The UK Government has taken a significant step in its commitment to a sustainable future by issuing a call for evidence to support the country's transition towards price-based competitive allocation for renewable hydrogen production. This move is in line with the objectives outlined in the British Energy Security Strategy, which aims to introduce annual allocation rounds for electrolytic hydrogen. The ultimate goal is to transition to price-based competition by 2025, pending the necessary legislation and favorable market conditions.
The primary purpose of this call for evidence is to gather substantial data on market conditions required for the successful implementation of price-based competitive allocation for electrolytic projects, as well as for other specified non-carbon capture, usage, and storage (CCUS) technologies. Through this consultation, the government seeks to gain a deeper understanding of how a price-based competitive allocation process can incentivize projects beyond the reduction of low carbon hydrogen production costs. This includes exploring the potential benefits associated with electricity system optimization, economic gains, supply chain development, and enhanced security of hydrogen supply. Moreover, the consultation aims to solicit input on the optimal design of the price-based competitive allocation framework.
Stakeholders have until 2nd August 2023 to contribute their insights and expertise through this call for evidence. The government anticipates significant interest and participation from developers of new electrolytic projects, as well as those involved in non-CCUS low carbon hydrogen production ventures across the UK. Businesses operating within low carbon hydrogen production supply chains, electricity suppliers, consumer and environmental groups with a vested interest in low carbon hydrogen production, and trade bodies representing the renewable energy sector are also encouraged to participate actively.
To further engage stakeholders, the Department for Energy Security and Net Zero will host a launch briefing event on 25th May. This event will focus on discussing the HAR2 market engagement document and providing additional context on the call for evidence related to competitive allocation.
By embracing price-based competitive allocation and seeking evidence from various industry stakeholders, the UK Government is paving the way for an accelerated transition towards renewable hydrogen production. This approach demonstrates a commitment to driving innovation, achieving broader sustainability goals, and establishing the UK as a leader in the global renewable energy sector.
