Cheap wind power will “open up the opportunity” to produce affordable green hydrogen using electrolysis, according to the boss of ITM Power.
Chief executive Graham Cooley was responding to the results of last week’s Contracts for Difference auction which saw multiple projects – mainly offshore and remote island windfarms – secure agreements a record low strike price of £39.65/MWh (2012 prices).
“Low cost offshore wind generation is a game changer for renewables,” Cooley told Utility Week. “It will enable the UK to produce very large amounts of green electricity in the 2020s and create a long term pathway for utilising the North Sea’s vast renewable potential. This will place the UK in a superb position to achieve net zero by 2050.
“However, it will also cause greater variability which will require much more substantial grid balancing solutions. Electrolyser technology is very well placed to provide such services to the system operator, while satisfying the increasing appetite for green molecules as well as green elections.
“So we expect the overall effect of having large amounts of cheap offshore wind power in the fuel mix will be to substantially reduce the costs of green hydrogen production and massively open up the opportunity for electrolysis.”
The gas networks in Great Britain have been developing plans to decarbonise the gas grid by converting it to run on hydrogen.
They initially envision the bulk of the hydrogen being extracted from natural gas, with the resulting carbon dioxide emissions being captured and stored. In its H21 report, Northern Gas Networks concluded this production method could deliver low-carbon hydrogen at an average cost of £50.69/MWh.
But speaking to Utility Week in July, Cooley claimed that by 2030 his company would be able to produce low-carbon hydrogen using electrolysis and renewables for as little as £48/MWh. His forecast assumed wholesale power prices would be below £40/MWh for around two thirds of the year.
ITM Power currently operates a fleet of six 300kW electrolysers around the UK.
Meanwhile, researchers from the University of Sussex have said the low prices in the Contracts for Difference auction have exposed nuclear power as a “costly distraction”.
Andy Stirling, professor of science and technology policy at the Science Policy Research Unit (SPRU), said: “These new official contracts for UK offshore wind confirm that the astounding recent fall in costs is continuing, with little sign yet of slowing down. The resulting game-changing implications for UK energy systems have yet to fully sink in.”
“Even allowing pessimistic margins to cover costs of intermittency, there can be no doubt now that nuclear projects including Hinkley Point C, have been left high and dry.”
Echoing the findings from a 2017 report by SPRU that concluded that the civil nuclear programme is being propped up in order to maintain the UK’s military capabilities, Stirling said continued support provide further evidence that “this intense nuclear commitment effectively embodies a massive subsidy to military interests.”
Phil Johnstone, a research fellow at SPRU, said: “If rapid decarbonisation really is the priority, going all out for renewables is name of the game; new nuclear a very costly distraction.
“With consumers locked in in to a bad deal for new nuclear that will hit the poor the hardest, the new record offshore wind prices highlight that UK citizens deserve to be told why the UK government is so committed to new nuclear.”