UK okays £2 bn for 11 green hydrogen projects, launches new funding round

The UK has announced support for 11 new green hydrogen projects at an investment of £2 billion over the next 15 years. The projects – all of which will use electrolysis and have a combined capacity of 125 MW – were selected under the country's first hydrogen allocation round (HAR1) launched in July 2022.

Britain's Energy Security Secretary Claire Coutinho announced the backing and confirmed that suppliers would receive a guaranteed price for energy supplied. The projects carry a weighted average strike price of £241/ MWh. In return, the selected projects will invest over £400 million in the next three years.

In a release, the UK government called the announcement "the largest number of commercial scale green hydrogen production projects announced at once anywhere in Europe" and said it would help to place the country at the forefront of this emerging industry. Select winners include:

• Sofidel in South Wales, which will replace 50 percent of its current gas boiler consumption at the Port Talbot paper mill with green hydrogen
• InchDairnie Distillery in Scotland, which plans to run a boiler on 100 percent green hydrogen for use in their distilling process
• PD Ports in Teesside, which will use green hydrogen to replace diesel in its vehicle fleet, decarbonizing port operations from 2026

Green hydrogen, which is made by using renewable energy to split water, is being trialled as a clean fuel for energy intensive industries and the transport sector. Britain, which is targeting to reach net zero emissions by 2050, is relying on green hydrogen and offshore wind as key sectors to help deliver that outcome.

In a statement, 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."

Minister for Energy Efficiency and Green Finance Lord Callanan said: "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."

On Thursday, the UK also opened the second round of funding for companies seeking project support, and published a production roadmap setting out its plan for future allocation rounds scheduled for 2025 and 2026.

The country said it would seek to boost hydrogen capacity up to 1.5 GW across both rounds, while awarding funds to projects that would help deliver up to 4 GW of carbon capture-enabled (blue) hydrogen and 6 GW of green hydrogen by 2030. 

Sopna Sury, Chief Operating Officer Hydrogen, at RWE Generation, a German utility that has ramped-up clean energy investments and earmarked specific amounts for the UK, said the announcement of Britain's first two hydrogen allocation rounds marked "a significant milestone" in the development of the UK hydrogen economy.

"As a company with ambitions to develop approximately 2 GW of green hydrogen projects across all our markets, and to invest around €8 billion net in green technologies in the UK between 2024-2030, RWE looks forward to being part of building a thriving hydrogen ecosystem in the UK."  

The UK's government ministers have also announced support for hydrogen blending in the country's national gas network, subject to safety assessments.

Under a proposal, the country could blend hydrogen with other gases in its distribution network. Backers say this could help producers reduce the cost of hydrogen and support the wider energy system. At present, less than one percent of gas in the UK's distribution networks is hydrogen.

The government says hydrogen blending could help the UK achieve its net zero goal, but points out this would have a limited and temporary role as the country moves away from natural gas.