Energy Transition Outlook 2021

ENERGY TRANSITION OUTLOOK 2021

For example, the UK has 22 million homes that are heated by gas. This means that the existing demand swing between summer and winter for natural gas is a ratio of 1:8. Shifting to an alternative source such as hydrogen potentially creates less challenge and disruption for consumers. To be successful, hydrogen needs to be integrated into the wider energy system to compliment other growing low carbon technologies such as renewables. This would ensure that the system is not reliant on a single energy vector, and that the system remains as resilient as it is today. Continuing to meet individual requirements of users and consumers remains a critical objective of the energy system though, even in a low carbon future, and so ensuring flexibility in the market through energy sources is key. Supply chain opportunities In addition to CCUS, the supply chain has an important role to play in supporting the UK achieve its hydrogen potential. The NSTD envisages around £5 billion of investment spending on production facilities will be needed to meet the government’s hydrogen target by 2030. Whilst this only covers the production element, there will also be significant expenditure requirements in the downstream parts of the business, including infrastructure and equipment and in the transporting of hydrogen. As with CCUS, the oil and gas supply chain is already active across all these areas. A key element to unlocking the UK’s hydrogen potential will be scaling up and overcoming technology barriers seen in the market today. There is already a mature and competitive market for hydrogen production equipment in terms of both methane reformers, fuel cells and electrolyser equipment. However, to satisfy the scale of the demand, innovation will need to increase. As noted below, several Western European companies are already leading the way in the market along with activity from China.

Figure 17: Hydrogen Equipment Manufacturers

Electrolyzers

Hydrogen Production Equipment Manufacturers

Methane Reformers

Fuel Cells

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