Developing Scotland’s capacity to produce, distribute, store, use and export hydrogen is one component in the creation of a greener economy that supports reaching net zero by 2045.

Announced on the first day of the All-Energy renewables event held in Glasgow, the reports are designed to help hydrogen-producing businesses, their supply chains, and their customers understand how, when and where hydrogen demand will evolve in Scotland.

Building on previous studies, this new research refreshes the estimates on how much hydrogen might be used for industrial processes and non-domestic heating, transport and distilleries by looking at new business sectors not previously covered.

The research also helps hydrogen producers and their supply chains identify customers they can sell their hydrogen in Scotland. The hydrogen economy presents immediate opportunities for companies in sectors such as oil and gas refining, chemicals and pharmaceuticals, distilleries, glass and mobile generators.

In the longer term, technology and infrastructure improvements will enable more hydrogen use in shipping, heavy goods vehicles, ferries, aviation, construction and agriculture.

David Rennie, head of low carbon energy at Scottish Enterprise, said: “The global transition to green energy, including hydrogen, makes this a lucrative and innovative sector that Scottish companies are well placed to benefit from.

“Scotland’s energy companies and their supply chains are already bringing their considerable expertise and excellence to the energy transition agenda. With our support, most recently in committing £2 million as a founding partner for Scotland’s first Energy Incubator and Scale Up Hub as part of Aberdeen’s Energy Transition Zone, we can position Scotland as a leader in green energy.

“Green energy has the power to transform Scotland’s economy, with significant opportunities coming from clean hydrogen, Scotwind, green heat, and others. Scottish Enterprise is fully committing its significant resources to helping businesses grasp the green energy opportunities and exploit these for a sustainable economic future.”

The key findings from the reports are:

• Demand in industry and transport: Based on the medium uptake scenarios, the study estimated that hydrogen demand in industry and transport may reach around 26TWh/year by 2045. For context, the Scottish Energy Strategy estimates that Scotland’s total energy demand could be around 148TWh by 2045, meaning hydrogen use in industry and transport could fulfil around 18% of Scotland’s total energy needs.
• Highest demand by sector: The sectors with the highest potential demand were refining, chemicals and pharmaceuticals, shipping and HGVs. Ferries, distilleries, aviation and the agricultural sectors represent a smaller but still sizable demand. New research on the construction and events sector showed some short-term opportunities for decentralised deliveries of hydrogen-powered generators. Engagement with industry stakeholders highlighted commercial decisions that might lead to further demand beyond this study, for example, fertiliser production in Scotland (currently non-existent).
• Geographies with concentrated demand for hydrogen: The highest concentration of demand is in the Central Belt, particularly industrial clusters like Grangemouth and Fife. Other hubs show demand in spots that offer key transport links or connections to the offshore energy industry, such as Ayrshire, Cromarty Firth, the North East, Orkney and Shetland. A Regional Hydrogen Energy Hubs approach will drive short-term opportunities for hydrogen demand development by coupling production with multiple local end-uses to build up scale.
• Transport: The transport sector with the largest potential demand for hydrogen is shipping, with a possible requirement for more energy-dense fuels like ammonia in Scottish ports that cater to international or heavy freight routes. This was followed by other sectors with vehicles covering long routes where electrification is challenging, like heavy good vehicles, ferries and aviation. Buses and passenger rail were not found to represent significant demand, but have already been key enablers of hydrogen demonstration, and new opportunities could be explored among construction and agricultural vehicles as decarbonisation deadlines approach.
• Distilleries: While whisky distilleries all have similar technical uses for hydrogen, the report examines six modes in which distilleries can obtain hydrogen, from on-site production or procurement from a third party, depending on their site’s characteristics. Analysed on a case-by-case basis, these modes represent different costs, regulatory requirements, and potential for new energy efficiencies. Multiple case studies are presented to showcase how distilleries have already trialled hydrogen, sometimes in combination with technologies like anaerobic digestion, to create a bespoke solution.

With the Scotch Whisky sector looking at multiple options to decarbonise its operations, the new research also takes a deeper look at how distilleries can evaluate whether hydrogen is the right choice for their heating requirements.

In the last six years alone, 20 distilleries have opened in Scotland, bringing the total distilling-related businesses in Scotland to 245. Whisky exports represented £6.2 billion in 2022, equating to 75% of all Scottish food and drink exports.

The research contained in the suite of reports was undertaken between December 2022 and April 2023 and covers all of Scotland. The findings will also be used by Scottish Enterprise and its partners to understand where it can best support hydrogen producers as well as help stimulate demand from sectors and businesses that could benefit from using hydrogen in their processes. For the distilleries research, Scottish Enterprise worked closely with Highlands and Islands Enterprise and South of Scotland Enterprise.

Scottish Enterprise staff will be presenting the findings of the new reports alongside the report researchers, Ricardo and Element Energy, during the two days of the All-Energy conference.