As the UK accelerates its ambitions to establish a low-carbon hydrogen economy, 27 electrolytic hydrogen projects have been shortlisted under the second Hydrogen Allocation Round (HAR2), representing a substantial increase from the first round.
The selection, announced on 7 April 2025, spans projects across England, Scotland, and Wales and signals intensified competition for future government support. With projects ranging from Carlton Power’s 10MW Hartlebury facility in the West Midlands to ScottishPower’s expanded ambitions at Whitelee and Irvine in Scotland, the shortlisted proposals collectively point toward a growing geographic and technological diversity in the UK’s electrolytic hydrogen pipeline.
The HAR2 shortlist includes high-profile developers such as RWE, EDF Renewables, Centrica, Uniper, and Lhyfe, alongside smaller players like Four Zeros Energy and Strathallan Hydrogen. This mix reflects both the maturity of legacy utilities and the agility of newer entrants targeting regional demand clusters.
However, despite the breadth of proposals, inclusion on the shortlist does not imply guaranteed funding. As with HAR1, the government has made clear that only a subset of projects will proceed beyond the due diligence phase, based on criteria including affordability and value for money. This aligns with the government’s broader policy emphasis on cost discipline, reinforced through its recently published Cost Challenge Document, which urges developers to aggressively pursue cost reductions throughout the hydrogen value chain.
HAR2 builds upon lessons from HAR1, which supported 11 projects with a combined capacity of 125MW. By contrast, if all HAR2 shortlisted projects were realised, the total installed capacity could exceed 300MW, depending on final project sizes — although actual allocation will depend heavily on each project’s ability to pass technical, commercial, and financial scrutiny.
A critical test for HAR2 lies in demonstrating whether electrolytic hydrogen can compete in a tightening subsidy environment. While most shortlisted projects are targeting industrial clusters or mobility hubs, developers must still prove long-term demand certainty and viable offtake models. This is particularly pressing as UK industrial users remain sensitive to price volatility and the absence of long-term regulatory clarity.
Furthermore, the regulatory landscape continues to evolve. Ofgem’s emerging market design for hydrogen transport and storage, and the Department for Energy Security and Net Zero’s ongoing work on hydrogen business models, will shape the investment landscape for these projects. The extent to which these align with project economics — including grid connection timelines, renewable power sourcing, and carbon intensity thresholds — will determine which projects can move from shortlist to shovels-in-the-ground.
In parallel, the UK’s hydrogen ambitions are being closely watched across Europe, where competing jurisdictions such as Germany and the Netherlands are advancing their own national schemes with more direct subsidies and faster permitting pathways. Against this backdrop, the UK government’s insistence on competitive selection criteria may place additional pressure on developers to innovate on cost structures and delivery models.
As developers move into the due diligence phase, many will be forced to recalibrate expectations. Despite being shortlisted, access to Contracts for Difference (CfDs) or other subsidy mechanisms is not guaranteed. Instead, developers are being nudged toward a new paradigm: where public support is contingent on clear evidence of cost-efficiency, scalability, and private sector co-investment.
Whether HAR2 ultimately translates into deployed electrolyser capacity will depend not just on technical readiness, but on how effectively developers can align their business cases with shifting regulatory and commercial expectations. The shortlisting is a step forward — but it is by no means a greenlight.
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