UK Government Unveils Hydrogen to Power Business Model
Key Ideas
  • The UK government will implement a Hydrogen to Power Business Model (H2P BM) based on elements of the Dispatchable Power Agreement (DPA) to accelerate hydrogen deployment.
  • The H2P BM will include availability payments and variable payments to incentivize hydrogen power plants, reflecting the DPA designed for power CCUS but tailored for H2P.
  • Hydrogen to Power (H2P) is seen as vital for ensuring security of supply alongside Carbon Capture, Utilization, and Storage (CCUS) as a low carbon, flexible technology in the UK.
  • The government will also establish a Hydrogen to Power Expert Working Group to gather feedback on policy proposals and support decision-making in the sector.
The UK government has revealed its response to the consultation on market interventions to boost the deployment of hydrogen to power (H2P). The response confirms the introduction of a Hydrogen to Power Business Model (H2P BM) based on elements of the Dispatchable Power Agreement (DPA) but tailored for H2P. The DPA-style business model for H2P will include availability payments and variable payments to encourage the installation and operation of hydrogen power plants. The government plans to provide detailed design proposals in Spring 2025 and engage further with the market. The UK government views H2P as essential for ensuring future security of supply alongside Carbon Capture, Utilization, and Storage (CCUS) technology. It is considered a crucial technology to provide continuous output during periods of low renewable energy generation. The government also highlights the importance of large-scale hydrogen storage and transport infrastructure for the success of the hydrogen economy. In terms of the Capacity Market (CM), the government acknowledges challenges in supporting H2P due to its higher initial costs but aims to enable H2P participation in the CM as soon as feasible. Additionally, H2P is proposed as a decarbonization pathway in the CM to phase out unabated gas generation. Furthermore, the government published a stocktake on hydrogen regulations and standards for combustion equipment in the industry and power sectors. This initiative aims to enhance the understanding of ongoing work, identify risks, and support knowledge sharing in the sector. Looking ahead, the government will release a detailed H2P BM market engagement document in Spring 2025 and establish a Hydrogen to Power Expert Working Group to gather insights from industry experts and facilitate policy decisions in the sector.
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