Major boost for hydrogen as UK unlocks new investment and jobs

Over 700 jobs will be created across the UK in a world-leading hydrogen industry from the South West of England to the Highlands of Scotland, backed by £2 billion in government funding over the next 15 years.

Energy Security Secretary Claire Coutinho today (Thursday 14 December) announced backing for 11 major projects to produce green hydrogen – through a process known as electrolysis – and confirmed suppliers will receive a guaranteed price from the government for the clean energy they supply.

This represents the largest number of commercial scale green hydrogen production projects announced at once anywhere in Europe, helping to place the country at the forefront of this emerging industry. Unlike blue hydrogen, which is formed using fossil fuels and capturing the carbon emissions, green hydrogen is made by using renewable energy to split water – helping provide cleaner fuel for energy intensive industries and transport.

In return for this government support, the successful projects will invest over £400 million in the next 3 years, generating more than 700 jobs in local communities across the UK and delivering 125MW of new hydrogen for 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, who plan to run a boiler on 100% hydrogen for use in their distilling process
• PD Ports in Teesside, who will use hydrogen to replace diesel in their vehicle fleet, decarbonising port operations from 2026

Energy Security Secretary Claire Coutinho said:

Hydrogen presents a massive economic opportunity for the UK, unlocking over 12,000 jobs and up to £11 billion of investment by 2030.

Today’s announcement represents the largest number of commercial scale green hydrogen production projects announced at once anywhere in Europe.

These 11 major new hydrogen projects across the UK will create over 700 jobs and deliver new opportunities from Plymouth in England to Cromarty in Scotland.

Minister for Energy Efficiency and Green Finance Lord Callanan said:

Today’s funding commitment represents a monumental step forward in helping producers to deliver a fuel of the future today, backing businesses to go greener.

This will be essential to achieving our net zero targets, and will benefit people across the UK with the job and investment opportunities that this funding will bring.

And we’re not stopping there with a new, second round of funding now available for producers to apply for, so they can develop the next round of projects and build on this success.

Today’s funding represents the most significant step in scaling up the UK’s hydrogen economy to date – speeding up progress towards the government’s ambition to deploy up to 10GW low carbon production capacity by 2030.

Ministers have also today opened a new second round of funding that companies can apply for to support their projects and published a production roadmap, which sets out the government’s plan for future allocation rounds in 2025 and 2026. This includes ambitious plans to boost hydrogen capacity up to 1.5GW across these rounds, and award funding to projects to help deliver up to 4GW of CCUS-enabled, or blue, hydrogen and 6GW of green hydrogen by 2030 – giving businesses the confidence they need to invest in the UK.

Ministers have also announced their decision to support hydrogen blending in certain scenarios – subject to an assessment of safety evidence and final agreement.

Currently, less than 1% of the gas in distribution networks is hydrogen. Under proposals, hydrogen could be blended with other gases in the network as an offtaker of last resort, working to reduce costs in the hydrogen sector by helping producers, and to support the wider energy system.

Hydrogen blending may help achieve the UK’s net zero ambitions, but would have a limited and temporary role as the UK moves away from the use of natural gas.

Ministers have decided not to proceed with a hydrogen trial in Redcar, as the main source of hydrogen will not be available. The government recognises the potential role of hydrogen in home heating and will assess evidence from the neighbourhood trial in Fife, as well as similar schemes across Europe, to decide in 2026 whether and how hydrogen could help households in the journey to net zero.

Sopna Sury, Chief Operating Officer Hydrogen RWE Generation said:

Today’s announcements on the first 2 hydrogen allocation rounds mark a significant milestone in the development of the UK hydrogen economy.  They represent a shift from policy development to project delivery, giving industry more clarity on the route to final investment decisions.  Alongside the wider policy publications, this demonstrates that the UK wants to be a leader in delivering the clean energy transition.

These early projects are vital not only in driving the production of electrolytic hydrogen but also in signalling the need to build-out the T&S infrastructure for its wider distribution.

As a company with ambitions to develop approximately 2 gigawatts of green hydrogen projects across all our markets, and to invest around 8 billion euros net in green technologies in the UK between 2024-2030, RWE looks forward to being part of building a thriving hydrogen ecosystem in the UK.

Jane Toogood, Industry Co-Chair of the Hydrogen Delivery Council, said:

I warmly welcome the suite of announcements made by government today.  These represent positive and tangible progress across a broad range of topics, to deliver against a clear roadmap. The collaboration between industry and government within the Hydrogen Delivery Council has proved to be a valuable mechanism to enable progress at this early stage.

Bart White, European Head of Energy Structured Finance at Santander Corporate & Investment Banking (Santander CIB) said:

We very much welcome today’s broad suite of announcements that will further catalyse the development of the UK’s hydrogen infrastructure and ecosystem. Future generations will value these steps to lay the foundations of this burgeoning market and a critical part of the solution towards net zero. We stand ready to explore financing new projects to play our part in the UK’s refreshed roadmap.

Clare Jackson, CEO of Hydrogen UK, said:

The hydrogen industry welcomes today’s suite of announcements including the results of HAR1 negotiations that provide crucial support to first mover UK hydrogen projects, and will help kickstart domestic production. HAR1 and the various other documents including a thorough Update to the Market, the Hydrogen Production Delivery Roadmap and the Transport and Storage Networks Pathway are important steps forward for the UK’s hydrogen economy. We also welcome the positive decision on blending.

