Energy security concerns fuel business appetite for hydrogen

Mounting concerns about energy security are leading business leaders to back hydrogen as part of their energy improvement strategies.

Businesses now view energy security and resilience as the second biggest threat to their organisations, according to Centrica’s survey on businesses decarbonisation plans.

Of the 500 executives surveyed across a range of sectors, 40% said that energy security was a risk that their organisation is concerned about.

It means energy security and resilience is now perceived as more of a risk than market instability and regulatory or legislative changes – both of which were seen as greater risks in 2021 when Centrica last carried out its survey.

Only financial risk (eg a lack of funding) was cited by more business leaders as a risk (44%).

To mitigate energy security concerns, 77% of business leaders said they were incorporating hydrogen as part of their future energy plans with more than a quarter (27%) intending to trial or implement it in the next two years.

The biggest driver for investing in hydrogen is cost with a third of firms believing that hydrogen will be a more predictable cost for them to factor into their plans than alternative fuels.

Justin Jacober, director of Centrica Business Solutions UK & Ireland, said: “Organisations clearly see the potential of hydrogen in creating a net zero future, where energy costs are more predictable than those imported from overseas. A progressive approach to modern energy technologies that incorporates hydrogen will mean firms benefit from reduced carbon emissions and lower energy costs.

“What we need to see next is the UK invest in hydrogen and get ready to deploy technologies more quickly. By investing now, the UK can make sure it is a leading hydrogen economy. A fully realised hydrogen strategy has the potential to improve flexibility within the grid and enable us to better harness the power of renewables, which will be essential if we’re to reduce renewable curtailment and eliminate carbon emissions.”

The Energy Networks Association (ENA) has also called for greater investment in a UK-wide hydrogen network within its Hydrogen vision for the UK, published today (19 April).

The report calls for the government to show the same commitment to hydrogen network infrastructure development as it has shown to hydrogen production, expedite the development of critical business models for transport and storage, make key policy decisions around blending and hydrogen-ready boilers, and ensure that the planned Future System Operator is given the right tools and mandate to deliver its part in the hydrogen vision.

James Earl, ENA director of gas, said: “If we are to hit the government’s decarbonisation targets, secure energy investment in an increasingly competitive global market and protect long-term energy security for customers then the government needs to make rapid progress across both renewables and hydrogen deployment.

“Gas network operators are ready to invest, innovate and deliver this vision for hydrogen’s role in the UK energy system, but we need certainty from government to let them plan with confidence. Our gas network members pledge to work collaboratively with government, the regulator, businesses and the communities they serve to explore and deliver the significant benefits that hydrogen can have to the energy system, industry, consumers and the UK economy.”

Last month, UK hydrogen champion Jane Toogood published a new report that outlines recommendations on the steps to kickstart an industry in the UK. These include making a strategic decision to support blending of hydrogen into the gas transmission network this year and confirm suitable arrangements for support.

In response a coalition of 20 organisations including Octopus Energy, E3G and the UK Green Building Council called on the government to reject Toogood’s recommendations, which they claim are “misleading” and would drive up consumer bills.