One of nine underground caverns used to store natural gas on Yorkshire’s coast will instead switch to hydrogen as part of a multi-million pound ‘pathfinder’ project.

The caverns at Aldbrough were created more than a decade ago out of a subterranean layer of rock salt. They are used to store gas at times of low demand and sell it back at peak demand periods.

SSE Thermal’s project, which could cost more than £100m, will combine storage, as well as hydrogen production and power generation. Hydrogen will be produced on site from water using a 35MW electrolyser, running off an existing substation, before being stored in the converted, cathedral-sized, cavern.

A turbine, which runs on 100 per cent hydrogen, will produce energy that can be fed back into the grid. The small-scale project will produce 20 gigawatt hours of energy – equivalent to powering 40 hydrogen buses a year.

SSE's gas storage site at Aldbrough in East Yorkshire

The aim is to demonstrate the technology works, before bigger projects in the area get underway.

SSE Thermal’s managing director Catherine Raw told the Guardian that even if hydrogen is more expensive than other fuels “you’re able to deliver the power exactly when you need it during peak demand and when power prices are justified”.

The company is bidding for funding from the Government’s £240m Net Zero Hydrogen Fund.

In a statement Ms Raw said: “We know that hydrogen has enormous potential as an enabler of net zero – and this project aims to prove that.

"We intend to bring together production, storage and power generation in one location and showcase how electrolytic hydrogen can provide home-grown security of supply while powering the UK to net zero.”

The team aims to produce hydrogen and start filling the cavern by 2025, subject to planning consents and reaching a financial investment decision next year. It will come before a larger hydrogen storage project with an initial expected capacity of at least 320 gigawatt hours begins at the site in 2028 in partnership with the Norwegian energy company Equinor.

The Scottish company, which is one of the UK’s largest renewable energy and network operators, reported profits had more than tripled last month on the back of rising energy prices. SSE is working with Equinor on the Keadby hydrogen power station, in north Lincolnshire, which is planned to be the world’s first big 100 per cent hydrogen-fired power station.

Aldbrough gas site in East Yorkshire to produce and store hydrogen in 'pathfinder' project by 2025