A swathe of green hydrogen schemes across the UK are set to benefit from £2 billion in government funding, unlocking hundreds of jobs and millions more in investment.
Energy Security Secretary Claire Coutinho on Thursday announced backing for 11 major electrolytic hydrogen projects across the country, with £2 billion in government funding to be committed over the next 15 years.
The hydrogen allocation round (HAR1) scheme will see suppliers receive a guaranteed price from the government for the hydrogen they supply via the Hydrogen Production Business Model, which will start to be paid once projects become operational.
This has been agreed at a weighted average strike price of £241/MWh (£175/MWh in 2012 prices).
The Department for Energy Security and Net Zero said the move would help create over 125MW of capacity and 700 jobs from the south west of England to the Highlands, supporting a “world-leading hydrogen industry”.
In return, developers will also commit to invest over £400 million in projects over the next three years.
DESNZ said the announcement represents “the largest number of commercial scale green hydrogen production projects announced at once anywhere in Europe”, and would help to place the UK at the forefront of the sector.
Successful awardees in Scotland include the 10.6MW Cromarty Hydrogen scheme backed by ScottishPower and Storegga, as well as the 7.1MW Whitelee hydrogen project based at ScottishPower’s wind farm of the same name.
© DESNZEnergy Security Secretary Claire Coutinho said: “Hydrogen presents a massive economic opportunity for the UK, unlocking over 12,000 jobs and up to £11 billion of investment by 2030.
“Today’s announcement represents the largest number of commercial scale green hydrogen production projects announced at once anywhere in Europe.
“These eleven major new hydrogen projects across the UK will create over 700 jobs and deliver new opportunities from Plymouth in England to Cromarty in Scotland.”
It comes as the UK looks to meet government ambitions to deploy up to 10GW of low-carbon hydrogen production capacity – both blue and green – by 2030.
A total of 17 projects entered final negotiations, representing 243MW of capacity, of which two withdrew and four were not successful.
However DESNZ encouraged all projects who have not been successful in HAR1 to consider applying in HAR2 “with more competitive proposals.” Future allocation rounds are also expected in 2025 and 2026.
Minister for Energy Efficiency and Green Finance Lord Callanan added: “Today’s funding commitment represents a monumental step forward in helping producers to deliver a fuel of the future today, backing businesses to go greener.
“This will be essential to achieving our net zero targets, and will benefit people across the UK with the job and investment opportunities that this funding will bring.
“And we’re not stopping there with a new, second round of funding now available for producers to apply for, so they can develop the next round of projects and build on this success.”
Green light at Cromarty
Storegga and its partners welcomed the news, confirming that construction of Cromarty Hydrogen would employ around 170 people during construction and create around 30 new high-skilled jobs in its first phase, with “more to follow” as the project expands.
Phase 1 will produce close to 5,500 kg of hydrogen per day, for use by the local distilling sector.
Long-term production, through future phases, has the potential to rise to over 100,000kg per day, for delivery throughout the region to distilleries and other industrial and transport sectors.
© Supplied by Storegga/Scottish Po“After a lot of hard work by the integrated Storegga and ScottishPower project team, particularly over the past 18 months since the UK Government launch of HAR1, I’m delighted that Cromarty has been selected,” said Sarah Potts, Storegga’s Hydrogen Managing Director.
“As an SME originating from North East Scotland, I believe Storegga is able to bring a unique perspective and ambition to deliver decarbonisation solutions for Scottish industry.
“We look forward to now being able to take the project forward to a final investment decision in 2024, with first production in 2026 and continuing to grow our hydrogen investments in the region.”
Carlton hails 55MW award
Another recipent is Edinburgh and Stokesley based Carlton Power, which secured backing for three projects at Trafford in Greater Manchester, Barrow-in-Furness (Cumbria) and Langage, near Plymouth.
Subject to reaching FID in the early part of 2024, the firm said all three should enter commercial operation within two years.
Eric Adams, Carlton Power’s Hydrogen Projects Director said: “We are delighted with today’s announcement from DESNZ. Securing contracts for each project – totalling 55MW of capacity and an investment of c£100m, and each with planning consent – is a major achievement and places Carlton Power among the leading British companies that are helping to build the hydrogen economy in the UK.”
© Carlton PowerStep back on hydrogen blending
In the same announcement DESNZ confirmed ministers had also made the decision to support hydrogen blending in the gas grid only in “certain scenarios”, though these remain subject to an assessment of safety evidence and final agreement.
Currently, less than 1% of the gas in distribution networks is hydrogen.
Under proposals, hydrogen could be blended with other gases in the network as an offtaker of last resort, working to reduce costs in the hydrogen sector by helping producers, and to support the wider energy system.
Ministers decided not to proceed with a hydrogen trial in Redcar, as the main source of hydrogen will not be available.
Evidence will also be assessed from a neighbourhood trial in Fife, as well as similar schemes across Europe, to decide in 2026 whether and how hydrogen could be used in household settings.
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