Powering hydrogen’s future: The multifaceted role of process safety management

Hydrogen is recognised as a vital component in the transition to a low-carbon energy future. However, hydrogen projects face challenges across various fronts, including financial viability, regulatory and consenting hurdles, knowledge gaps, geoeconomic factors, and supply chain vulnerabilities.

Safety and risk management are typically viewed as legal and moral obligations. But can an effective process safety management approach also serve as a strategic tool to help address these complex challenges that hinder the development of new hydrogen projects?

Introduction

Hydrogen is an important energy vector in the energy transition. Its safety risks are well recognised and documented from decades of industrial experience, such as in refineries.

Although challenging, the safety risks of hydrogen can be managed through knowledge of its physical characteristics and well tried and tested controls. Effective process safety management (PSM) ensures people deployed on hydrogen projects are equipped with adequate knowledge of hydrogen and that appropriate, proportionate risk management practices are adopted.

Despite being focused on process safety, PSM can also offer benefits far beyond what its name suggests. So, what exactly is PSM?

Process safety management

Process safety is about preventing the release of hazardous substances that can lead to catastrophic events such as explosions, toxic releases, or fires. PSM is a robust approach to managing process safety risks that enables an organisation to say with confidence that:

We understand what can go wrong.
We know what arrangements we have in place to prevent this from happening.
We know that we are doing what is required by our arrangements.
We are confident that our arrangements will work when required.

In the PSM framework developed by the UK’s Energy Institute (EI), there are 20 key elements grouped into the four focus areas of process safety leadership, risk identification and assessment, risk management, and review and improvement (see Figure 1).

Figure 1: Energy Institute PSM framework (Ref.1)

When these elements are all fully developed and implemented properly, it requires a failure in almost all of them for an incident to occur which could harm people. This follows the “Swiss cheese” model, which illustrates how multiple barriers (layers of cheese) prevent hazardous incidents. However, each barrier has potential faults (holes in the cheese) and when these align the hazard can pass through all the barriers and cause an incident.

The benefits of PSM in addressing safety risks are clear, but how can PSM help to manage the other risks faced by hydrogen projects?

Hydrogen project risks

Hydrogen projects face many other multifaceted challenges and risks besides process safety. Five key risk areas associated with developing new hydrogen projects are illustrated in Figure 2.

Figure 2: Types of risk faced by new hydrogen projects

Financial risk

The financial viability of hydrogen projects is often evaluated using the Levelised Cost of Hydrogen (LCOH), which represents the average cost of producing one kilogram over the asset’s lifetime. LCOH accounts for the initial capital expenditure (CAPEX), as well as the operational expenditure (OPEX) required to operate and maintain the hydrogen-producing assets.

Hydrogen projects require significant CAPEX investment, well before any revenue from production is realised. The costs associated with design work, navigating the planning process, purchasing materials and equipment, etc., are significant. These expenditures can escalate further due to inefficiencies during project development, such as making major changes late in the design process.

Overlooking operational efficiency during the design phase can subject the project to high OPEX, and thus higher LCOH, throughout the asset’s operational life. Similarly, overlooking safety considerations may lead to significant financial impacts in the future. As the late, process safety expert Trevor Kletz said, “If you think safety is expensive, try having an accident.”

Additionally, some organisations will develop projects with a view of selling them on, so their projects must be commercially attractive to buyers.

An effective PSM system can contribute to reducing these financial risks:

Optimise amount of effort in safety and risk management (PSM Element 6 – Hazard identification and risk assessment). Conducting safety and risk studies proportionate to each project stage prevents wasting time and money on studies which are too detailed relative to the design maturity, and which provide little or no benefit.
Apply safety and risk management activities in a timely manner (PSM Element 6 – Hazard identification and risk assessment). Incorporating safety and risk management too late in the design process may reveal that a project is inherently unsafe in its planned location or configuration, requiring significant rework. Early identification of hazards also provides more opportunity to eliminate or reduce risks, which is much easier and cheaper in early design phases (as shown in Figure 3). Hazards identified too late may require less effective but more expensive control measures, as highlighted by the hierarchy of risk controls (Figure 4).
Apply a risk-based engineering design approach (PSM Element 6 – Hazard identification and risk assessment). Strictly following prescriptive codes and standards and striving to deliver as safe a design as possible can lead to an overly conservative, over-engineered facility. This leads to many high-integrity components and functions requiring regular offline testing, increasing both downtime and demand on technicians. Taking a risk-based approach to design – guided by a PSM framework – enables a balance to be struck between safety and operability, reducing both CAPEX and OPEX. PSM also considers long-term asset integrity, further minimising downtime and ensuring business continuity.
Optimise inspection and maintenance (PSM Element 15 – Inspection and maintenance). A well-planned inspection and preventive maintenance regime will minimise technicians’ hours and downtime of the facility. It will also identify emerging integrity issues which can be rectified before component replacement is required. This all contributes to a reduction in OPEX.

A robust PSM approach will ultimately result in safe and responsible project development. This reduces risk to people – and therefore risk of financial penalties and reputational damage from safety incidents – and ensures the project meets the safety requirements of prospective buyers should the project be sold. By considering risk to assets as well as people, PSM may further heighten the commercial attractiveness of a project (for example, minimising insurance premiums by including asset protecting risk reduction measures).

Figure 3: Opportunities for risk reduction

Figure 4: Hierarchy of risk controls

Consenting risk

To be awarded planning consent, amongst other factors, it must be demonstrated that a project can exist safely in its proposed location at a conceptual level. To prove this, “Primary” safety issues must be addressed in the pre-consent phase (see Figure 5).

