Scotland’s Hydrogen Opportunity: Why Land, Infrastructure and Regulatory Certainty Matter

Scotland's hydrogen sector continues to gather momentum as developers, investors and policymakers seek to support the production, transportation and export of low-carbon hydrogen. The progression of projects through government support mechanisms, including Hydrogen Allocation Round 2 (HAR2), demonstrates that the UK Government is directing significant revenue support towards the sector to help projects move closer to delivery.

Achieving Scotland's ambitions of 5GW of hydrogen production capacity by 2030 and 25GW by 2045 will require significant investment in the infrastructure needed to produce, store, transport and export hydrogen. While technology and regulation remain key areas of focus, the availability of suitable land and infrastructure will also play a critical role in successful project delivery. For landowners, developers and investors, several key real estate considerations are already beginning to shape project development.

Site selection and land assembly

• Hydrogen projects require access to the right combination of land, power and water. Sites with strong access to water supplies, ports and wider transport infrastructure are likely to become increasingly attractive, driving demand for option agreements, leases, servitudes, wayleaves and other land rights needed to support hydrogen production, storage and export infrastructure.

  Finding suitable sites can therefore be challenging, particularly where the land take required spans property owned by different individuals or where additional access, grid, water, pipeline or export rights are required to make a project deliverable.

  Planning and consenting

• Hydrogen projects may form part of wider clean energy schemes involving solar generation, battery storage, transport infrastructure and, in some cases, port or export facilities. Each part of the project may be subject to separate planning and consenting requirements, so considering planning strategy, land rights and project delivery timelines together at an early stage is essential.

  Infrastructure and operational arrangements

• Many of the legal structures familiar from other renewable energy projects will remain relevant, particularly where hydrogen projects are co-located with solar generation, battery storage or transport and export infrastructure. These arrangements can raise additional considerations around shared access, operation and maintenance of any common infrastructure, the allocation of decommissioning obligations, interface with existing land permitted uses and the flexibility needed to accommodate changes to project design.
• Given the evolving regulatory environment, developers will need to ensure that any project documents provide sufficient long-term flexibility to accommodate future changes in legal requirements, industry standards and operational practices, including evolving infrastructure, grid and water requirements.

Ports and export infrastructure

• If hydrogen is transported directly rather than converted into other export products, demand may increase for land situated close to ports, industrial sites and transport corridors.

  Regulatory certainty and project viability

• Regulatory certainty remains an important issue for the sector. For Scottish projects seeking to access export markets or attract investment, EU low-carbon hydrogen standards may become an important benchmark. How emissions are attributed to the electricity used in hydrogen production could affect whether projects meet those standards, with potential implications for project viability, financing and offtake arrangements. For developers, investors and landowners, regulatory certainty may prove to be just as important as technological advancement in determining which projects proceed.

Looking ahead

The continued growth of the hydrogen sector presents significant opportunities across Scotland's property and energy markets. While many of the legal and property issues will be familiar from renewable energy developments, the evolving regulatory landscape means that early site selection with access to power and water supplies, robust land rights to construct, access, maintain and operate the infrastructure and flexible project documentation are likely to remain critical to the successful delivery of hydrogen projects.

If you would like any further information or advice on any of the issues covered in this article, please contact Dixcee Fast, Lauren Winters or another member of our Hydrogen Team.

This article was written by Magen Murphy and Caitlin Preston.