Integration of low-carbon hydrogen value chains for hard-to-decarbonise sectors with wider energy systems: Whole-systems modelling and optimisation
Lead Research Organisation:
Energy Systems Catapult
Department Name: Research
Abstract
Low-carbon hydrogen has a crucial part to play in the UK's transition to net zero by 2050, complementing renewable electricity, and providing an alternative low-carbon energy source for sectors that are difficult to decarbonise. To kickstart a thriving low-carbon hydrogen economy, the UK Government has set a target capacity of 5 GW of hydrogen by 2030. This will require a rapid and large-scale deployment of generation capacity, infrastructures to support the delivery of the hydrogen to its end uses, and growing its demands. Switching energy-intensive industries to low-carbon hydrogen could help accelerate its uptake and provide a reliable demand to entice producers into the market. This is also the largest opportunity for reducing CO2 emissions: per tonne of hydrogen used, heavy industry can abate about 4 times as much CO2 as other sectors. Once the market has been established, this could trickle down to other sectors, such as heating in buildings and transport, particularly long distance and heavy duty, where battery vehicles are not well suited, helping to progress the UK towards net zero.
Switching energy-intensive industries to hydrogen is an effective way of integrating hydrogen into the whole energy system. This project will investigate how this can be done: what the system requirements are as well as the benefits and impacts of doing so. First, we will understand how energy-intensive industries will perform technically, economically and environmentally if they switch to hydrogen, using steelmaking as an exemplar with a process known as Direct Reduction of Iron combined with Electric Arc Furnace, by building high-fidelity mathematical models of these processes. These will be compared with other decarbonisation options for steelmaking, such as efficiency improvements, retrofitting with carbon capture, storage and utilisation technologies, and using alternative reductants and fuels such as biomass.
We will then explore the implications of integrating these processes and the value chains for supplying low-carbon hydrogen into the wider energy system. This requires a whole-system modelling approach that uses optimisation for the planning, design and operation of the overall system. The model includes a representation of the possible technologies, infrastructures and resources, and determines the optimal combination of these (what technologies and infrastructures to deploy, where and when, and how to operate them over time) in order to satisfy the demands for energy services and products, while satisfying constraints (e.g. environmental), to minimise an overall performance criterion (e.g. total costs or GHG emissions). We will use the whole-system model to answer the following questions.
1. Can sufficient low-carbon hydrogen be produced in the UK for the steel industry? What is the optimal mix of green and blue hydrogen to minimise costs and environmental impacts? How much renewable energy will be needed?
2. How to ramp up demands in low-carbon hydrogen and what are the roles that technologies could play in achieving the levels of production needed to meet the targets? How will the hydrogen value chains develop and expand?
3. Once the energy-intensive industries, such as steel, have been decarbonised using hydrogen, which sectors should be decarbonised next?
4. What are the impacts on the electricity network and the wider energy system? How much energy storage capacity will be needed and in what form?
5. What are the costs and benefits of developing highly integrated industrial clusters from the start, and expanding the network by building more clusters and linking them, as opposed to developing less-integrated networks nationally and then gradually increasing their integration?
6. What market frameworks and policies can be put in place to ensure that steel, and other products and energy services, produced from low-carbon hydrogen will be economically competitive, locally and internationally?
Switching energy-intensive industries to hydrogen is an effective way of integrating hydrogen into the whole energy system. This project will investigate how this can be done: what the system requirements are as well as the benefits and impacts of doing so. First, we will understand how energy-intensive industries will perform technically, economically and environmentally if they switch to hydrogen, using steelmaking as an exemplar with a process known as Direct Reduction of Iron combined with Electric Arc Furnace, by building high-fidelity mathematical models of these processes. These will be compared with other decarbonisation options for steelmaking, such as efficiency improvements, retrofitting with carbon capture, storage and utilisation technologies, and using alternative reductants and fuels such as biomass.
We will then explore the implications of integrating these processes and the value chains for supplying low-carbon hydrogen into the wider energy system. This requires a whole-system modelling approach that uses optimisation for the planning, design and operation of the overall system. The model includes a representation of the possible technologies, infrastructures and resources, and determines the optimal combination of these (what technologies and infrastructures to deploy, where and when, and how to operate them over time) in order to satisfy the demands for energy services and products, while satisfying constraints (e.g. environmental), to minimise an overall performance criterion (e.g. total costs or GHG emissions). We will use the whole-system model to answer the following questions.
1. Can sufficient low-carbon hydrogen be produced in the UK for the steel industry? What is the optimal mix of green and blue hydrogen to minimise costs and environmental impacts? How much renewable energy will be needed?
2. How to ramp up demands in low-carbon hydrogen and what are the roles that technologies could play in achieving the levels of production needed to meet the targets? How will the hydrogen value chains develop and expand?
3. Once the energy-intensive industries, such as steel, have been decarbonised using hydrogen, which sectors should be decarbonised next?
4. What are the impacts on the electricity network and the wider energy system? How much energy storage capacity will be needed and in what form?
5. What are the costs and benefits of developing highly integrated industrial clusters from the start, and expanding the network by building more clusters and linking them, as opposed to developing less-integrated networks nationally and then gradually increasing their integration?
6. What market frameworks and policies can be put in place to ensure that steel, and other products and energy services, produced from low-carbon hydrogen will be economically competitive, locally and internationally?
