Hydrogen and the circular economy

“The whole market is going to change when we move to a distributed energy production and consumption model.”

Educational 23 Dec 2021 by Jane Edwards

Hydrogen is rapidly emerging as one of the top low-carbon solutions in the move towards a greener economy. Hydrogen lends itself to the circular economy model and presents several opportunities through generation and distribution. In fact, hydrogen is completely transforming the energy supply chain to a more distributed one. 

Of course, interoperability and data ecosystems are key if we want a distributed hydrogen network to reach its fullest potential and be used on a large scale, so how does it all work? We spoke with IOTICS’ partner Fujitsu’s Chief Digital Officer for Manufacturing and Utilities, Graeme Wright to understand more about the opportunities and challenges that the hydrogen economy presents. 

What opportunities does the hydrogen circular economy bring?

“To distribute hydrogen… you would need to pressurise it. Whenever you pressurise a gas you generate heat,” Wright said. The pressurised gas then needs to be cooled down, usually using water.  “[The hot water] could be used in community energy systems. You could put it into industry,” he continued. One of SGN’s projects, Fife 100 is an example of how this hot water is being used. It’s being sent to distilleries to make gin. Wright went on to explain that the gas is then depressurised which creates a refrigeration opportunity, which could be used in warehouses. This simple example illustrates the disruptive impact of hydrogen as a fuel. Distinctions between utilities, transport, manufacturing and infrastructure become blurred. Offering entirely new revenue models, and new ecosystem requirements.

The circular economy and interoperability

In order for the benefits of the hydrogen circular economy to be realised, multiple organisational boundaries need to be crossed. Data must be securely exchanged between partners old and new, this is where interoperability comes into the picture. Normally, once wind turbines have generated enough electricity, they receive notices from the network distribution operators to curtail the amount of energy they’re producing, but Wright asked,

“Can you share data better?’. What if there was another option?  “Can you say, ‘actually I don’t want to generate electricity, I’m going to generate hydrogen instead’?” he said, Smart Wind Turbines that are more efficient and drive benefits beyond their existing operations. . 

The hydrogen circular economy model has many benefits, but hydrogen goes further transforming the entire energy supply chain. Hydrogen is generated by electrolysis using the power of local wind turbines or solar panels meaning that the energy is produced on a decentralised basis, 

“The original energy sector, up until quite recently, has been structured around centralised generation and production of gas,” Wright explains. “The generating capability of hydrogen needs to be on more of a macrogrid basis. This is a safety issue as well,” he said, explaining that one of the challenges the model faces is that pressurised hydrogen has a high PSI level. “It’s a bomb waiting to go off in a bad way if you’ve got a leak”. Decentralisation and the federation of infrastructure have increasingly become a target for the industry. Hydrogen may just be the stalking horse needed to deliver on this vision. 

Decentralisation is obviously not without its challenges – means of production gets a little complicated when you want to use it to power network rail. Wright pointed out that the distributed model of energy production still has to be able to power up an entire network, “you’ve still got to have power coming on to the grid, but can you do that through community energy?” 

The challenge is scaling it up and the key to doing so is by sharing data effectively and building ecosystems. The question for energy providers, according to Wright, is ‘why would they bother to do that?’ There has to be a mutually beneficial exchange of data. 

“There are a lot of organisations that are sat on information,” said Wright. “For their investors, they could actually make more money by exploiting that data better. That might mean selling that data, sharing that data in return for something.” At IOTICS we see that the future can’t be silos or open data, but the selective exchange of data at different levels of security and under varied contractual conditions. 

How do we make effective data sharing a reality?

It goes without saying that effective ecosystems don’t appear overnight, but if we are to deliver on ambitions 2030, 2040 and 2050 targets enterprises need to start building them today. Fujitsu and IOTICS are both taking initiative to make ecosystems in the hydrogen sector a reality. 

“We’re looking at customers in the UK, the gas distribution companies,” said Wright. Fujitsu and their network of partners are  asking themselves, “What can we do in terms of helping build that data sharing network?”. This drive to build data sharing networks, to start exchanging data securely will help companies gain a better understanding of what’s going on in their network in terms of things like where the pressures are, where the pipes are and where they need to make investments in order to be able to make the move to hydrogen. 

Wright discussed how he looked into smart cities in the UK ten years ago but ultimately steered away from it because of the challenges that existed surrounding them. The people that were making the investment in collecting data were the likes of energy companies and the council, whereas the people that needed the data were in the transport industry. 

“The investment didn’t line up with where the benefit was going to be realised,” said Wright. The only way around this challenge was by trading the data, but ten years ago there wasn’t really an approach to doing that.

“I do think with the sort of things that are coming out in IOTICS you’re starting to get frameworks that could actually start to deliver that,” said Wright. 


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