The U.K. government is looking to get a leg up on its European rivals with a flurry of new funding for hydrogen projects, including one linked to an Ørsted offshore wind farm.

As part of a £90 million ($116 million) funding round announced this week for early-stage low-carbon projects, £28 million was allocated to five hydrogen supply demos. Another £20 million will go toward hydrogen-based industrial fuel swapping projects, covering the glass, cement and lime sectors as well as a Unilever-backed project focused on consumer goods.

The winners cover a diverse mix of hydrogen applications — from floating wind turbines with attached electrolyzers on-deck to low-carbon hydrogen with carbon capture and storage and the country’s first proposed facility for green hydrogen production.

One of the biggest winners is a proposal led by ITM Power to use power from Ørsted’s Hornsea One offshore wind farm to generate the U.K.'s first green hydrogen using 100 megawatts of electrolyzers. The project received £7.5 million in funding. 

Green hydrogen uses renewable power to create H2 via electrolysis. Most hydrogen produced today is made by splitting it from methane gas, generating carbon dioxide as a byproduct.

The ITM/Ørsted project would be the largest electrolyzer in the world, according to Wood Mackenzie senior analyst Ben Gallagher.

“The largest-ever project deployed is 10 megawatts, so it’s a huge uptick in terms of scale. This would be record-breaking by several leaps and bounds,” said Gallagher, who characterized the project as the manifestation of the green hydrogen value proposition.

The current problem with electrolyzers is their tiny capacity, both installed and for manufacturing. Only 252 megawatts of electrolyzers were in operation worldwide between 2010-2019, according to WoodMac. But manufacturing capacity is starting to ramp up, buoyed by a pipeline of announced green hydrogen projects that passed 3.2 gigawatts last year.

ITM Power, a manufacturer, gets the keys to a new factory in the U.K. later this year that will be capable of ramping up to 1 gigawatt per year.

Ørsted, the world's leading offshore wind developer, said hydrogen could soon achieve dramatic cost reductions. “We've seen this happen in offshore wind. With industry and government working together, there has been a rapid deployment and a huge cost reduction. This project aims to do the same with hydrogen,” Anders Christian Nordstrøm, Ørsted's VP for hydrogen, said in a statement.

Germany, France and Belgium are all investing in hydrogen as efforts to decarbonize industry and heat garner greater attention. Both sectors lag far behind power when it comes to lowering their emissions.

Floating electrolyzers

Another winner in the U.K.'s funding round is the Dolphyn project, led by consultancy Environmental Resources Management, which will pair a floating wind turbine structure with an integrated electrolyzer.

Its £3.1 million grant will contribute to the final design work on a 2-megawatt prototype that it hopes to have in the water in 2023, followed by a 10-megawatt commercial prototype in 2026.

Dolphyn’s plans benefited from input from offshore turbine manufacturer MHI Vestas, the aforementioned ITM Power, and Principle Power, the developer of the floating structure used in Engie and EDF’s WindFloat Atlantic trial.

The Dolphyn floating wind turbine with built-in electroyzer and desalination hardware. (Credit: Environmental Resources Management

The system desalinates seawater prior to electrolysis, powered by the turbine, on-board solar panels and standby power supply when required. Hydrogen can be stored onboard or pumped where it’s needed through a pipeline.

Finding demand

In the long run, the success of hydrogen projects depends on finding a stable and sizable source of demand.

One potential use for green hydrogen is as an additive to existing natural-gas systems, effectively allowing gas companies to continue operating as they currently do while partially decarbonizing. Italy’s Snam is doubling its hydrogen injection trials from a 5 percent to a 10 percent mix.

ITM Power began a trial in January to inject a 20 percent mix of hydrogen into the private natural-gas network of Keele University.

Lorna Archer from the energy futures team at Scottish Gas Networks told a recent industry conference that domestic gas boilers in the U.K. could handle a 20 percent mix without the need for a full refit.

But WoodMac's Gallagher warns that challenges around leaks and safety mean such a fuel swap isn’t as straightforward as it sounds.

“What's less theoretical is the sort of industrial end users that require hydrogen in their products [that are] looking at displacing carbon-intensive hydrogen with green hydrogen," he said.