Publications
Related Projects
| Project Reference | Relationship | Related To | Start | End | Award Value |
|---|---|---|---|---|---|
| EP/W033275/1 | 01/02/2024 | 06/11/2025 | £249,051 | ||
| EP/W033275/2 | Transfer | EP/W033275/1 | 06/11/2025 | 04/06/2028 | £0 |
| Description | The research funded by this award is developing high fidelity whole-systems optimisation models to determine effective pathways for decarbonising heavy industry, particularly using hydrogen and electrification. The project is still in its early-to-mid phase, but valuable insights have already emerged as follows: 1. Pathways for Industrial Decarbonisation: The study identified that heavy industry, including steel manufacturing, can be largely decarbonised through electrification for heat and hydrogen as a feedstock (e.g., replacing natural gas and coal as a reductant in steelmaking). While switching the steel industry to hydrogen was initially hypothesised as a way to stimulate the hydrogen economy, the research found that the most significant driver for hydrogen demand is actually its role in energy storage to enable high renewables integration. 2. Hydrogen's Role in the Energy System: Hydrogen is crucial for inter-seasonal and short-term energy storage, enabling efficient use of renewable electricity, particularly from wind power in Scotland. The research showed that up to 46% of the natural gas distribution grid could be converted to hydrogen in some scenarios, depending on decarbonisation targets. 3. Infrastructure Requirements and System Impacts: Large-scale electrification requires substantial reinforcement of electricity networks, particularly to transport wind power from Scotland to the rest of Great Britain. Hydrogen infrastructure, including pipelines and underground storage, will be essential to balance energy supply and demand over different timescales. 4. Optimisation Model Development: The research further developed and applied the Value Web Model (VWM), a powerful whole-systems multi-objective optimisation model. The model determines the best mix of technologies and infrastructure investments while accounting for economic, environmental, technical, and policy constraints. It provides insights into the most efficient deployment of hydrogen, electrification, and energy storage solutions in an integrated energy system. 5. Policy and Industry Implications: The findings support policymakers and industry stakeholders in making informed decisions on hydrogen production, storage, and use. They highlight the importance of long-term strategic planning to avoid lock-in of carbon-intensive technologies and ensure a cost-effective transition to net zero. |
| Exploitation Route | The outcomes of this research can be taken forward through both academic and non-academic routes. Academic Routes: The Value Web Model (VWM) can be further developed and applied by researchers working on energy systems optimisation, multi-vector energy networks, and hydrogen supply chains. The findings provide a foundation for future studies on hydrogen integration, energy storage, and electrification of industry, supporting further advancements in energy modelling and decarbonisation strategies. Academics can use the model's data-driven framework to assess different energy transition pathways in other countries and regions. Non-Academic Routes: Policymakers and regulators can use the insights to design policies that support efficient hydrogen deployment, electricity network reinforcement, and industrial decarbonisation. Industry stakeholders, including energy companies, hydrogen producers, and heavy industrial sectors, can leverage the model's outputs to guide investment decisions on infrastructure, storage, and technology adoption. Energy system planners and consultancies can apply the VWM to develop integrated energy transition strategies for governments and businesses. By providing optimisation-based decision support, this research helps align investments, policies, and technological developments to accelerate industrial decarbonisation in a cost-effective and system-wide manner. |
| Sectors | Energy |
| Description | This research has contributed to the ongoing transition towards a low-carbon industrial sector, with emerging economic and societal impacts in the public and private sectors. The findings have provided evidence for the UK Department for Energy Security and Net Zero (DESNZ) in support of industrial electrification, influencing policy discussions on decarbonisation strategies. Ongoing discussions with DESNZ indicate potential funding for a new project on Industrial Electrification and Demand Side Response, building on the insights from this research. Within academia, this research has strengthened the field of whole-systems optimisation for industrial decarbonisation, providing a scalable and technology-agnostic framework that can be applied to other sectors and regions. The results have contributed to ongoing work in hydrogen integration, energy storage, and cross-sector coupling, helping nucleate a growing research area in multi-vector energy networks. As the research progresses, further opportunities exist to expand its impact through continued collaboration with policymakers, industry stakeholders, and international research partners. With around 20 months remaining in the grant period, there is still significant time to realise non-academic impacts, including further policy influence and commercial applications of the modelling framework. |
| First Year Of Impact | 2024 |
| Sector | Energy |
| Impact Types | Policy & public services |
| Description | Partnership with Siemens |
| Organisation | Siemens Process Systems Engineering Ltd |
| Country | United Kingdom |
| Sector | Private |
| PI Contribution | Our team is developing process models of heavy industrial processes using gPROMS Process, a proprietary software by Siemens. The outputs from these process models are being used in the whole-systems value chain optimisation model being developed in this project to determine the role of various technologies in decarbonising heavy industry. |
| Collaborator Contribution | Siemens provided £55k of in-kind contributions in the form of training, consulting and software licences. |
| Impact | The work is on-going and the results will be presented at the World Hydrogen Technology Conference 2025 in October 2025. |
| Start Year | 2024 |
| Description | Engagement with the Department for Energy Security and Net Zero (DESNZ) |
| Form Of Engagement Activity | A formal working group, expert panel or dialogue |
| Part Of Official Scheme? | No |
| Geographic Reach | National |
| Primary Audience | Policymakers/politicians |
| Results and Impact | The initial results of the project were shared with the Engineering Team at DESNZ who gave positive feedback and demonstrated interests in pursuing a project on Industrial Electrification and Demand Side Response, building on these initial results and using the model being developed in this project. |
| Year(s) Of Engagement Activity | 2024 |
| Description | Show & Tell presentation at the Catapult |
| Form Of Engagement Activity | A talk or presentation |
| Part Of Official Scheme? | No |
| Geographic Reach | National |
| Primary Audience | Industry/Business |
| Results and Impact | High-level presentation of the project and results so far to people who are working with the government and businesses on innovations towards Net Zero. There were discussions afterwards and the audience showed interest in using the model being developed in this project for future potential projects. |
| Year(s) Of Engagement Activity | 2024 |