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2024

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UK allocates more than £2bn of subsidies to 11 green hydrogen projects in first auction round

Author:

Hydrogeninsight


The UK has allocated more than £2bn ($2.53bn) of subsidies to 11 projects in England, Wales and Scotland.

 

The 125MW of winning projects under the first Hydrogen Allocation Round (HAR1) will receive a strike price of £241/MWh over a period of 15 years, with the exact subsidy from the government depending on the natural gas price under a Contracts for Difference-style scheme.

 

With the MWh figure referring to the higher heating value of hydrogen (39.4kWh/kg), each MWh represents 25.4kg of H2, giving an effective strike price of £9.49 ($12) per kg.

 

Developers will only start receiving these subsidies once projects start producing hydrogen, but more than £90m has already been allocated from the separate Net Zero Hydrogen Fund to support their construction.

The winning projects are:

 

Project Name Lead Developer Location Capacity (MW)
Barrow Green Hydrogen Carlton Power North West 21.0
Bradford Low Carbon Hydrogen Hygen Yorkshire 24.5
Cromarty Hydrogen Scottish Power and Storegga Scotland 10.6
Green Hydrogen 3 HYRO (RES/Octopus) South East 10.6
HyBont Marubeni Europower Wales 5.2
HyMarnham JG Pears and GeoPura East Midlands 9.3
Langage Green Hydrogen Carlton Power South West 7.0
Tees Green Hydrogen EDF Renewables Hydrogen North East 5.2
Trafford Green Hydrogen Carlton Power North West 10.5
West Wales Hydrogen H2 Energy and Trafigura Wales 14.2
Whitelee Green Hydrogen Scottish Power Scotland 7.1

 

A second Hydrogen Allocation Round (HAR2) for up to 875MW of green hydrogen — “subject to affordability and value for money” — has also been announced this morning by the government.

 

This will help the UK “achieve our aim of up to 1GW of electrolytic hydrogen production projects to be in operation or construction by 2025”.

 

And in a new “Hydrogen Production Delivery Roadmap”, also unveiled today, the government announced plans to allocate up to 750MW in both the third and fourth allocation rounds (HAR3 and HAR4) in 2025 and 2026, respectively.

 

These will be followed by further annual rounds in 2027, 2028 and 2029, with the sizes of those tenders still to be determined.

 

A total of 17 projects entered final negotiations in HAR1, two withdrew and four were rejected.

 

“We encourage all projects who have not been successful in HAR1 to consider applying in HAR2 with more competitive proposals,” says the Department for Energy Security and Net Zero (DESNZ).

 

Lord Callanan, minister for energy efficiency and green finance, stated: “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.”

 

Source: Hydrogeninsight

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