Hydrogen Production Business Model / Net Zero Hydrogen Fund: HAR1 Successful Projects

Source Company Press Release
Company Carlton Power Limited, Electricite de France S.A., GeoPura, Ltd., H2 Energy AG, Hygen Energy Limited, HYRO, Iberdrola S.A., JG Pears, Marubeni Corporation, Storegga, Trafigura
Tags Country: United Kingdom, M&A: Deals, Licensing Round, Renewables: Hydrogen, Renewables News, Segment: Power
Date December 14, 2023

Following the launch of the first hydrogen allocation round (HAR1) in July 2022, we have selected the successful projects to be offered contracts. We are pleased to announce 11 successful projects, totalling 125MW capacity.

HAR1 puts the UK in a leading position internationally: this represents the largest number of commercial scale green hydrogen production projects announced at once anywhere in Europe. This round will provide over £2 billion of revenue support from the Hydrogen Production Business Model, which will start to be paid once projects become operational. Over £90 million from the Net Zero Hydrogen Fund has been allocated to support the construction of these projects.

We have conducted a robust allocation process to ensure only deliverable projects that represent value for money are awarded contracts. The 11 projects have been agreed at a weighted average [footnote 1] strike price of £241/MWh (£175/MWh in 2012 prices). This compares well to the strike prices of other nascent technologies such as floating offshore wind and tidal stream.

Government delivered HAR1 to time, and we expect that first projects will become operational from 2025. Combined with our commitments to further Hydrogen Allocation Rounds, this gives hydrogen developers, investors and supply chain companies the certainty they need to commit to the UK.

Government has engaged extensively with industry and recognises what it takes to make first-of-a-kind hydrogen projects commercially viable. The 11 successful projects demonstrate the UK hydrogen sector and commercial framework is highly investible and attractive for both equity and debt investors. The projects cover 8 regions across England, Scotland and Wales and will provide a range of benefits, including:  

  • £413 million of private capital being invested by the projects upfront between 2024-2026, with around 760 direct jobs created during construction and operation
  • £ millions more to be spent across a wide range of offtakers (users of the hydrogen, including hard to decarbonise industrial processes and heavy transport facilities) to convert their operations to hydrogen and improve their long-term viability
  • enhancing energy security, given these projects will support users to switch from imported fuels such as natural gas and diesel to domestically produced hydrogen
  • kickstarting the low carbon hydrogen economy across the UK, helping meet the 2025 ambition of up to 1GW of electrolytic hydrogen production capacity in operation or construction
  • advancing government’s reaffirmed ambition to deploy up to 10GW of low carbon hydrogen production capacity by 2030, with at least half from electrolytic hydrogen production capacity, subject to value for money and affordability. This could unlock up to £11 billion of private investment and support more than 12,000 jobs by 2030

We remain committed to our ambition of having up to 1GW of electrolytic hydrogen in construction or operation by the end of 2025. As such, we have also launched the second hydrogen allocation round (HAR2) with an aim to support up to 875MW capacity, subject to affordability, value for money and quality of projects.

Of the 17 projects that entered final negotiations, 2 projects withdrew and 15 projects, totalling 243MW of capacity, submitted Best and Final Offers. Of these, 4 were not successful.

We encourage all projects who have not been successful in HAR1 to consider applying in HAR2 with more competitive proposals - please see the HAR2 application guidance for further details.  

List of successful HAR1 projects

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  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 
  1. Weighted by the total hydrogen volumes expected to be produced by each project over the lifetime of the LCHA contract. The subsidy will vary relative to changes in the reference (natural gas) price. ↩

Source: EvaluateEnergy® ©2024 EvaluateEnergy Ltd