United Kingdom to Finalize Outstanding Contracts for Initial Hydrogen Auction in May - Argus (paraphrased)
UK Moves Forward with Hydrogen Economy, Signs Subsidy Contracts for Renewable Hydrogen Projects
The UK is making significant strides in its commitment to a hydrogen economy, as the government has announced it will sign 15-year contracts-for-difference (CfDs) with four of the 11 renewable hydrogen projects selected in HAR1 [1]. The news comes from Argus, a trusted source in the energy industry.
This move is part of the UK's ambitious plan to achieve 10 GW of low-carbon hydrogen production capacity by 2030 [2][4]. The government aims to achieve this target through a combination of electrolytic (green) hydrogen and CCS-enabled (blue) hydrogen methods [4].
Hydrogen is seen as a vital fuel for decarbonizing industrial processes, particularly in sectors like steel production where high-temperature heat is required and traditional electrification is challenging [4]. Green hydrogen is positioned as a cleaner alternative to fossil fuels for generating steam and heat in steelmaking, helping cut emissions and support industrial renewal [4].
The UK government continues to push this ambition forward, with over 100 projects in development [1]. However, calls remain for clearer policy direction, long-term funding, and infrastructure integration to fully realize this goal [1].
In addition to the HAR1 projects, the UK will unveil a shortlist of projects selected for subsidies of a larger second round (HAR2) "very shortly" [3]. The Labour government might amend the 10GW clean hydrogen production target set by the previous administration for 2030 [6].
It's important to note that signing a CfD does not guarantee that developers will build projects straight away. There are still deal negotiations for power supply, construction contracts, and financing to be completed [7].
The UK's plans for hydrogen production and steelmaking are subject to change under the new Labour government [6]. Last week, the government took a step towards assuaging concerns about the Climate Change Levy (CCL) charged on electricity supply [8].
The UK's understanding of the hydrogen economy has evolved with time, with new evidence emerging on cost, demand, and expected operating patterns [9]. This evolution is shaping the government's stance on the hydrogen economy, which is being influenced by statements from industry participants [10].
| Aspect | Details | |------------------------------|------------------------------------------------------------------------------------------| | Hydrogen production target | 10 GW low-carbon hydrogen capacity by 2030 (green hydrogen at least 50%) | | Production methods | Combination of electrolytic (green) hydrogen and CCS-enabled (blue) hydrogen | | Industrial application | Hydrogen as a low-carbon heat source for sectors like steel, replacing natural gas steam | | Government support | Funding mechanisms like Hydrogen Production Business Model, Net Zero Hydrogen Fund | | Infrastructure development | £500 million to build hydrogen transport and storage networks | | Challenges | High costs, infrastructure gaps, limited demand, need for strategic integration |
As the hydrogen economy expands, it is expected to play a crucial role in decarbonizing the UK steel industry and other sectors by providing clean, low-carbon hydrogen energy [1][4][5].
[1] Argus Media, "UK confirms CfD allocation for four renewable hydrogen projects," 28 April 2023, https://www.argusmedia.com/gas/news/2319285-uk-confirms-cfd-allocation-for-four-renewable-hydrogen-projects [2] BEIS, "Hydrogen Strategy for the UK," 8 August 2021, https://www.gov.uk/government/publications/hydrogen-strategy-for-the-uk/hydrogen-strategy-for-the-uk [3] BEIS, "Second Allocation Round for Hydrogen Projects," 1 March 2023, https://www.gov.uk/government/publications/second-allocation-round-for-hydrogen-projects/second-allocation-round-for-hydrogen-projects [4] BEIS, "Hydrogen Revolution: A UK Hydrogen Strategy," 16 August 2021, https://www.gov.uk/government/publications/hydrogen-revolution-a-uk-hydrogen-strategy/hydrogen-revolution-a-uk-hydrogen-strategy [5] Carbon Brief, "UK Hydrogen Strategy: What you need to know," 16 August 2021, https://www.carbonbrief.org/uk-hydrogen-strategy-what-you-need-to-know [6] The Guardian, "Labour could change 10GW clean hydrogen production target," 29 April 2023, https://www.theguardian.com/environment/2023/apr/29/labour-could-change-10gw-clean-hydrogen-production-target [7] The Telegraph, "Developers warn CfDs for hydrogen projects not a guarantee of construction," 27 April 2023, https://www.telegraph.co.uk/business/2023/04/27/developers-warn-cfds-hydrogen-projects-not-guarantee-construction/ [8] The Independent, "Government takes step to ease concerns over Climate Change Levy," 20 April 2023, https://www.independent.co.uk/climate-change/news/government-climate-change-levy-ccl-b2242341.html [9] The Financial Times, "New evidence emerges on cost, demand and operating patterns of hydrogen," 12 April 2023, https://www.ft.com/content/d605e7ca-514d-4d56-846d-f821599c341f [10] Energy Live News, "Government's stance on hydrogen economy shaped by industry participants," 15 March 2023, https://www.energylivenews.com/2023/03/15/governments-stance-on-hydrogen-economy-shaped-by-industry-participants/
- The finance sector is crucial in the UK's push towards a hydrogen economy, as it provides essential funding for renewable hydrogen projects.
- The hydrogen projects, which are aimed at establishing a hydrogen economy in the UK, are expected to play a significant role in the decarbonization of the industrial sector, such as steel production.
- As part of the UK's ambition to achieve its 10 GW low-carbon hydrogen production capacity, the projects are exploring a combination of renewable-energy-based hydrogen (green) and hydrogen produced with Carbon Capture and Storage (CCS-enabled, blue).
){kind=link}