The Nuclear Industry Association (NIA) welcomes the chance to respond to the Department for Business, Energy & Industrial Strategy’s Designing the Net Zero Hydrogen Fund inquiry.
The NIA is the trade association and representative body for the civil nuclear industry in the UK. We represent more than 200 companies operating across all aspects of the nuclear fuel cycle. This includes the current and prospective operators of nuclear power stations, the international designers, and vendors of nuclear power stations, and those engaged in decommissioning, waste management and nuclear liabilities management.
Some of our members may choose to make their own detailed submissions so therefore this response is a high-level overview of the nuclear sector’s thoughts on this matter.
What wider benefits could the NZHF deliver, such as local growth and low carbon leadership opportunities?
Nuclear’s history is deep-rooted in local communities, often those far removed the infrastructure benefits of city life, such as Copeland, Hartlepool, Anglesey, and Bridgwater. The sector has showcased how to successfully engage with, and support, local economies through the creation of jobs, supply chains and educational resources.
With thousands of highly-skilled jobs – many of which are signposted for the local population – nuclear sites can offer both short and long-term prosperity to these regions. Jobs at risk in manufacturing or in fossil fuels could be easily transferrable into the nuclear industry, either in the construction of new sites or in STEM roles. Recruitment remains a key priority for the sector, as detailed in the Nuclear Sector Deal published in 2018.
The nuclear and hydrogen sectors have a lot in common, including public misconceptions of their respective benefits. Our industry has worked with communities for decades on building skills for future generations, STEM outreach in local schools and providing long-term, highly-skilled and well-paid jobs to areas which are often left behind.
As a result of this work acceptance of nuclear energy, and understanding of its role in Net Zero by 2050, is proportionally higher in these regions of the UK compared to those without nuclear capabilities.
Working with nuclear, the Government and hydrogen industry could learn the dos and don’ts of successfully engaging with local communities as the sector and market grows.
The NZHF could demand that successful recipients of investment have a plan on local engagement – as evidenced by the nuclear sector – so that each project can play a part in public understanding of hydrogen’s role in a Net Zero future.
Do you agree with the proposed scope for the NZHF?
Yes, we agree with the proposed scope of the NZHF. However, we would welcome more insight into how the fund will evolve to help technologies that will contribute to UK hydrogen production in 2030s, such as Advanced Modular Reactors (AMRs).
Noting the importance of revenue support which could be covered by the Hydrogen Business Model, do you agree that capital grant funding is the most effective option for low carbon hydrogen projects to come forward?
Do you agree that there is a need/demand for government intervention to support hydrogen production projects with their development costs?
As the fund is relatively small in size, we agree with the Government’s priority of funding smaller scale projects at first in order to build expertise and skills, learn about costs and scaling, and help stimulate the UK hydrogen market.
This is particularly true for electrolytic hydrogen projects, which have not received the same amount of funding, support or resources as CCUS in the years leading up to the publication of the Hydrogen Strategy.
We therefore agree that capital grant funding is the most appropriate in this instance.
Do you agree with the proposed high-level eligibility criteria for NZHF applications?
Do you agree with the proposed high-level assessment criteria for NZHF applications?
Yes, we agree with the eligibility and assessment criteria for NZHF applications as set out in the consultation document.
We would encourage Government to continue to work with industry on which economic benefits need to be shown by applicants and to come to a decision on this as soon as possible so that applicants are not under-resourced in expertise in these areas before applying. This could disadvantage smaller-scale projects that are essential to scaling the market.
Do you have any comments on the application process for the NZHF? Please explain any practical considerations the government should take into account when designing the final bidding system.
With the various support mechanisms currently available from the Government to different technologies, the department should take into consideration the level of funding and support already offered and which applicants would therefore be more reliant on the NZHF to jump-start their projects.
For example, hydrogen produced by renewable energy can be supplemented through the Renewable Transport Fuel Obligation (RTFO), whereas other low-carbon hydrogen producers are not currently deemed eligible for that scheme.