The UK government has given the green light for 10 commercial-scale green hydrogen projects to begin construction, as the country looks to fuel to accelerate its clean power transition.

"This government is rolling out hydrogen out at scale for the first time, with 10 of the first projects now shovel-ready to start powering businesses with clean, homegrown energy from Teesside to Devon," said UK Minister for Industry Sarah Jones.

"Hydrogen will help us cut industrial emissions and support Britain's industrial renewal by creating thousands of jobs in our industrial heartlands."

The projects, selected from the first phase of the government's Hydrogen Allocation Round (HAR1), represent more than GBP400 million ($542 million) in private capital investment committed between 2024 and 2026, according to the UK Department for Energy Security and Net Zero.

The UK hopes to use low-carbon hydrogen to decarbonize industrial sectors including refineries, chemical production, heavy industry and hard-to-electrify transport.

Industry reaction

Many in the hydrogen industry welcomed the development, saying it provided investors some much-needed confidence.

"This announcement marks a significant and encouraging milestone for the UK's hydrogen sector," said Emma Guthrie, CEO of the Hydrogen Energy Association."The signing of contracts for 10 projects under HAR1 provides vital momentum and confidence for industry and investors alike."

The announcement follows the government's Spending Review confirmation of an additional GBP500 million for Britain's first hydrogen transport and storage network, connecting producers with end-users including power stations and industry.

The HAR1 projects are expected to access over GBP2 billion in revenue support over 15 years through the Hydrogen Production Business Model, plus over GBP90 million in capital expenditure support via the Net Zero Hydrogen Fund.

The UK government is aiming to streamline its electrolytic hydrogen allocation round process to shorten the time between application and award, based on learnings from the first two rounds.

It also plans to launch HAR3 by 2026, with HAR4 to launch from 2028, and could move to a price-based competitive allocation from 2030.

DESNZ awarded support to a total of 125 MW across 11 HAR1 projects at an average strike price of GBP241/MWh (GBP9.50/kg, $12.15/kg).

Platts, part of S&P Global Commodity Insights, assessed the cost of producing hydrogen via alkaline electrolysis in the UK (including capex) at $6.90/kg on July 22 based on month-ahead grid power prices. PEM electrolysis production was assessed at $7.15/kg.

DESNZ is to publish a hydrogen update to the market later this summer, and a new hydrogen strategy will follow in the autumn.