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By Promote ShetlandFebruary 26th 2021

Green hydrogen could be one of the key energy sources of the future – and Shetland’s Orion Project has one of the world’s most ambitious plans to generate it on a large scale.

Green hydrogen might be one of the key fuels of the future – a potential $12 trillion industry that could meet a quarter of the world’s energy needs by 2050, according to Goldman Sachs. An alternative to fossil fuels and batteries, green hydrogen differs from grey or blue hydrogen in that the water electrolysis that creates it is powered by renewable energy rather than carbon-emitting steam methane reforming.

And Shetland is well placed to become a world leader in this growing energy source – which has uses in everything from transport to aquaculture, medicine and the space industry, but has been held back by the relatively high costs of production, transport and storage.

The islands have ambitious plans to create green hydrogen on a large scale as part of the Orion Project (Opportunity, Renewables, Integration, Offshore Networks), a partnership between the Shetland Islands Council and the Oil and Gas Technology Centre in Aberdeen, involving Highlands and Islands Enterprise and the wider UK energy industry. Using existing infrastructure and know-how around the Sullom Voe terminal to create hydrogen is part of the project’s overarching ambition for Shetland to transition from fossil fuels to clean energy, using onshore and offshore wind to reduce emissions to net zero and reduce fuel costs on the islands.

Shetland hopes to export 350,000 tonnes of green hydrogen a year by 2050, around 12 per cent of the UK’s predicted demand, as well as producing the 60,000 tonnes needed to replace the diesel, petrol and marine oils currently used on the islands. “These are some of the most ambitious plans anywhere in the world,” says Gunther Newcombe OBE, a UK oil and gas industry stalwart who is consulting with the project. “It’s a chance for the islands to be an exemplar for the rest of the UK and the EU, while creating new jobs and opportunities on the islands.”

It’s a chance for the islands to be an exemplar for the rest of the UK and the EU, while creating new jobs and opportunities on the islands.

Gunther Newcombe OBE, oil and gas industry expert

There are two primary reasons that Shetland makes sense as a large-scale producer of green hydrogen. One is its position as an oil and gas hub since the 1970s, which gives the islands a key competitive advantage. “There’s an established infrastructure, experienced workforce and functioning supply chain here,” says Newcombe. “It’s very viable to adapt that to produce and export green hydrogen – transitioning existing jobs and creating new ones.” Becoming a green hydrogen producer would involve a lot of repurposing of existing facilities rather than building new ones – for example, using the existing deep-water quay at Sullom Voe for export and the refuelling of hydrogen-powered ships. The Orion Project plans hope not just to maintain the current number of jobs in the oil and gas industry, but to create up to 500 new ones.

The other big reason is the wind, which could replace oil and gas and fish as Shetland’s key natural resource. Shetland has the highest average wind speeds in the UK, and some of the most consistent winds in Europe. The islands hope to be able to harness enough clean energy to produce large amounts of hydrogen at a competitive cost – starting with the Viking Energy project, which is in the process of installing 103 wind turbines that will be operational by 2024, and with further plans to generate significant energy from offshore wind installations.

While the Viking Energy project has already broken ground, a green hydrogen future for Shetland is still mostly theoretical, with the Orion Project team seeking investment and working on business cases for a fuel source that has impeccable sustainability credentials but still has issues around costs – which are expected to decrease as renewable energy becomes cheaper and more solutions are found for producing hydrogen, for example by using sea water (most green hydrogen is extracted from desalinated water).

“We think there’s a growing investment case, with more and more demand for the cleanest fuel sources possible, and it fits firmly with UK and Scottish targets on reducing climate emissions,” says Douglas Irvine, Orion’s Project Manager. The UK government has already invested GBP70 million in hydrogen production plants in Merseyside and Aberdeenshire, and the Scottish government announced plans to become a “leading hydrogen nation”, hoping to generate 5GW of green hydrogen by 2030, or enough to power 1.8 million homes. Meanwhile, the EU has established a target of producing 80GW of green hydrogen by 2030.

There’s a growing investment case for green hydrogen, with more and more demand for the cleanest fuel sources possible.

Douglas Irvine, Orion Project Manager

The fuel source is attracting growing private investment around the world, too. Pennsylvania-based Air Products, the world’s biggest supplier of hydrogen, is already valued at more than $58 billion, while stocks in US hydrogen fuel cell producer Plug Power rose by more than 700% in 2020. There are a growing number of ever-larger hydrogen plants around the world, from the Netherlands to Australia and Japan, with Saudi Arabia in the process of building a $5 billion plant that will produce a world-beating 650 tonnes of green hydrogen a day. The firm behind the Saudi plant is part of a group of seven businesses called the Green Hydrogen Catapult, including Danish wind energy giants Ørsted, that plans to deploy 25 gigawatts of green hydrogen globally by 2026.

For Shetland, it’s a chance to be at the forefront of another future-facing industry, with the potential to shore up the local economy in the decades to come. Shetland is already home to the world’s first tidal energy array, and this year will break ground on the UK’s first commercial small satellite launch site. The islands are finding local solutions to global problems – and green hydrogen could be a key answer to the biggest challenge of them all.