NEWS & INSIGHTS | Opinion
UK carbon storage advances with first CO2 injection while electrolyser market faces hurdles
Luca Corradi
Luca works to bring “the outside in”, connecting innovators and academics across sectors and disciplines, to explore the latest technologies that could be adopted to address oil and gas industry challenges. Leading The Net Zero Technology Centre’s horizon scanning activity, he identifies emerging technology trends, cutting through the hype to identify potential areas of impact and application. With a background in business and organisational change leadership, Luca has developed a strong network and is passionate about harnessing this to deliver the next generation of the net zero energy industry.
Outside work Luca loves reading, music and travel. He is married with two young daughters and a dog. He enjoys the rare motorbike ride in Scotland and even rarer ski trip on the Alps.
More net zero news – Economic Potential of Tidal and Wave Energy; Fist UK CO2 injection; Electrolyser overcapacity
Chief technology officer Luca Corradi and his team monitor the global net zero landscape closely, following the trends, policies, investments and technology innovations that get the world closer to its shared climate goals. Learn more about our horizon scanning service. This week, Luca and his team share a recent report about the significant opportunities for wave and tidal energy within Scotland, highlight the UK’s first CO2 injection project milestone, and look at the hurdles in the electrolyser market.
Economic Potential of Tidal & Wave Energy in Scotland
Scotland is at the forefront of the global development and deployment of tidal stream and wave energy devices. Moreover, tidal stream and wave projects in the UK could generate over £8 billion in economic benefit to the Scottish economy by 2050, and support over 15,000 high-value jobs in 2050. If Scotland is successful in achieving commercialisation, then there could be a combined market for almost 9 GW of tidal stream and wave energy by 2050. This, in turn could feed into potential deployments of 12.6 GW in the UK and 300 GW across the globe. Furthermore, ff Scotland becomes a world leader in producing devices and their subsystems, the global export market could be worth up to £28 billion by 2050.
Additionally, Scottish tidal stream technologies and projects have won Contracts for Difference in the last three auctions (to be delivered 2026–2029). To deliver the GVA and jobs potential for both sectors the report provides the following policy recommendations:
- Support technology developers and their supply chains, focusing on sustained funding for technology innovation, long term-market support, and increased supply chain competitiveness
- Build essential sector infrastructure including port, harbour and national grid upgrades, develop skills and training, and provide opportunities for cross-sector collaboration
- Tasking and funding existing innovation and support organisations to oversee a well-coordinated and accelerated delivery of the recommendations.
Published by The University of Edinburgh, the report highlights the significant opportunities for wave and tidal energy within Scotland.
First UK CO2 injection
The Poseidon Project, run by Perenco UK, Carbon Catalyst Ltd and Harbour Energy, has started injecting CO2 into a depleted natural gas reservoir in the UK’s Southern North Sea. Notably, this is the UK’s first CO2 injection test and will allow engineers and geoscientists to study monitoring techniques and the impact of liquid CO2 injection into a depleted field. Consequently, the results will inform the development of the project, which could start permanently storing CO2 from 2029, subject to regulatory consents. Furthermore, Perenco has agreed to use the test data in a technical collaboration with the wider carbon storage industry, potentially helping other projects to get up and running more quickly.
Following a successful injection test, the Poseidon Project will progress towards final investment decision in 2027 and the first commercial CO2 injection for permanent storage in 2029. Initially, Poseidon expects to have an initial injection capacity of 1.5 Mtpa, gradually rising to ~10Mtpa by 2034, with potential to reach 40 Mtpa. Ultimately, the storage capacity, utilising aquifers and various depleted reservoirs, is ~1000 Mt.
The Poseidon project has started injecting CO2 into a depleted natural gas reservoir – a first for the UK
Image source: Perenco UK
Electrolyser overcapacity
Electrolyser manufacturers have built out production capacities at the GW scale to cater for announced renewable hydrogen projects. However, project realisation is lagging with only 2% of the electrolyser market at Final Investment Decision (FID) phase or in operation.
There is significant electrolyser overcapacity in the market which has caused a decline in stock performance of electrolyser manufacturers, with over €2 billion of shareholder value destroyed in 2024. For instance, in China, electrolyser capacity was 25 GW compared to an electrolyser demand of 3 GW, presenting 800% overcapacity, while the EU had 500% overcapacity. Moreover, Chinese electrolyser manufacturers are starting to win projects within the EU and offer lower prices.
Therefore, the report by strategy& recommends European manufacturers improve cost competitiveness internally by extending their technology portfolio and acquiring key input technologies. Additionally, they should also look for partners, and mergers and acquisitions (M&A), including partnering with Chinese players to leverage their know-how and low-price capabilities in exchange for market access through the European brand.
Analysis by Strategy& (part of the PWC network) shows significant overcapacity in the electrolyser market
Source: www.strategyand.pwc.com
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