BEIS unveils £25m hydrogen innovation fund, proposes hydrogen-ready boiler mandate

The Department for Business, Energy and Industrial Strategy (BEIS) is allocating the funding as part of efforts to deliver the targets detailed in the Energy Security Strategy.

On hydrogen, the Strategy doubled the UK’s target for clean hydrogen production capacity for 2030, to 10GW. At least half of this will need to be green hydrogen, produced by electrolysing water using systems powered with renewable electricity. The Government is also looking at ‘blue’ hydrogen, produced using natural gas and with emissions captured using man-made technologies. In the longer-term, it also sees a potential role for ‘pink’ hydrogen, produced using nuclear electricity, and hydrogen generated using biomass and waste.

The new funding announced this week by BEIS includes £25m for the development of technologies capable of producing hydrogen from bioenergy with carbon capture and storage (BECCS).

Drax, which has been promoting BECCS for electricity generation, burning wood pellets and capturing emissions at its Selby plant, has stated that the most promising hydrogen BECCS technology is gasification. This involves heating organic material while preventing its combustion. This causes the material to break down into hydrogen and carbon monoxide.  Carbon monoxide can then be exposed to water to generate more hydrogen.

While gasification does produce some carbon dioxide, it can be co-located with carbon capture technologies. Some may also argue that because biomass absorbs carbon dioxide as it grows, the life-cycle is carbon-neutral. This is disputed and, of course, differences in processes and biomass supply chains will result in different pictures for lifecycle emissions.

BEIS’s funding is being provided under Phase 2 of the Hydrogen BECCS Innovation Programme and intended to support the progression of hydrogen BECCS technologies from design stage to demonstration. It is also intended to help unlock further funding from the private sector. Phase 1 of the project supported projects in scoping prototype demonstration.

Hydrogen-ready boilers

BEIS has also launched a consultation this week on changes to mandatory requirements for boiler manufacturers producing boilers for use in homes. It is proposing that all new domestic-scale gas boilers sold from 2026 should be capable of being powered by hydrogen.

The future of hydrogen for home heating in the UK is unclear. The UK Government is funding a ‘Hydrogen Village’ trial for completion before the end of 2025. Only once this trial is complete will a decision will be taken on the long-term policy vision for hydrogen in home heating. The UK is aiming to end the sale of natural-gas-only boilers by 2035 and the main alternatives at present are heat pumps and heat networks.

Hydrogen can be used in home heating, up to blends of 20%, without changing infrastructure. Beyond this point, infrastructure does need to be changed. Most gas firms are advocating a 20% blend jumping up to 100% if possible. However, IRENA has stated that home heating is not the most efficient application for hydrogen, stating that the fuel should be prioritised in sectors that are harder to electrify, including long-haul aviation, trucking and shipping.

BEIS is also consulting on higher efficiency standards for natural gas-only boilers.The consultation will run until 21 March 2023.

The Energy and Utilities Alliance’s chief executive Mike Foster said that mandating hydrogen-ready boilers is “an important step towards decarbonising homes” and called the proposal a “no-regrets option”.

Foster, who also heads up the Heating and Hotwater Industry Council, also noted that boiler manufacturers have already pledged to bring hydrogen-ready boiler costs down to reach parity with natural-gas-only models.

Also supporting the decisions taken by BEIS today is the UK’s hydrogen champion, Jane Toogood. She said: “To maintain market confidence and investment, the industry needs the Government to keep up the momentum, particularly on decisions to create demand for hydrogen and progress the hydrogen business models.”

Nuclear funding

It bears noting that BEIS’s hydrogen funding announcement has been overshadowed in terms of scale by confirmation of £77m funding for the nuclear sector.

The Government committed in the Energy Security Strategy to delivering a final investment decision on one large project in this Parliament and at least two in the next Parliament. It will also support small modular reactors (SMRs). The headline ambition is for 25% of the UK’s electricity demand to be met with nuclear in 2050.

BEIS is providing, it has confirmed, up to £60m for research into high-temperature gas reactors (HTGRs) – a next-generation form of the advanced modular reactor. The funding is intended to get a demonstration project up and running this decade.

HGTRs, BEIS claims, could be cheaper to develop than large, conventional nuclear power stations.

A further £4m of funding is being provided to the Advanced Modular Reactor Knowledge Centre, to support research and knowledge-sharing around the practicalities of HGTRs.

BEIS is also providing up to £13m to nuclear fuel fabricators in Preston. The aim here is to grow the UK’s manufacturing capacity and reduce its reliance on imported uranium.

Funding is being drawn from the UK Government’s £1bn Net-Zero Innovation Portfolio.

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