UK Government Introduces Innovative Business Model for Hydrogen Power Sector
Key Ideas
  • UK government unveils new subsidy scheme for hydrogen-to-power (H2P) plants, based on dispatchable power agreements used for carbon capture technologies.
  • Support payment will provide revenue certainty for investors, aiming to lower investment and finance costs as the market matures.
  • Industry association Hydrogen UK welcomes the initiative, emphasizing the significance of H2P in achieving clean power and net-zero targets.
  • Government highlights the importance of H2P, CCUS, and long-duration energy storage in reducing reliance on unabated gas-fired generation.
The UK government has announced a pioneering business model to support the development of hydrogen-to-power (H2P) plants. This initiative involves the introduction of a new subsidy scheme for H2P plants, modeled after the dispatchable power agreements (DPAs) utilized for carbon capture technologies. The support framework includes a support payment mechanism aimed at providing revenue stability for investors, with the expectation of reducing investment and finance costs as the market matures. Further details regarding the support for H2P are anticipated to be revealed in spring 2025. The government's move to include H2P plants in the UK capacity market, along with the establishment of a business model that aligns with DPAs, signifies a strategic approach to foster the growth of hydrogen-based power projects. Industry response, particularly from Hydrogen UK, has been positive, with the association emphasizing the pivotal role of H2P in achieving clean power and contributing to net-zero objectives. The government's acknowledgment of the challenges, such as initial project costs and fuel availability concerns, demonstrates a proactive stance towards addressing key barriers to H2P deployment. By recognizing H2P, alongside carbon capture and long-duration energy storage, as crucial elements in transitioning away from unabated gas-fired generation, the UK government underscores its commitment to sustainable energy practices and reducing emissions.
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