Green hydrogen will play a crucial role in Britain's energy transition and is set to become cost-competitive there ahead of other markets, according to a new study by industry body RenewableUK.

The report, Powering the Future: RenewableUK’s Vision of the Transition, sets out a wide-ranging view of how the UK’s energy system is set to change between now and 2050 – the government’s target date for reaching net-zero carbon emissions.

The study highlights the huge potential for green hydrogen – hydrogen produced using renewable electricity – as a zero-carbon alternative to fossil fuels.

The UK’s mix of high renewable energy capacity in sectors like offshore wind and strong climate change policies means green hydrogen is likely to become cost competitive in the UK faster than in other parts of the world, it adds.

RenewableUK’s chief economist and author of the report Marina Valls said: “In terms of industry we think that hydrogen provides a really credible low carbon option for energy intensive users. We are seeing evidence of this with some projects already underway.

“Our view is that within this decade users of high carbon energy sources will have moved to low carbon options – either clean electricity or green hydrogen.”

RenewableUK’s new modelling in the report shows that, working with government to ensure that the right policies are in place, the UK’s offshore wind industry can attract £54bn ($66bn) in private investment to quadruple capacity to 40GW by 2030, which will provide more than one-third of the UK’s electricity, and that it can then grow further to 90GW by 2050.

The report shows how additional growth of onshore wind to 26GW by 2030 means that the UK’s overall wind capacity could grow to 66GW by the end of this decade, providing more than half the nation's total power, and 120GW by 2050.

Despite the short-term impacts of Covid-19 on energy use, RenewableUK expects low-cost renewable power to grow rapidly in the next ten years to meet new demand from electric vehicles, low-carbon heating and renewable hydrogen. By 2050, the industry body predicts renewables could be providing over three quarters of the UK’s power needs.

In addition to power sources like wind and solar, the study expects energy storage to grow exponentially as batteries and other forms of storage scale up to ensure the UK’s power supplies remain balanced at all times.

The document envisages significant changes in the way consumers use the energy system, with clean electricity rather than fossil fuels used to power transport and heating through electric vehicles, solar technology, heat pumps and other sources.

As well as benefiting from cheap renewable power, consumers will have opportunities to reduce energy costs by, for example, selling power stored in batteries or EVs to the grid when it’s needed most and buying electricity when it’s cheaper. This flexibility will be a key characteristic of the UK’s electricity system, and of energy companies’ business models, in the transition to net zero.

The report sets out a series of recommendations to government, including holding annual contracts-for-difference (CfD) auctions for large-scale renewable generators to provide low-cost power, rather than the current every two years, and targeting support specifically at innovative technologies which are not yet able to compete with more established power sources in these auctions.

“This is an incredibly exciting time for the energy sector,” said Valls. “We’re entering an era of rapid technological change as we move closer towards total decarbonisation, using an even wider range of technologies such as renewable hydrogen alongside more wind, solar, battery storage and – crucially – people participating far more pro-actively in the way our modern energy system operates, making it more flexible.

“Renewable energy sources are penetrating the global energy markets faster than anyone expected, and generating power cheaper than fossil fuels sooner than anyone predicted.”