With much scrutiny and understandable wariness around hydrogen’s safety, gaining planning consent for hydrogen projects is a difficult process. Public acceptance can be a deciding factor in the consenting of a project, especially if it is located near to residents (for instance see Ref. 2 and Ref. 3).

Failing to properly prepare for the consenting process can ultimately halt a project’s progress. So how can these consenting risks be mitigated through PSM?

Encourage stakeholder engagement (PSM Element 5 – Communication with stakeholders). Endorsing open, transparent engagement with regulatory bodies, local planning authorities, and the local population can aid the consenting process. Engagement with UK Health and Safety Executive, for example, can help ensure that the project is developed in line with regulatory best practice.
Maintain widely accessible risk management documentation (PSM Element 7 – Documentation, records and knowledge management). Well-informed, well-maintained safety and risk documentation can be critical in changing public perception and help not only in consenting the current project, but in future hydrogen projects too. However, technical documentation can feel impenetrable to the layperson. To win public hearts and minds, an accessible, engaging demonstration of safety is essential.
Focus on “Primary” safety issues. As outlined in Figure 5, concentrating effort on the “Primary” safety issues in the pre-consent phase simplifies the consenting process, reduces costs and mitigates commercial risk by increasing the likelihood of consent being granted.

Figure 5: Primary and Secondary safety issues

Knowledge and expertise risk

Many hydrogen project developers are relatively young organisations who do not have fully developed Health, Safety, Security and Environment (HSSE) management systems or PSM frameworks. They often have experience in typical renewables projects like wind and solar, but not in major accident hazard industries.

This can leave many knowledge gaps, including applicable legislation and competency requirements. How can PSM help with these knowledge gap risks?

Ensure employee competency (PSM Element 1 – Leadership, commitment and responsibility, and PSM Element 3 – Employee selection, placement and competency, and health assurance). Assessment and verification of employee competence is required to ensure people have sufficient experience and qualifications for their roles. This extends to the leadership team of organisations, who must lead by example and instil a proactive safety culture from the top down.
Outline mechanisms to identify, understand, and comply with applicable legislation and standards (PSM Element 2 – Identification and compliance with legislation and industry standards). This ensures that those involved in hydrogen projects are well versed in the most up to date requirements.

Geoeconomics risk

The term geoeconomics describes the political and commercial factors in the region where the asset will be located. Whilst such factors are outside the direct influence of PSM, some indirect relationships include:

Investment and trade: Robust PSM practices can enhance a company’s reputation for safety and reliability, making it more attractive to foreign investment and international trade.
Insurance costs: Companies with effective PSM programmes may benefit from lower insurance premiums due to reduced risk of accidents. Lower insurance costs can enhance a company’s financial health, contributing positively to the broader economy.
Public perception and social licence to operate: Companies with strong safety records and responsible practices are more likely to gain public trust and maintain their social licence to operate. This trust can translate into better market opportunities and support from local communities, which is essential for sustainable economic operations.
Economic stability: A safety and environmental disaster has the potential to disrupt the financial viability of the operating company.

Supply chain risk

In addition to the risks around the supply and demand of hydrogen itself, there are also risks within the supply chain of goods and services.

There is the risk of procuring unsafe equipment which is hazardous to people. Key equipment items, such as electrolysers, are often manufactured in regions where safety standards differ to where they will be installed. Details of the residual risk lurking in the products is often withheld by vendors on the grounds of intellectual property. This can severely hinder the project’s efforts to demonstrate that risks have been reduced As Low As Reasonably Practicable (ALARP).

Additionally, the necessary skills and expertise may not be available throughout the supply chain. This can compromise the quality of materials, equipment, or services. It may also result in errors, inefficiencies, and rework, all of which can drive up project costs significantly.

PSM can assist in mitigating these supply chain risks.

Specify employer’s Health, Safety & Environment (HSE) requirements (PSM Element 11 – Standards and practices). Employer’s HSE requirements set out the safety and environmental standards that products must meet. They should be informed by all applicable codes, regulations, and standards. Having a strong, consistent set of HSE requirements can help build strong relationships – equipment vendors will know what is expected of them, easing the transaction process.
Integrate equipment into an overall safe system (PSM Element 10 – Management of operational interfaces). A robust PSM approach enables different vendors to work together to build a safe and reliable system. Each process component may be demonstrated to be safe independently via certification to relevant codes and standards, but this does not guarantee that they will operate safely when combined (Ref. 4).
Specify contractor competency management requirements (PSM Element 18 – Contractor and supplier, selection and management). These requirements ensure any contractors taken on throughout the project development (designers, independent consultants, independent verification bodies, etc.) are competent to fulfil their designated role.

Conclusion

The safe development of hydrogen projects is crucial for achieving global net-zero carbon emissions. A robust PSM approach not only addresses hydrogen’s safety risks but can also provide organisations with a strategic advantage in project development.

A comprehensive PSM framework, such as that published by the UK’s EI, can help developers devise well-rounded risk management strategies. These strategies can benefit the development phase of hydrogen projects while also addressing non-safety risks and vulnerabilities.

PSM should not be viewed merely as a legal necessity. Organisations should recognise its wider benefits. All stakeholders involved in hydrogen projects should collaborate to develop projects that meet the highest standards. Failing to do so could prevent or delay major hydrogen projects, or lead to safety incidents that hinder the widespread adoption of this valuable energy vector.

When every participant across the hydrogen supply chain fulfils their role in implementing effective PSM, it can contribute to the overall success of hydrogen projects – projects that are vital to a sustainable future.