The UK government has shortlisted 27 green hydrogen projects for potential funding support as part of its second hydrogen allocation round (HAR2).
The HAR2 shortlist includes eight projects in Scotland, three in Wales and 16 in England representing approximately 765 MW of green hydrogen production capacity.
As a result, the government fell short of the 875 MW capacity it had been hoping to secure as part of HAR2.
Despite this, the Department for Energy Security and Net Zero (DESNZ) said the shortlisted will “create thousands of jobs in the UK’s industrial heartlands”.
DESNZ said the HAR2 projects have the potential to secure close to £1 billion in private sector investment by 2029.
Industry minister Sarah Jones said hydrogen can “power our everyday life and unlock clean energy growth across the country”.
“We are deploying hydrogen at a commercial scale for the first time – not just investing in a technology – but investing in British jobs, our proud manufacturing communities and our energy security,” Jones said.
The HAR2 shortlist includes projects focused on decarbonising manufacturing and industrial practices.
Industries covered include ammonia production, power generation, glass manufacturing, brick making, and sustainable aviation fuel production.
The HAR2 announcement comes less than a week after Jones said the Labour government plans to outline a revamped hydrogen strategy later this year.
Hydrogen Allocation Round 2
The government launched HAR2 in 2024 with the aim of securing up to 875 MW of green hydrogen capacity.
It came after the first hydrogen allocation round (HAR1) awarded £2 billion in funding to 11 green hydrogen projects in 2023.
The 11 HAR1 projects represented a total of 125 MW of capacity, falling short of the government’s original target of 250 MW.
Since then, several of the original HAR1 projects have gone on to sign revenue support contracts – although the process has been beset by delays.
The HAR process was established by the previous Conservative government as part of a goal to secure up to 10 GW of low carbon hydrogen production capacity by 2030.
© Supplied by Scottish EnterpriseThe HAR2 scheme will see suppliers receive a guaranteed price from the government for the green hydrogen they supply via the hydrogen production business model.
Hydrogen Energy Association chief executive Dr Emma Guthrie said the HAR2 announcement brings “vital clarity” and will provide a “crucial boost” to UK projects.
“The funding support offered through HAR2 gives our members and the wider industry the confidence to gear up for delivery, unlocking investment, creating jobs, and driving economic growth,” Guthrie said.
Meanwhile, Hydrogen UK chief executive Clare Jackson said HAR2 marks a “crucial step for scaling electrolytic hydrogen”.
“This progress builds on valuable lessons from past rounds and strengthens UK leadership in clean energy – reinforcing the sector’s crucial role in economic growth and energy security,” Jackson said.
HAR2 green hydrogen shortlist
Developers which have been shortlisted for project funding as part of HAR2 include RWE, Carlton Power, ScottishPower, Lhyfe, Statkraft and a joint venture between SSE and Equinor.
Major projects include SSE Thermal’s Aldbrough hydrogen pathfinder and RWE’s Grangemouth green hydrogen in Scotland and Pembroke green hydrogen in Wales.
© Supplied by PAIn Scotland, developer Green Cat Hydrogen was shortlisted for three of its projects, while ScottishPower made the shortlist with two projects including the second phase of a green hydrogen project at its Whitelee wind farm near Glasgow.
Norwegian state-owned renewables developer Statkraft also made the shortlist with the first phase of its Shetland Hydrogen project.
Alongside UK government funding for HAR projects, the Scottish government is also aiming to support the development of the hydrogen sector.
Scotland’s acting energy secretary Gillian Martin has described hydrogen as one of Scotland’s “greatest industrial opportunities since oil and gas”.
Meanwhile, the UK government expects the emerging hydrogen sector to be a £7bn annual opportunity for British businesses.
