13-12-2023

SSE Thermal acquires 50% stake in H2NorthEast hydrogen project

SSE Thermal has become joint owner of a blue hydrogen project in Teesside which is set to play a major role in supporting a reliable decarbonised power system by 2035 and accelerating industrial decarbonisation.

The partnership with Kellas Midstream will see the companies jointly develop H2NorthEast, a hydrogen production facility with carbon capture and storage that could help to kickstart a hydrogen economy in the Tees Valley. The agreement is for an initial consideration of <£10m to Kellas Midstream with further contingent consideration due should the project reach a financial investment decision.

In its first phase, H2NorthEast could deliver up to 355MW of blue hydrogen production capacity from 2028 with plans to scale up to more than 1GW. Offtakers would include heavy industry and power generation, either through blending into existing assets or in new hydrogen-fired plants.

The Climate Change Committee has identified the role blue hydrogen will play in securing a reliable and decarbonised power system. It can support the development of green hydrogen by stimulating early demand for hydrogen at scale and establishing the core infrastructure required for a hydrogen economy.  If delivered, the project would contribute to the UK Government’s ambition of 10GW of low-carbon hydrogen production by 2030, of which up to 5GW could be blue hydrogen.

Teesside is a key location for decarbonisation, with the UK Government committed to developing CO2 infrastructure in the region and multiple low-carbon projects already being taken forward.

As part of the East Coast Cluster, H2NorthEast will have the opportunity to secure a connection to shared CO2 pipelines through the upcoming Track 1 Expansion process. This would allow emissions from the hydrogen production process to be captured and transported before being safely stored under the Southern North Sea.

A strategic addition to SSE’s hydrogen portfolio, H2NorthEast has received support through the UK Government’s Net Zero Hydrogen Fund to deliver a Front End Engineering and Design programme, which is underway and being led by Worley and Johnson Matthey.

With an anticipated minimum carbon capture rate of 97%, H2NorthEast meets both UK and EU low-carbon standards. Specifically, the hydrogen produced via H2NorthEast would be fully compliant with both the UK’s Low Carbon Hydrogen Standard and is expected to be aligned with the EU Taxonomy for sustainable activities.

"Blue hydrogen has a strategic role to play alongside green hydrogen and the hydrogen produced by H2NorthEast will not only support the decarbonisation of industry, it can be a vital piece in the net zero jigsaw for the power sector." Catherine Raw, Managing Director of SSE Thermal and Group Executive Committee lead for hydrogen.

Catherine added: “As a company focused on decarbonising power generation using low-carbon technologies, we know how crucial it is for hydrogen production to be scaled up this decade. H2NorthEast will help to deliver production at significant scale while also serving as a key enabler of green hydrogen, benefiting the UK’s net zero ambitions and creating an engine room for industrial growth.

“We have gained significant experience in developing projects including hydrogen and carbon capture through other projects in our portfolio and look forward to bringing that expertise to H2NorthEast and working with our new partners at Kellas Midstream.”

Nathan Morgan, Chief Executive of Kellas Midstream, said: “We are delighted to establish a joint venture with SSE which will allow us to leverage both organisations’ industry-leading positions in energy infrastructure and flexible energy generation to realise our shared commitment to go beyond ambition and make low carbon hydrogen production a reality for the UK. 

“SSE’s entry into H2NorthEast is further testament to the quality of this world-class project and the significant role it can play in the UK’s net zero journey.”