on the bio methane point, so that we're also very positive about bio methane. And we think that it certainly does also have the potential to scale. There was a report by the Green Gas Group, which has some estimates of bio methane producing around. 120 terawatt hours per year by 2050. So that's a high end estimate, but we think it's worth exploring.
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Speaker 1
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Speaker 1
And I'll hand over to you on hydrogen. Then I'll come back. When do we think the strategy will will be released? We would love for it to be a surprise announcement this afternoon, but we we carry on waiting. There's a there's there's a few things here. So our our members have been waiting quite patiently on a number of funding and allocation updates that that that can happen without the strategy itself.
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Speaker 1
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Speaker 1
The, the second allocation of the electrolytic hydrogen production projects that's been stalled since early last year. Those projects need to go through to, to what we call the invitation to offer stage so that the. developers and the. investors know that there is still confidence that that that the UK and the government is still serious about hydrogen. Similarly, with the as I mentioned, that transport and storage, that first regional network, there was a.
£500 million commitment that that came through in the last spending review in the industrial strategy. That's great, but we now we need to see that actually launch and then a timeline and a plan for when.
£500 million commitment that that came through in the last spending review in the industrial strategy. That's great, but we now we need to see that actually launch and then a timeline and a plan for when.
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Speaker 1
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Speaker 1
Will be allocated. Because we've talked about today, those, you know, the salt caverns that we're going to be relying on for long, ultra long duration energy storage. Most of them really are located near to near to clusters. So there is a regional network build out required to go with it and a credible pathway for, for, for production projects. Beyond those current Ha1 and Ha2.
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Speaker 2
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Speaker 2
from a strategy or announcements beforehand. Yes, I think I'd agree with that. I would add what I mentioned earlier around clarifying the role of hydrogen and setting out where government thinks that it adds the most value so that we can understand where it fits in the broader picture of that portfolio of flexible technology. And I think just resolving some of the outstanding.
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Speaker 3
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Speaker 3
routes to market look like. And I think the question on when it's coming, I mean, it would be good if Desnos gave us some indication of what their thinking is, because it was expected earlier this year, and it's been very silent on what. And we don't really understand why. Similarly, hydrogen allocation around two. There was a shortlisting done in April 2025. So well over a year ago , we would have expected that to have been then.
confirmed in the course of this year. Again, no, it's very radio silence from Disney's and not quite sure why. Perhaps you should ask them. The other thing you mentioned in.
confirmed in the course of this year. Again, no, it's very radio silence from Disney's and not quite sure why. Perhaps you should ask them. The other thing you mentioned in.
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Speaker 3
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Speaker 3
There was going to be a decision about the role of hydrogen in home heating. I think it's pretty widely. recognised that hydrogen and this shoots me that hydrogen home heating is not going to happen because it's just the. inefficiency issue. So heat pumps for home heating are clearly the route to go or district heating, but not hydrogen for heating. Similarly, electric cars have come a long way since.
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Baroness Sheehan
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Baroness Sheehan
forward. I think that's very helpful. Thank you. Okay. Thank you. We are. 1137 and can I what I was going to say was that there are several colleagues who are bursting to ask further questions. I do want to give them a chance, but we have run out of time in this forum. Please, will those colleagues email in their questions to Lily and Alistair? And then we will make sure that the panel has an.
opportunity to address them. So I do apologise to colleagues, but I think that's probably the fairest way to proceed at the moment. So with that, if I can just say thank you very much to our expert panel, I think it's been. fascinating to hear your. perspectives and and just to remind you that the written evidence that you've already committed to send to us would be very much appreciated. And if you could bear with us and answer further questions from colleagues, that would be much.
appreciated also. And with that, I bring today's public session to a close, and the . Committee
opportunity to address them. So I do apologise to colleagues, but I think that's probably the fairest way to proceed at the moment. So with that, if I can just say thank you very much to our expert panel, I think it's been. fascinating to hear your. perspectives and and just to remind you that the written evidence that you've already committed to send to us would be very much appreciated. And if you could bear with us and answer further questions from colleagues, that would be much.
appreciated also. And with that, I bring today's public session to a close, and the . Committee
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