Kellas Midstream and SSE Thermal form Joint Venture for H2NorthEast hydrogen project on Teesside

Energy infrastructure company, Kellas Midstream (“Kellas”), and leading flexible energy provider, SSE Thermal (“SSE”), have formed a joint venture that will see SSE acquire a 50% share in H2NorthEast, Kellas’ blue hydrogen project on Teesside.

This is an important strategic partnership not only for the region, but for the UK as a whole as it transitions to a net zero future. Kellas and SSE will drive the continued progress of H2NorthEast to further strengthen its position as a major contributor to industry decarbonisation across the Tees Valley that will play a vital role in helping the UK achieve its climate targets.

H2NorthEast is a large-scale infrastructure project to build a 1GW CCUS-enabled blue hydrogen production facility next to Kellas’ CATS (Central Area Transmission System) gas transportation and processing terminal. Currently in front end engineering design (FEED), Phase 1 of the project is targeted to be operational from 2028 delivering 355MW of low carbon hydrogen to local industry, with further phases increasing production to over a gigawatt.

As a joint venture, H2NorthEast will continue to benefit from Kellas’ unrivalled depth of experience owning and operating critical national energy infrastructure. SSE, as one of the UK’s largest electricity generators, will bring to the project its vast knowledge and experience in low carbon infrastructure development which spans renewables, networks and flexible power generation.

Nathan Morgan, Kellas CEO, said: “We are delighted to establish a joint venture with SSE which will allow us to leverage both organisations’ industry-leading positions in energy infrastructure and flexible energy generation to realise our shared commitment to go beyond ambition and make low carbon hydrogen production a reality for the UK. Following our recent announcement regarding our offtake heads of terms with Statera Energy, SSE’s entry into H2NorthEast is further testament to the quality of this world-class project and the significant role it can play in the UK’s net zero journey.”

Catherine Raw, Managing Director of SSE Thermal, said: “As a company focused on decarbonising power generation using low carbon technologies, we know how crucial it is for hydrogen production to be scaled up this decade. H2NorthEast will help to deliver production at significant scale while also serving as a key enabler of green hydrogen, benefitting the UK’s net zero ambitions and creating an engine room for industrial growth.

“We have gained significant experience in developing projects including hydrogen and carbon capture through other projects in our portfolio and look forward to bringing that expertise to H2NorthEast and working with our new partners at Kellas Midstream.”

Since H2NorthEast was launched in October 2021, the project has achieved a string of successes. In August 2022, it was selected by Government as one of four low carbon hydrogen projects to progress as part of the Track 1 cluster sequencing process and intends to participate in the upcoming Track 1 expansion process. Earlier this year it secured funding through the Net Zero Hydrogen Fund. Most recently, H2NorthEast reached two key milestones including entering FEED in partnership with global service companies, Worley and Johnson Matthey, and signing a heads of terms agreement with Statera Energy for the provision of low carbon hydrogen from H2NorthEast to the Saltholme power stations in Teesside.