UK Chancellor Rachel Reeves has confirmed £2bn ($2.6bn) of funding for 11 green hydrogen projects totalling 125MW of capacity.
Previously selected for funding under the Conservatives, Reeves, in the first Labour budget for 14 years – delivered by the female Chancellor – confirmed that the revenue support will be carried out.
© HM Treasury
“Today, I am providing funding for 11 new green hydrogen projects across England, Scotland and Wales,” Reeves said. “They will be amongst the first commercial-scale projects anywhere in the world.”
The 11 projects under the first Hydrogen Allocation Round (HAR1), have been kept in limbo for around 10 months while awaiting confirmation of the funding (full list of projects below).
Read more: UK Government selects 11 green hydrogen projects for £2bn of revenue support
H2 View understands the confirmation was a notification that this Labour Government will press ahead with the funding, with official contracts for the funding still yet to be signed with shortlisted projects.
Offered in the form of a weighted average strike price of £241/MWh ($313.9/MWh), the £2bn of revenue support has been weighted by the total volumes of hydrogen production expected to be produced by the projects – reducing the cost of the energy carrier for offtakers.
Revenue support is expected to be paid after the projects start hydrogen production, with some £90m ($117.2m) allocated to support their construction.
The Chancellor, however, did not outline any further details of the contracts yet to be signed with the projects.
H2 View has reached out to UK trade associations for comment and more details.
Ahead of July’s General Election, Hydrogen UK had pressed the next government to fast-track the HAR1 funding to ensure projects can reach final investment decision (FID).
Read more:Hydrogen UK presses next govt to fast-track £2bn green hydrogen projects
The trade body said the next government needed to “overcome issues presented by the Low Carbon Hydrogen Agreement (LCHA)” and show “reasonable flexibility on detailed project-specific points.
Revealed in 2021, the LCHA aims to bolster the production and use of low-carbon hydrogen by offering financial support, hydrogen business model development, infrastructure development and more.
Hydrogen UK’s Head of Policy, Brett Ryan, said, “The reaffirming of the multi-year investment into carbon capture and storage, along with funding for the 11 HAR1 projects, marks a much anticipated formal announcement on the government’s commitment to these clean energy sectors. Hydrogen UK will continue to support and collaborate with the government and industry stakeholders to ensure FID is reached as soon as possible, avoiding further delay.”
James Watson, Head of Decarbonisation at law firm Osborne Clarke, said the confirmation was a “big step” in the right direction.
“The support for the new green hydrogen production facilities is welcome,” he said. “The form of support is yet to be determined but the sector and investors have been trailing for some time the need for investment and policy certainty.”
Shortlisted HAR1 projects
- Carlton Power’s 21MW Barrow Green Hydrogen Project, Cumbria
- Hygen’s 24.5MW Bradford Low-Carbon Hydrogen, Yorkshire
- Scottish Power and Storegga’s 10.6MW Cromarty Hydrogen, Scotland
- HYRO’s 10.6MW Green Hydrogen 3, Southeast
- Marubeni Europower’s 5.2MW Hybont, Wales
- JG Pears and GeoPura’s 9.3MW HyMarnham, East Midlands
- Carlton Power’s 7MW Langage Green Hydrogen, Southwest
- EDF Renewables Hydrogen’s 5.2MW Tees Green Hydrogen, Northeast
- Carlton Power’s 10.5MW Trafford Green Hydrogen, Northwest
- H2 Energy and Trafigura’s 14.2MW West Wales Hydrogen, Wales
- Scottish Power’s 7.1MW Whitelee Green Hydrogen, Scotland
This is a breaking news story and will be updated.
