The UK government has committed £2 billion in funding over the next 15 years to support green hydrogen projects, Energy Security Secretary Claire Coutinho announced. This financial backing is designated for 11 major projects focused on green hydrogen production, and the government assures suppliers a guaranteed price for the clean energy they provide.
In exchange for this government support, the successful projects are expected to invest over £400 million in the next three years, generating more than 700 jobs across various local communities in the UK and delivering 125MW of new hydrogen capacity. The announcement follows the launch of the first hydrogen allocation round (HAR1) in July 2022.
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Among the 11 projects are the 21MW Barrow Green Hydrogen project in north-west England, developed by Carlton Power, the 24.5MW Bradford Low Carbon Hydrogen by Hygen, and H2 Energy and Trafigura's 14.2MW West Wales Hydrogen project.
Key offtakers for the produced hydrogen include Sofidel in South Wales, set to replace 50% of its gas boiler consumption with hydrogen at its Port Talbot paper mill; InchDairnie Distillery in Scotland, planning to run a boiler on 100% hydrogen; and PD Ports in Teesside, intending to use hydrogen to replace diesel in its vehicle fleet, thereby decarbonizing port operations from 2026.
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Claire Coutinho emphasized the economic potential of hydrogen for the UK, projecting the creation of over 12,000 jobs and up to £11 billion in investment by 2030. The funding represents a significant step forward, marking the largest number of commercial-scale green hydrogen production projects announced simultaneously in Europe.
Minister for Energy Efficiency and Green Finance Lord Callanan noted the commitment to achieving net-zero targets and the benefits for individuals across the UK in terms of job opportunities and investments resulting from this funding. The government is not stopping at this commitment, with a new second round of funding available for companies to apply, aiming to support the development of additional projects.
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The funding is geared towards accelerating progress towards the government's ambition of deploying up to 10GW of low carbon production capacity by 2030. A production roadmap has been published, outlining plans for future allocation rounds in 2025 and 2026, including ambitious targets to boost hydrogen capacity up to 1.5GW and award funding for up to 4GW of carbon capture, utilization, and storage (CCUS)-enabled blue hydrogen, and 6GW of green hydrogen by 2030.
However, in a separate decision, ministers have opted not to proceed with a hydrogen trial in Redcar, citing the unavailability of the main source of hydrogen.
