Kraft Heinz Partners With Carlton Power to Deliver Company';s First-Ever Renewable Green Hydrogen Project in the UK

Rhea-AI Summary

The Kraft Heinz Company has signed an agreement with Carlton Power to develop a renewable green hydrogen plant at its Kitt Green manufacturing plant in Wigan, Greater Manchester. The proposed 20MW plant will meet more than 50% of the plant’s annual natural gas demand and reduce the plant’s carbon emissions by 16000T/yr. The hydrogen will be produced by an electrolyser using electricity generated from renewable sources. The project is contingent on securing financial support from the UK Government's Hydrogen Allocation Round (HAR2) and aims to deliver hydrogen to Kitt Green in 2026/27.

Positive

• The proposed renewable green hydrogen plant has the potential to significantly reduce carbon emissions at Kraft Heinz's Kitt Green manufacturing plant.
• The project aims to meet more than 50% of the plant’s annual natural gas demand and reduce carbon emissions by 16000T/yr.
• The hydrogen will be produced by an electrolyser using electricity generated from renewable sources, primarily wind and solar power.
• The agreement with Carlton Power is a significant step forward in Kraft Heinz's efforts to reduce carbon emissions and achieve their global goal of net zero emissions by 2050.

Negative

• The project is contingent on securing financial support from the UK Government's Hydrogen Allocation Round (HAR2), which may introduce uncertainty in the timeline and operationalization of the plant.
• The construction of the renewable hydrogen scheme is earmarked to enter operation in 2026, which may be considered a longer timeline for some investors.

Insights

Sustainability Analyst

The commitment by Kraft Heinz to develop a green hydrogen facility at its Kitt Green manufacturing plant represents a strategic move towards sustainable business practices. By aiming to fuel over half of the plant's natural gas demand with hydrogen produced from renewable sources, the company not only supports its net zero emissions goal but also positions itself favorably in the eyes of increasingly environmentally-conscious consumers and investors.

This initiative may also serve as a hedge against volatile fossil fuel prices, potentially stabilizing operational costs in the long run. However, the upfront investment of £40m and the reliance on government financial support underscore the significant costs associated with transitioning to green energy solutions. Stakeholders should consider the balance between long-term savings and immediate capital requirements.

Energy Sector Analyst

The partnership between Kraft Heinz and Carlton Power signals a noteworthy advancement in the UK's energy sector, particularly in the green hydrogen niche. Green hydrogen, being at the forefront of renewable energy discussions, has the potential to revolutionize energy consumption patterns in the industrial sector.

The success of this project could encourage further development in the hydrogen economy, potentially leading to a decrease in costs due to economies of scale and technological advancements. However, the project's dependency on the UK Government's Hydrogen Production Business Model (HPBM) for financial viability raises questions about the sustainability of such ventures without government incentives.

Market Research Analyst

Kraft Heinz's foray into renewable hydrogen energy is reflective of a broader market trend where companies are increasingly investing in clean energy solutions. This move is likely to resonate with the growing segment of the market that favors companies with strong environmental, social and governance (ESG) credentials.

From a competitive standpoint, the company could gain a first-mover advantage in its industry by reducing its carbon footprint and potentially lowering energy costs in the long-term. However, the timeline for the project's completion in 2026/27 and the subsequent operational phase suggests that any financial benefits from the project will not be realized in the immediate future, which investors should take into account when assessing the company's short-term financial outlook.

Proposed project has the potential to fuel at least 50% of Kraft Heinz’s Kitt Green manufacturing plant, helping to reduce carbon emissions and advance the company towards its larger net zero ambitions. Kitt Green is Carlton Power’s fifth green hydrogen project it’s developing in the UK.

LONDON & WIGAN, England--(BUSINESS WIRE)-- The Kraft Heinz Company (Nasdaq: KHC) (“Kraft Heinz”) has signed an agreement with Carlton Power, the UK energy infrastructure development company, to study the development of a renewable green hydrogen plant at its Kitt Green manufacturing plant in Wigan, Greater Manchester.

Kitt Green is one of the largest food processing plants in Europe and one of the largest Kraft Heinz facilities in the world, producing a quarter of a million tons of food annually and employing approximately 850 people.

The proposed 20MW Kitt Green hydrogen plant, the first to be taken forward by Kraft Heinz globally, will meet more than 50% of the plant’s annual natural gas demand and reduce the plant’s carbon emissions by 16000T/yr. The hydrogen will be produced by an electrolyser using electricity generated from sources of renewable energy, primarily wind and solar power.

The Kitt Green project is the fifth green hydrogen project that Carlton Power is taking forward within the UK.

Eric Adams, Hydrogen Projects Director at Carlton Power, said: “We’re delighted to be working with Kraft Heinz to bring forward a green hydrogen facility at Kitt Green to help the company accelerate its efforts to decarbonise their operations. It is critical that projects like this are brought forward to support British companies, especially in manufacturing, in reducing their carbon emissions and reaching Net Zero.”

Jojo Lins De Noronha, President, Northern Europe, The Kraft Heinz Company, said: “Our agreement with Carlton Power is an important step forward in our efforts to reduce carbon emissions and achieve our global goal of net zero emissions by 2050, with a 50 percent reduction in emissions by 2030. We’re excited to partner together to develop our first, renewable hydrogen energy project globally and hope to see more projects like these in the future.”

