The UK government, through the Low Carbon Contracts Company (LCCC), has signed its first contracts to promote hydrogen production under a new business model.
This approach provides financial support to bridge the cost difference between low-carbon hydrogen and traditional, high-emission fuels.
Three projects have been launched: Cromarty Hydrogen by Scottish Power and Storegga, Scottish Power’s Whitelee Green Hydrogen, and West Wales Hydrogen by Trafigura. Together, these projects aim to produce clean hydrogen, reduce industrial emissions, create job opportunities, and attract investments.
The UK’s energy strategy targets up to 10GW of low-carbon hydrogen capacity by 2030. Electrolytic hydrogen, which splits water into hydrogen and oxygen using electricity, is expected to provide at least half of this. By 2025, the country aims to have 1GW of electrolytic hydrogen capacity either operational or under construction.
Enrique Cornejo from OEUK highlighted the importance of government-developed policies and support mechanisms for these projects. He also emphasized the need to include hydrogen production using natural gas combined with carbon capture technology. Up to 4GW of the 2030 target is designated for hydrogen with carbon capture, based on plans by the Department for Energy Security and Net Zero (DESNZ).
First Hydrogen Allocation Round
The Cromarty, Whitelee, and West Wales projects are part of 11 selected under the UK’s First Hydrogen Allocation Round (HAR1), initiated in July 2022. These projects spread across eight regions, totaling a capacity of 125MW. HAR1 positions the UK as a leader in green hydrogen production in Europe.
A combined support of over £2 billion has been committed from the Hydrogen Production Business Model, alongside a £90 million allocation from the Net Zero Hydrogen Fund for project construction. Projects have been evaluated for value and set at a competitive strike price.
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