With RenewableUK's annual green hydrogen conference happening next month, it is worth reflecting how pivotal 2023 was for the UK's hydrogen economy. At the heart of this was the 125MW of electrolyser capacity that was secured through the first hydrogen allocation round (HAR1), which not only marked a significant milestone for the UK but also set a precedent across Europe, with the highest number of commercial-scale projects awarded contracts in a single allocation round.
However, this is only the first step on the journey to vibrant green hydrogen economy. Later this year, the second hydrogen allocation round (HAR2) aims to bring an additional 875MW online to meet the Government’s ambition of 1GW of capacity online or with funding by the end of 2025. This is an ambitious upscaling, but the necessity to grow the sector in order to realize the Government's targets of 6GW of electrolyser capacity by 2030, a crucial component of the overarching goal of establishing 10GW of low-carbon hydrogen capacity.
While the ambition is welcome, it is imperative to acknowledge that ambition alone may not suffice to fulfil these targets. The hydrogen allocation round process, while indispensable, faces certain challenges that must be addressed to ensure the seamless advancement of the hydrogen economy.
Firstly, while allocation rounds enable project growth, they can also constrict opportunity. The one-size-fits-all approach fails to recognize the diverse range of hydrogen projects, potentially stifling innovation and creativity. Moreover, linking revenues to consumer price index (CPI) through strike price indexation could inadvertently steer projects towards less flexible options, hindering their ability to harness the full potential of renewable energy sources such as wind power.
Secondly, the journey towards a robust hydrogen economy requires a clear focus on demand-side policies. While commendable projects like Protium's recent collaboration with Budweiser highlight promising advancements, there's a pressing need for further initiatives to stimulate demand and foster alternatives to fossil fuels.
Thirdly, the development of robust infrastructure for transport and storage stands as a linchpin in accelerating the transition towards a hydrogen-based economy. Without adequate infrastructure, the full potential of hydrogen as a clean energy solution cannot be realized.
Finally, as we embark on the unprecedented task of building a hydrogen economy at scale, addressing regulatory and environmental concerns becomes paramount. While hydrogen technology has a longstanding presence in industry, its widespread adoption demands reform of planning and safety measures, and proactive environmental stewardship. Upskilling and resourcing regulatory bodies and planning departments will be essential to navigating the complexities of project development effectively.
Addressing these challenges is critical to achieving the government's targets by 2030 and establishing the UK as a global leader in the hydrogen economy.
These are just some of the issues that we will be discussing at our third Green Hydrogen conference on April 18th in Liverpool. This event serves as a platform for industry experts to convene and explore the opportunities and challenges for the green hydrogen economy, from upstream processes to demand-side dynamics. Join us as we chart the course towards a cleaner, brighter future powered by hydrogen innovation. For registration and further details, please visit Overview (renewableuk.com).
RenewableUK’s EnergyPulse market intelligence platform provides analysis and details of the UK’s green hydrogen projects. EnergyPulse provides information on timelines, news, contracts and ownership of more than 100 UK green hydrogen projects, and the data is available to download or analyse using our interactive dashboards. For more details and information on EnergyPulse’s coverage of UK onshore wind and energy storage projects and global offshore wind projects, please visit RenewableUK EnergyPulse.
Written by Barnaby Wharton, Director of Future Electricity Systems & Rhys Thomas, Head of EnergyPulse from RenewableUK