Blog: UK Hydrogen Strategy Market Update

The Department for Business. Energy and Industrial Strategy (BEIS) published a market update to the UK Hydrogen Strategy on 13 December 2022. The UK Hydrogen Strategy was launched in August 2021, setting out the Government’s approach to developing a thriving low carbon hydrogen sector in the UK in order to meet the country’s increased ambition for 10GW of low carbon hydrogen production capacity by 2030.

Background

This market update to the Strategy summarises the activity across government since July 2022, when the last update was published, to develop new hydrogen policy at pace and to design and deliver funding support. This activity includes announcements on shortlisted hydrogen projects in the Cluster Sequencing Process, the launch of a consultation on hydrogen transport and storage (T&S) infrastructure, the publication of the HPBM Heads of Terms, and an update on the ongoing first Electrolytic Hydrogen Allocation Round.

Use of hydrogen in the maritime sector

Looking at the use of hydrogen across different modes of transport, this policy document also provides a summary of policy and funding measures announced since the last market update, including:

• the implementation of RTFO guidance changes from July 2022 to enable increased flexibility in production of renewable hydrogen using electricity transmitted over a grid;
• the launch of Phase 2 activity in the Tees Valley Hydrogen Transport Hub through a £20 million R&D competition, run by Innovate UK;
• the launch of the third round of the CMDC in September 2022, allocating £60 million for technology and systems demonstrations;
• the provision of £5.5 million of funding through the Engineering and Physical Sciences Research Council in July 2022 for a project using ammonia as a hydrogen carrier in commercial marine vessels;
• directing £10 million of funding under Innovate UK’s Net Zero Mobility programme to early stage, highly innovative transport propulsion technologies, for which hydrogen is a key thematic area.

Upcoming opportunities

Currently open or upcoming opportunities for government and industry to work in partnership within the framework of the UK Hydrogen Strategy include:

• A market engagement exercise about the second electrolytic hydrogen allocation round (HAR2), which government aims to launch in Q2 2023.
• A consultation on potential reform options for the CHP Quality Assurance scheme, being planned for publication in 2023.
• The Industrial Energy Transformation Fund Phase 2: Autumn 2022 competition, which is open for applications until 13 January 2023.
• Phase 2B of the Industrial Hydrogen Accelerator competition, which is intended to launch by the end of 2022, offering the opportunity for projects that were successful in the phase 2A feasibility competition to apply for grant funding to build demonstrations or conduct FEED studies.
• Phase 2 of the Hydrogen BECCS competition, launched alongside this update, offering the opportunity for projects that were successful in Phase 1 to apply for funding to build demonstrators of their Phase 1 designs.
• A consultation, intended to be published in winter 2022/23, on design changes to the Capacity Market to better align it with net zero and improve delivery assurance.
• A consultation, intended to be published in winter 2022/23, on proposals for updating Decarbonisation Readiness requirements to ensure new build and substantially refurbishing combustion power plants have viable decarbonisation plans.
• An invitation to the Gas Distribution Networks to submit proposals for plans for a potential pilot hydrogen town by 20 January 2023.
• Innovate UK are aiming to run a circa £4.5 million competition in early 2023 to fund collaborative R&D projects aimed at developing hydrogen supply chains.

You can read the full UK Hydrogen Strategy market update here.