UK Government Pushes Forward with £2bn Funding for Green Hydrogen Projects Under HAR1

Oct 31

2 min read

UK Chancellor Rachel Reeves confirms £2bn funding for 11 green hydrogen projects in the UK, totaling 125MW under HAR1, marking a crucial step toward achieving commercial-scale green hydrogen production.

UK Chancellor Confirms £2bn for 11 Green Hydrogen Projects — Image Credit: HM Treasury

In a significant move for the UK’s green hydrogen sector, Chancellor Rachel Reeves has confirmed £2 billion ($2.6 billion) in funding for 11 green hydrogen projects, totaling 125MW. Previously selected under the Conservative government, the projects have been in limbo for 10 months while awaiting confirmation of financial support. This initiative marks the first commercial-scale hydrogen projects across England, Scotland, and Wales, with the funding now officially endorsed in Labour's first budget in 14 years.

The green hydrogen projects are part of the first Hydrogen Allocation Round (HAR1) and will receive support through a weighted average strike price of £241/MWh ($313.9/MWh), aimed at reducing hydrogen production costs for offtakers. Approximately £90 million ($117.2 million) of the funding will specifically support the construction phase of these projects, with the remaining funds allocated as revenue support post-production commencement.

Brett Ryan, Head of Policy at Hydrogen UK, acknowledged the announcement as a "formal commitment" to support hydrogen and carbon capture, while urging swift final investment decisions (FID) to avoid further delays. The funding aligns with the objectives of the 2021 Low Carbon Hydrogen Agreement (LCHA), designed to advance low-carbon hydrogen production with financial and policy backing.