Today, Hydrogen UK also released an industry-led report on supply chains. Working together, industry and government have a responsibility to channel investment into our supply chains, thereby cementing the UK’s stature as a global frontrunner in hydrogen production and its diverse end-use applications.

Eric Adams, Carlton Power’s Hydrogen Projects Director said:

We are delighted with today’s announcement from the Department for Energy Security and Net Zero (DESNZ).  Securing contracts for each project – totalling 55MW of capacity and an investment of c£100 million, and each with planning consent – is a major achievement and places Carlton Power among the leading British companies that are helping to build the hydrogen economy in the UK.

Keith Clarke, Founder and Chief Executive of Carlton Power said:

We are supporting UK industry to decarbonise their operations, supporting the UK’s efforts to reach net zero and we are a catalyst for green investment and jobs into the UK regions.  Working with our financial partners, Schroders Greencoat, we can now work towards Final Investment Decisions for each scheme in the early part of next year and thereafter work to have the 3 enter commercial operation within 2 years.

Jamie Burns, Director at Hygen said:

We are delighted that this project has been selected for government funding to take it to the next phase of development – it will provide a blueprint for how complex projects like this can be delivered.

Gareth Mills, Managing Director at N-Gen said:

This is an important and exciting project, not just for Bradford, but also for the wider area and the community that lives here, so we are delighted to now have financial backing from government to allow us to start work on the site.

Bradford Council declared a climate emergency in 2019 and we believe this facility will play an important role in helping the area deliver on its climate change ambitions.

We know hydrogen can support decarbonising all energy types including transport, and producing green hydrogen is central to this, so we’re really excited to work with Hygen to deliver this development.

Sarah Potts, Storegga’s Hydrogen Managing Director said:

After a lot of hard work by the integrated Storegga and ScottishPower project team, particularly over the past 18 months since the UK government launch of HAR1, I’m delighted that Cromarty has been selected by the UK government Department of Energy Security and Net Zero as one of 11 projects to be awarded a funding support contract. As an SME originating from North East Scotland, I believe Storegga is able to bring a unique perspective and ambition to deliver decarbonisation solutions for Scottish industry. We look forward to now being able to take the project forward to a final investment decision in 2024, with first production in 2026 and continuing to grow our hydrogen investments in the region.

Tristan Zipfel, Director of Strategy and Analysis at EDF Renewables UK, said:

Today’s announcement is a huge leap forward for green hydrogen innovation which has the capacity to guarantee the long-term sustainability of industry in the North East. We are delighted that the government has given this vote of confidence in both EDF Renewables UK, Hynamics and the capacity of the region to be a world-leader in green technology and innovation.

Pierre de Raphelis-Soissan, CEO at Hynamics UK said:

This is a very important step towards realising the potential of Tees Green Hydrogen and making a ground breaking contribution to decarbonisation in the Tees Valley. The project is uniquely placed to be scalable in order that future demand can be met as hydrogen-based technology becomes the industrial norm.

Peter Jones, Director of ScottishPower Green Hydrogen Business said:

The first wave of production facilities like Whitelee and Cromarty will demonstrate that zero-emission hydrogen can be delivered at commercial scale and drive the development of a viable market for the green fuel. 

It will also create highly skilled green jobs across the UK and quickly support a world leading supply chain.

It’s early days for this burgeoning market and government support is to be welcomed to help deliver a future green hydrogen economy.

Julien Rolland, CEO of H2 Energy Europe, said:

We are very grateful for the support that the UK government has announced for our 20MW electrolytic hydrogen production facility, marking a significant milestone in our journey to develop South Wales’s first large-scale green hydrogen production plant. The facility will enable industry in South Wales to transition to using green hydrogen produced from renewable energy sources.

The green hydrogen produced at Milford Haven will be used to displace natural gas and other fossil fuels in industrial and chemical processes and contribute to the decarbonisation of the local industry. The interest that we’ve already received from local industry means we are already reviewing the opportunity to scale up the facility.

Alex Brierley, co-head of Octopus Energy Generation’s fund management team said: 

This is a major milestone as this funding will enable HYRO to roll out green hydrogen projects at scale in hard-to-electrify industrial processes. Our first project will be working with Kimberly-Clark to flush away fossil fuels when manufacturing Andrex and Kleenex. We’ve got a big pipeline of projects to help even more industrial businesses decarbonise – and we’re on track to invest billions in this sector.

Marco Perona, EMEA CEO for RES, said:

Green hydrogen, created using low cost, British renewable energy, will revolutionise how we power industry, helping the UK to build a globally competitive, zero carbon economy in the process. HYRO, in partnership with Kimberly-Clark, is leading this transition with a large pipeline of projects and with this latest backing will show how we can make green hydrogen a reality.

Mr Tomoki Nishino, President and CEO of Marubeni Europower Ltd, said:

Marubeni team is very honoured to be selected as a recipient of Hydrogen Allocation Round 1. Recently in October 2023, Marubeni signed an MoU with the UK government whereby we have shown our plan to invest £10 billion (along with our partners) into UK green business. We truly hope that a combination of HAR1 funding and Marubeni’s investment help decarbonize UK through HyBont, especially in the South Wales region.

Notes to editors