Subject to planning approval and financing, the £40m Carlton/Kraft Heinz renewable hydrogen scheme is earmarked to enter operation in 2026. Its construction will be contingent on securing financial support from the UK Government’s second Hydrogen Allocation Round (HAR2) of the Hydrogen Production Business Model (HPBM), which the Government has launched to support UK industry’s switch to hydrogen and encourage growth of the hydrogen economy across the country.

Over the next 12-18 months, Kraft Heinz and Carlton Power will seek to obtain planning permission for the scheme. In parallel, the two companies will work together to obtain grant funding and operational financial support from the UK Department of Energy Supply and Net Zero (DESNZ) with a target to deliver hydrogen to Kitt Green in 2026/27. A submission to DESNZ will be made this year (via HAR2), following consultations with local and national stakeholders.

The green hydrogen scheme is Carlton Power’s third to be developed in the North West of England and its second in the Greater Manchester region, the others being at Trafford in Greater Manchester which received planning consent in 2021 and at Barrow-in-Furness (South Cumbria) which was consented in June 2023. In December 2023, these two projects, (as well as Carlton’s Langage scheme near Plymouth, Devon) secured financial support through the Government’s Hydrogen Allocation Round 1 (HAR1).

In 2021, Kraft Heinz announced its goal to achieve net zero greenhouse gas emissions across its operational footprint (Scope 1 and Scope 2) and entire global supply chain (Scope 3) by 2050.

ABOUT THE KRAFT HEINZ COMPANY

We are driving transformation at The Kraft Heinz Company (Nasdaq: KHC), inspired by our Purpose, Let’s Make Life Delicious. Consumers are at the centre of everything we do. With 2022 net sales of approximately $26 billion, we are committed to growing our iconic and emerging food and beverage brands on a global scale. We leverage our scale and agility to unleash the full power of Kraft Heinz across a portfolio of six consumer-driven product platforms. As global citizens, we’re dedicated to making a sustainable, ethical impact while helping feed the world in healthy, responsible ways. Learn more about our journey by visiting www.kraftheinzcompany.com or following us on LinkedIn.

Download the latest Kraft Heinz ESG report to learn more about our climate ambitions and progress at www.kraftheinzcompany.com/esg.

ABOUT CARLTON POWER

Carlton Power has 25 years of development experience in the UK including bringing forward over 3.5GW of gas fired generation and 8MW of solar, with c2.5GW of energy storage at various stages of development. It has offices in Stokesley (north Yorkshire) and Edinburgh. Carlton is developing similar green hydrogen schemes at Trafford in Greater Manchester, Barrow-in-Furness (Cumbria), Langage (Plymouth) in Devon and Stirling in Scotland, as well as one of the world’s largest battery energy storage schemes – also at Trafford. The company is a member of Hydrogen UK, North West Hydrogen Alliance, Hydrogen South West and the Scottish Hydrogen & Fuel Cell Association. www.carltonpower.co.uk & project website URL – TBA.

In December 2023, Carlton was successful in Round One of the UK Government’s HAR1. The company’s first phase projects – at Trafford, Barrow-in-Furness and Langage - were each awarded financial contracts for each of the schemes by DESNZ. Subject to reaching Financial Investment Decisions in the early part of this year, these projects should enter commercial operation within two years. https://www.gov.uk/government/publications/hydrogen-production-business-model-net-zero-hydrogen-fund-shortlisted-projects/hydrogen-production-business-model-net-zero-hydrogen-fund-har1-successful-projects

In May 2023, Carlton Power and Schroders Greencoat, the specialist investment manager, formed a joint venture company, Green Hydrogen Energy Company Ltd (“GHECO”), to accelerate the development of green hydrogen projects in the UK. GHECO is aiming to build a project portfolio in the UK of 500MW by 2030.

In October 2023, Business Green listed Carlton Power in its list of Top 50 green pioneers in the UK - principally for the company’s work in green hydrogen across the country.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240205000737/en/

The Kraft Heinz Company:

Rosie Brierley, Corporate Communications Manager: Rosie.Brierley@KraftHeinz.com

Marissa Munnings, Corporate Communications Director: Marissa.Munnings@KraftHeinz.com

Carlton Power

Eric Adams, Projects Director: eadams@carltonpower.co.uk / 07803 085942

Paul Taylor, Taylor Keogh Communications: paul@taylorkeogh.com / 07966 782611

Source: The Kraft Heinz Company

FAQ

What is the agreement between Kraft Heinz and Carlton Power about?

The agreement is about developing a renewable green hydrogen plant at Kraft Heinz's Kitt Green manufacturing plant in Wigan, Greater Manchester.

What is the proposed capacity of the Kitt Green hydrogen plant?

The proposed capacity of the plant is 20MW.

How much of the plant’s annual natural gas demand will the proposed hydrogen plant meet?

The proposed hydrogen plant will meet more than 50% of the plant’s annual natural gas demand.

What is the timeline for the construction of the renewable hydrogen scheme?

The construction of the scheme is earmarked to enter operation in 2026, with a target to deliver hydrogen to Kitt Green in 2026/27.

What is the source of electricity to be used for producing hydrogen at the Kitt Green plant?

The hydrogen will be produced by an electrolyser using electricity generated from renewable sources, primarily wind and solar power.

What is the goal of Kraft Heinz in terms of carbon emissions reduction?

Kraft Heinz aims to achieve net zero emissions by 2050, with a 50 percent reduction in emissions by 2030.