Scottish Offshore Wind to Green Hydrogen Opportunity Assessment

Initial assessment of Scotland’s opportunity to produce green hydrogen from offshore wind
Summary of Key Findings

• Scotland has an abundant offshore wind resource that has the potential to be a vital component in our net zero transition. If used to produce green hydrogen, offshore wind can help abate the emissions of historically challenging sectors such as heating, transport and industry.
• The production of green hydrogen from offshore wind can help overcome Scotland’s grid constraints and unlock a massive clean power generation resource, creating a clean fuel for Scottish industry and households and a highly valuable commodity to supply rapidly growing UK and European markets.
• The primary export markets for Scottish green hydrogen are expected to be in Northern Europe (Germany, Netherlands & Belgium). Strong competition to supply these markets is expected to come from green hydrogen produced from solar energy in Southern Europe and North Africa.
• Falling wind and electrolyser costs will enable green hydrogen production to be cost-competitive in the key transport and heat sectors by 2032. Strategic investment in hydrogen transportation and storage is essential to unlocking the economic opportunity for Scotland.
• Xodus’ analysis supports a long-term outlook of LCoH falling towards £2/kg, with an estimated reference cost of £2.3 /kg in 2032 for hydrogen delivered to shore.
• Scotland has extensive port and pipeline infrastructure that can be repurposed for hydrogen export to the rest of UK and to Europe. Pipelines from the ‘90s are optimal for this purpose as they are likely to retain acceptable mechanical integrity and have a metallurgy better suited to hydrogen service. A more detailed assessment of export options should be performed to provide a firm foundation for early commercial green hydrogen projects.
• There is considerable hydrogen supply chain overlap with elements of parallel sectors, most notably, the oil and gas, offshore wind and subsea engineering sectors. Scotland already has a mature hydrocarbon supply chain which is engaged in supporting green hydrogen. However, a steady pipeline of early projects, supported by a clear, financeable route to market, will be needed to secure this supply chain capability through to widescale commercial deployment.
• There are gaps in the Scottish supply chain in the areas of design, manufacture and maintenance of hydrogen production, storage and transportation systems. Support, including apprenticeships, will be needed to develop indigenous skills and capabilities in these areas.
• The development of green hydrogen from offshore wind has the potential to create high value jobs, a significant proportion which are likely to be in remote, rural/coastal communities located close to offshore wind resources. These can serve as an avenue for workers to redeploy and develop skills learned from oil and gas, in line with Just Transition principles.