Momentum Builds for Offshore Hydrogen Production in the North Sea

The rapid increase in North Sea offshore wind deployment over the past decade has been one of the European energy transition’s most pronounced success stories. From a baseline of a little more than 3 GW in 2010, cumulative installed capacity rose to more than 25 GW in 2020. According to Guidehouse Insights’ Global Wind Energy Database, a further 55 GW of offshore wind capacity additions can be expected in Europe through 2030.

However, even with deployment at scale, the price of electricity from offshore wind is still higher than the electricity price from onshore turbines. Higher maintenance and installation costs for offshore turbines are important factors. So is the cost of investment in electrical infrastructure, such as offshore substations and high voltage transmission lines to connect wind farms to the mainland. According to the U.S. Department of Energy, electrical infrastructure accounts for 20% of the cost of new offshore wind projects on average. 

For the green hydrogen industry, access to inexpensive renewable electricity is critical. As a result, several electrolyzer projects under development take an innovative approach to producing hydrogen from offshore wind: locating electrolyzers offshore. This setup can be accomplished in a number of ways, each with specific benefits and drawbacks.

Offshore Oil & Gas Infrastructure

One method being explored in the North Sea is the installation of an electrolyzer on an oil & gas platform. The PosHYdon project, which is backed by the Netherlands Enterprise Agency, will use existing gas pipelines to transport hydrogen produced at Neptune Energy’s Q13a-A platform to offtakers onshore. In its first phase, expected to begin production in 2022, the project is expected to have a capacity of only 1 MW. Should the pilot prove successful, the capacity can potentially be scaled up further. 

Making use of existing assets provides a pathway to prolong the lifetimes of oil & gas infrastructure as fossil fuel extraction winds down. This approach is particularly attractive given the ongoing costs associated with decommissioning infrastructure in the North Sea, which amounted to £46 billion in 2020 on the UK continental shelf alone. However, the scope of these projects is dependent on the availability of fossil infrastructure in regions with high wind potential. Electrolyzers also need to be durable enough to operate reliably in harsh sea conditions. 

An alternative approach under development is siting the electrolyzer on an artificial island, as in the case of the hub-and-spoke layout being pioneered through the North Sea Wind Power Hub project. Constructing an island from sand potentially allows for the installation of much larger electrolyzer capacities than would otherwise be possible offshore, but longer development times mean that projects are likely to be delivered not until the 2030s.

Integrating Electrolysis into Wind Turbines

In-turbine electrolyzers are another option being explored. Siemens’ integrated solution combines the company’s largest offshore wind turbine, the SG14-222 DD, with an electrolyzer installed close to sea level. Full-scale demonstration of the concept is expected by 2025-2026.

Integrating electrolysis into wind turbines brings additional efficiency gains but also reduces some of the economies of scale associated with centralized project designs. The maximum electrolyzer capacity is capped at the capacity of the turbine itself (15 MW, in Siemens’ case). As system components such as compressors and power electronics can be shared only across a limited number of electrolyzer cells, their relative contribution to CAPEX is more significant. 

Solving the challenges associated with offshore electrolysis requires further investment, innovation, and collaboration between electrolyzer manufacturers and offshore energy stakeholders in the North Sea region. If these efforts are successful, the prize will be significant volumes of low cost green hydrogen production close to Europe’s largest industrial hydrogen end users.