popular articles

United Kingdom: New energy project allocation strategies

The UK is targeting a competitive allocation for 750 MW of hydrogen, with 10 GW of low-carbon generation by 2030, while a shortlist of electrolytic projects is announced and consultations on hydrogen policy and strategic planning are planned.

Please share:

In March, the government published a shortlist of 20 electrolytic projects totalling 408 MW as part of a first allocation round (HAR1).

Competitive Hydrogen Allocation: Towards 2025 in the UK

Around 250 MW should be awarded in the fourth quarter of 2023, with the first projects operational in 2025.

“We also intend to launch the second hydrogen allocation round (HAR2) later this year, with the aim of awarding contracts of up to 750 MW in 2025, subject to affordability and value for money,” he said.

“At the same time, the government is about to publish the Low Carbon Hydrogen Agreement (LCHA) for HAR1 projects,” he said.

ACHC will provide support through contracts for difference. This will close the cost gap between low-carbon hydrogen and high-carbon fuels.

“After HAR2, the government should move to an annual competitive price-based allocation for LCHAs by 2025 for electrolytic projects, and potentially other specified carbon capture hydrogen production technologies,” he said.

A call for evidence on this transition is due to close on August 11. The government is targeting up to 10 GW of low-carbon hydrogen production capacity by 2030. At least half of which comes from electrolytic hydrogen. It aims to produce up to 1 GW of electrolytic hydrogen. But also up to 1 GW of CCUS hydrogen in operation or under construction by 2025.

According to S&P Global Commodity Insights analyst Matthew Hodgkinson, “HAR2 funding would support three times the capacity of the initial allocation cycle”.

The level of interest in the cycle “will provide an even greater indication of the appetite for private finance in the UK low-carbon hydrogen industry, and will indicate whether investors have confidence in UK low-carbon hydrogen legislation,” he said.

Hydrogen UK grants: GBP 100 million for electrolysis

In October 2021, the Carbon Neutral Strategy confirmed that up to GBP100 million ($127 million) would be provided. In order to award contracts for up to 250 MW of electrolytic projects in 2023. This level of funding would provide a subsidy of GBP1/kgH2 to 10,000 mt/year (or 65 MW-75 MW of electrolysis) of production over a 10-year period, according to S&P Global’s May 2023 UK Hydrogen Future Energy Insights report.

“This is well short of the UK government’s target of at least 5 GW of electrolysis-based capacity by 2030. The UK program is one of the most advanced in terms of progress and project support. However, if the government intends to provide a subsidy for the entire 1 GW of capacity to be operational or under construction by 2025, the value of the subsidy will be very small (around 0.10 GBP/kgH2),” said Hodgkinson.

In its updated strategy, the government stated that it would continue to develop a policy based on the recommendations of the independent carbon neutrality review. Consultations on hydrogen blending were due to be published later this year. As well as design options for intervention in the hydrogen-to-electricity market. It also included the development of a roadmap for hydrogen production. As well as the design of transport and storage (T&S) business models.

In response to a T&S consultation published on August 2, the government said it favored a regulated asset base model combined with some form of revenue support for hydrogen transport. RAB-based models have gained ground in the UK for large, complex utility infrastructure projects and new nuclear projects.

Strategic Planning for Hydrogen in the UK

For storage, he favored a model that included a minimum revenue floor to provide certainty for investors.

Centrica, which wants to invest GBP2 billion to convert its raw gas storage facility into hydrogen, said it would only proceed with “the right regulatory support framework.”

Meanwhile, “some form of strategic planning, potentially combined with elements of market-led development, is required to enable the efficient, cost-effective and timely deployment of transport and storage infrastructure”, the government said.

“We will define a “hydrogen networks pathway” of the next steps in our vision for the development of hydrogen T&S in the UK, alongside the hydrogen production roadmap by the end of 2023,” he said.

“A future grid operator competent in electricity and gas networks would be responsible for central strategic planning for hydrogen T&S,” he said.

Platts, part of S&P Global Commodity Insights, valued the UK electrolytic hydrogen price (PEM electrolysis, including capital expenditure) at GB5.47/kg on August 1. They valued UK blue hydrogen at GBP2.86/kg. Platts rates UK electrolytic hydrogen prices among the most expensive.

Register free of charge for uninterrupted access.

