The UK government has announced the successful completion of the first hydrogen allocation round, awarding contracts to 11 projects for the development of commercial-scale green hydrogen production facilities.
The 11 projects, which have been selected from an initial list of 17, have a combined generation capacity of 125MW and are spread across eight regions in England, Scotland, and Wales. These facilities will be used to produce hydrogen to decarbonise hard-to-abate industries, such as industrial processes and heavy transport.
Announced today (14 December), the successful projects will receive £2 billion of revenue support from the government’s Hydrogen Production Business Model (HPBM) in exchange for a commitment from the project operators to invest more than £400m through to the end of 2026. The first projects are expected to become operational from 2025.
“Today’s announcement represents the largest number of commercial scale green hydrogen production projects announced at once anywhere in Europe,” said Energy Security Secretary, Claire Coutinho.
Hydrogen produced by these projects will support several businesses, including Sofidel in South Wales, who will replace 50% of their current gas boiler consumption with hydrogen at their Port Talbot paper mill. InchDairnie Distillery in Scotland also plans to run a boiler on 100% hydrogen for use in their distilling process.
In parallel, the government has launched a second hydrogen allocation round (HAR2) with the aim of supporting up to seven times the capacity of the first round, at 875MW. This sets out the government’s plan for future allocation rounds in 2025 and 2026.
The UK government has set a target of deploying up to 10GW of low carbon hydrogen production capacity by 2030, with at least half from electrolytic hydrogen production capacity. This is expected to unlock up to £11 billion of private investment and support more than 12,000 jobs by 2030.
The government is considering incorporating hydrogen blending into certain gas distribution scenarios. While hydrogen currently accounts for less than 1% of the gas in these networks, proposed plans aim to blend it with other gases to act as a “last-resort buyer,” potentially lowering hydrogen sector costs by supporting producers and bolstering the broader energy system.
Despite this ambition, a planned pilot project has been scrapped. Redcar in Teesside was the sole remaining area seeking to host the hydrogen blending trial, following the cancellation of plans for Ellesmere Port in July due to objections from residents.
The company behind the project stated that the trial was not proceeding due to the anticipated green hydrogen facilities being unavailable.
“We are disappointed that we will be unable to move forward with our plan to heat homes and businesses in Redcar with low-carbon hydrogen,” a spokesperson said. “Without adequate local hydrogen production, it is no longer feasible to execute the project.”
