Forty one electrolytic hydrogen production projects have applied for subsidies under the UK government’s first funding round for the technology, with a shortlist of projects expected in Q1 2023, the government says in its latest hydrogen strategy update.

The government launched the scheme in July, with the aim of having 1GW of capacity in operation or under construction by 2025. The deadline for applications was 12 October.

20GW – UK’s potential hydrogen production capacity

The scheme offers support to projects through two channels: the Net Zero Hydrogen Fund offers direct capital grants, and the Hydrogen Production Business Model offers ongoing support for producers via a market-based contract-for-difference mechanism.

The latest strategy update also includes a draft heads of terms for the contract which qualifying projects would initially enter into with the government. A fuller draft of the terms is expected in May 2023.

The government will engage with the market on a second funding round, which is also expected to be focused on electrolytic projects, in the second quarter of 2023, according to the strategy update.

Project pipeline

The government says it has identified up to 20GW of low-carbon hydrogen production capacity that could potentially be developed through to 2037, although it stresses this estimate is not based on future funding rounds or other government policy decisions.

The UK targets up to 10GW of capacity by 2030, with at least half coming from electrolysis.

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Author: Stuart Penson