Publicite

Recently published in

Statkraft halts the development of new green hydrogen projects due to increased market uncertainty, while continuing to structure certain existing assets to attract investors.
ITM Power has been selected to supply six POSEIDON electrolysis modules for Uniper’s 120MW Humber H2ub® (Green) project, scheduled to be operational by 2029.
ITM Power has been selected to supply six POSEIDON electrolysis modules for Uniper’s 120MW Humber H2ub® (Green) project, scheduled to be operational by 2029.
PureWave Hydrogen is accelerating exploration activities near the Sue Duroche 3 well, where HyTerra confirmed a 96.1% concentration of natural hydrogen, reinforcing the geological potential of the Nemaha Ridge area.
PureWave Hydrogen is accelerating exploration activities near the Sue Duroche 3 well, where HyTerra confirmed a 96.1% concentration of natural hydrogen, reinforcing the geological potential of the Nemaha Ridge area.
Enagás begins consultations for its future hydrogen transport network in Castile-La Mancha, covering 13 regions and 550 municipalities on a 2,600 km infrastructure, backed by European funding.
Enagás begins consultations for its future hydrogen transport network in Castile-La Mancha, covering 13 regions and 550 municipalities on a 2,600 km infrastructure, backed by European funding.
Norwegian group Nel ASA will supply PEM electrolysers to Collins Aerospace under a contract supporting oxygen systems onboard US Navy submarines.
Nel ASA announced that Statkraft has cancelled a 40 MW order for alkaline electrolysers, resulting in a NOK120mn ($11mn) reduction in the Norwegian manufacturer’s order backlog.
Nel ASA announced that Statkraft has cancelled a 40 MW order for alkaline electrolysers, resulting in a NOK120mn ($11mn) reduction in the Norwegian manufacturer’s order backlog.
Plug Power has signed an agreement for a $525mn secured financing with Yorkville Advisors, while announcing strong preliminary results for the first quarter of 2025.
Plug Power has signed an agreement for a $525mn secured financing with Yorkville Advisors, while announcing strong preliminary results for the first quarter of 2025.
H2APEX announces €35mn financing from its main shareholders and plans a €30mn capital increase in June to accelerate the development of its hydrogen production capacities in Germany.
H2APEX announces €35mn financing from its main shareholders and plans a €30mn capital increase in June to accelerate the development of its hydrogen production capacities in Germany.
Tyczka Hydrogen received the first certification under the EU's RFNBO scheme on 15 April, marking a strategic milestone for renewable hydrogen logistics across Europe.
French group Lhyfe confirmed on April 17 a €149 mn public subsidy for its Green Horizon project, targeting daily output of 34 tonnes of green hydrogen near the industrial port of Le Havre by 2029.
French group Lhyfe confirmed on April 17 a €149 mn public subsidy for its Green Horizon project, targeting daily output of 34 tonnes of green hydrogen near the industrial port of Le Havre by 2029.
Gen-Hy secures €99.84 mn in public funding to build an electrolyser plant in Allenjoie, with 250 jobs projected and operations set to begin in 2026.
Gen-Hy secures €99.84 mn in public funding to build an electrolyser plant in Allenjoie, with 250 jobs projected and operations set to begin in 2026.
Mantle8 has reported exceptional soil gas readings at Comminges, in the Pyrenees, confirming the effectiveness of its proprietary predictive exploration technology for natural hydrogen.
Mantle8 has reported exceptional soil gas readings at Comminges, in the Pyrenees, confirming the effectiveness of its proprietary predictive exploration technology for natural hydrogen.
The Hidrogenii joint venture, formed by Olin and Plug Power, has launched a 15 TPD hydrogen liquefaction plant in St. Gabriel, Louisiana, strengthening the regional hydrogen supply and the U.S. energy transition.
Paris scales back its hydrogen roadmap, reducing the target to 4.5 GW by 2030 and 8 GW by 2035 amid weak demand and technological delays.
Paris scales back its hydrogen roadmap, reducing the target to 4.5 GW by 2030 and 8 GW by 2035 amid weak demand and technological delays.
CB&I, Shell and their partners have completed the design of a large-capacity liquid hydrogen tank at NASA’s space centre, aiming to cut commercial-scale storage costs for global trade.
CB&I, Shell and their partners have completed the design of a large-capacity liquid hydrogen tank at NASA’s space centre, aiming to cut commercial-scale storage costs for global trade.
Authorities in Newfoundland have released the guidelines for EVREC’s green hydrogen project impact study, marking a key regulatory step in the industrial development of this energy hub.
Authorities in Newfoundland have released the guidelines for EVREC’s green hydrogen project impact study, marking a key regulatory step in the industrial development of this energy hub.
Hyundai Motor Group, in partnership with Pertamina and Indonesian authorities, announces the construction of a waste-based hydrogen production site in West Java, set to be operational by 2027.
Indian group Cyient will lead the engineering work at the Bodø hydrogen site in Norway, under a partnership with GreenH and Luxcara to supply maritime transport.
Indian group Cyient will lead the engineering work at the Bodø hydrogen site in Norway, under a partnership with GreenH and Luxcara to supply maritime transport.
The French government has delayed by 24 hours the presentation of its new hydrogen strategy, now scheduled for Wednesday, amid expectations from industry facing weak demand and high production costs.
The French government has delayed by 24 hours the presentation of its new hydrogen strategy, now scheduled for Wednesday, amid expectations from industry facing weak demand and high production costs.
Facing cash flow difficulties, McPhy Energy launches a judicial conciliation and issues a call for bids for a potential asset sale before the end of June.
Facing cash flow difficulties, McPhy Energy launches a judicial conciliation and issues a call for bids for a potential asset sale before the end of June.
Prime Minister François Bayrou has announced the imminent release of the revised hydrogen strategy, awaited for months by industry players facing insufficient demand.
Polish energy group ORLEN has initiated a market study on low-carbon ammonia for use in fertiliser production and synthetic fuel, as part of its long-term industrial plans.
Polish energy group ORLEN has initiated a market study on low-carbon ammonia for use in fertiliser production and synthetic fuel, as part of its long-term industrial plans.
Lhyfe has been shortlisted for two green hydrogen production projects in the UK under the HAR2 scheme, paving the way for 15-year public contractual support.
Lhyfe has been shortlisted for two green hydrogen production projects in the UK under the HAR2 scheme, paving the way for 15-year public contractual support.
Technip Energies will lead the delivery of the Blue Point Number One ATR project, set to become the world’s largest low-carbon ammonia production unit, in the United States for a joint venture between CF Industries, JERA, and Mitsui & Co.
Technip Energies will lead the delivery of the Blue Point Number One ATR project, set to become the world’s largest low-carbon ammonia production unit, in the United States for a joint venture between CF Industries, JERA, and Mitsui & Co.

Advertising