Department for Energy Security and Net Zero (DESNZ) – Supplementary written evidence (LES0046)

If we had a government that wanted to decarbonise by 2030, could the plans be brought forward?

Details on page 4 of transcript

In the British Energy Security Strategy, we committed to designing a business model for hydrogen storage by 2025. 2025 is an ambitious but achievable timeline for designing a complex business model, which needs to provide both investor certainty, and value for money for government, to support critical transport and storage projects.

We are working to provide clarity on next steps and updates in the run up to 2025 to give certainty to industry, including a forthcoming publication on allocation of the storage business model and our T&S Networks Pathway setting out the next steps in our vision for the development of hydrogen transport and storage in the UK, which we committed to publishing by the end of 2023.

It is estimated that a salt cavern purpose built for hydrogen storage will have a build time of 5-10 years, while a converted salt cavern will have a build time of between 3-5 years. Based on these timelines, it is feasible that some hydrogen storage projects could be operational by, or in some circumstances before, 2030 if a storage business model is designed and first contract awarded by 2025.

Ahead of business model support being available, we have created several measures to support the development of storage assets through existing government programmes. For example, the Net Zero Hydrogen Fund and Low Carbon Hydrogen Agreement will provide limited funding for costs of associated storage infrastructure for hydrogen production projects.

Hydrogen storage will be essential for the growth of the hydrogen economy. However, any production projects that are awarded hydrogen production business model contracts and which are to be operational before storage facilities supported by a storage business model contract would be operational, will, by design, not need storage supported by the storage business model.

10GW of Hydrogen = 66 TWh

Details on page 11 of transcript

The relationship between the power capacity of hydrogen production and the total annual energy produced will depend on several factors, including efficiency and availability.  The amount of energy (TWh) that can be produced by 10 GW of production capacity will be different for electrolytic (green) hydrogen and for hydrogen with CCUS (blue) production methods due to different conversion efficiencies and capacity factors.

For electrolytic (green) hydrogen, assuming a 50% load factor based on renewables generation and curtailment, 10 GW capacity would produce around 44 TWh of hydrogen per year. These are illustrative assumptions that reflect the potential for electrolysers to operate flexibly, running at times of high renewable supply and turning off at times of high electricity demand/low renewable supply. For hydrogen with CCUS (blue), assuming a 95% natural gas plant availability, 10 GW capacity would produce around 83 TWh of hydrogen per year.

The ambition is for at least half of the 10 GW of hydrogen production capacity to be electrolytic (green) hydrogen. Using these assumptions, a 50/50 split between electrolytic and CCUS hydrogen, 10 GW of production capacity would yield approximately 63.5 TWh per year. Average load factors may be higher or lower than this, and the split between electrolytic and CCUS hydrogen may shift, which would affect the amount of hydrogen produced each year.

These production figures cannot, on their own, be used to calculate how much hydrogen storage is required.

Further detail on REMA (timing on a decision on a strategic reserve)

Details on page 15 of transcript

Hydrogen storage is a possible candidate to provide strategic energy reserves, which recent analysis from the NIC and Royal Society have discussed the need for in future, whether that be supplied by hydrogen storage or another long duration energy store. Should a decision be taken that strategic reserves were needed, we will further assess which energy source or combination of energy sources may be best placed to provide this, at what scale, and whether further government intervention is necessary to ensure the energy is stored for very long periods and used only in specific circumstances.

On REMA

Reforming electricity markets is at the heart of Government’s action plan to deliver a decarbonised electricity system by 2035, subject to security of supply. We are carrying out a Review of Electricity Market Arrangements that will complete the move to a decarbonised power sector while managing a smooth and low cost transition away from the remaining unabated fossil fuel generation.

The first REMA consultation published in July 2022 set out options for reforming electricity markets, including across wholesale markets, balancing and ancillary services, and schemes to support investment in low carbon technologies and maintain security of supply. It detailed options that can drive investment in and efficient operation of low carbon flexible technologies, including electricity storage.

The first consultation sought views on a strategic reserve mechanism as an alternative or complementary mechanism to the existing Capacity Market. Based on feedback from the first consultation, we set out our decision to retain the option of a strategic reserve as an emergency or transitional measure in the government response. We acknowledged that there could be merit in exploring how a strategic reserve could be used alongside other mechanisms to help address specific security of supply or capacity needs to enable the transition away from high carbon technologies.

The second REMA consultation is due to be published in Autumn 2023 and seeks to set out a clear direction of travel on electricity market reform.

Any examples of projects coming through planning in less than 5 years - typical planning times

Details on page 19 of transcript

His Lordship says there have been lots of examples of big energy projects going through local planning. We would be grateful if he could explain this point as we are aware of no such examples.

Energy projects which are defined as Nationally Significant Infrastructure do not get dealt with under Town & Country Planning at the local level, they are dealt with under the Planning Act, and the Development Consent decision goes through the Planning Inspectorate and then on to the Secretary of State in this Department for decision. His Lordship asks if there are examples of big energy projects that have got through planning in less than five years, and for typical planning times. The answer is that all of them have been done in under five years. The average time from entering the planning system to decision is around 24 months. Some have taken longer than this, where an extension has been required to obtain further relevant information that is required in order to take a legally robust decision. Some cases are faster; a solar farm Development Consent Order (DCO) decision was taken earlier this year in around 13 months, which is well inside the statutory timetable set out in the Planning Act.

Clarification on Holistic Network Design

Details on page 6 of transcript

The Holistic Network Design published by the ESO in July 2022, represents a step change in the planning of network infrastructure and will for the first time provide an upfront design for both wider network reinforcements and the connections for offshore wind.

The Electricity System Operator (ESO) has concluded an important phase of the Holistic Network Design Follow-Up Exercise, meeting the Terms of Reference set by the Offshore Transmission Network Review. The HND Follow Up Exercise will provide recommended connections for an additional 21GW of offshore wind from ScotWind. We expect this to be published in the new year.

5 December 2023