National Highways has issued a new tender for the supply of low-carbon hydrogen for the Lower Thames Crossing (LTC) construction project, after an unsuccessful initial attempt.
This project, near London, is one of the UK’s largest road infrastructure initiatives. The agency is now willing to pay up to $17.40 per kilogram of hydrogen, a significant increase from the previous bid.
The relaunch tender seeks up to 5,900 tonnes of hydrogen over five years, with a maximum bid price of £80 million ($103.6 million). This translates to £13.56 ($17.40) per kilogram, up from the previous £8.06 ($10.41). The initial tender failed to attract suppliers despite offering £50 million ($64.6 million) for 6,200 tonnes of hydrogen. The substantial increase in the bid price raises questions about the project’s cost-effectiveness and its implications for taxpayer money.
The willingness to pay nearly double the initial price underscores potential challenges in the low-carbon hydrogen market. It suggests either a lack of supply or suppliers’ unwillingness to engage at the previous price point. This raises concerns about the realistic availability and affordability of green hydrogen, which is critical for such large-scale projects.
Comparatively, the global average price for green hydrogen production ranges from $4 to $6 per kilogram. The bid price of $17.40 per kilogram is significantly higher, even accounting for delivery and logistical costs. This discrepancy suggests that either the hydrogen market in the UK is uniquely strained or that there are additional, undisclosed challenges in the project’s execution.
From an economic perspective, the high cost of hydrogen for the LTC project could impact its long-term sustainability. The increased expenditure might necessitate re-evaluation of budget allocations, potentially affecting other infrastructure projects. Additionally, this cost spike could set a precedent for future hydrogen projects, potentially inflating market prices and complicating the broader adoption of hydrogen as a clean energy source.
The LTC project is pivotal in demonstrating the feasibility of using hydrogen in large-scale construction. However, the increased costs and difficulty in securing suppliers could undermine confidence in hydrogen’s viability as an alternative energy source. It emphasizes the need for robust strategies to develop a more stable and cost-effective hydrogen supply chain.
