The UK government, through the Department for Energy Security and Net Zero (DESNZ), has reinforced its commitment to the energy transition by announcing an intervention in the market to facilitate the deployment of Hydrogen in Energy (H2P). This initiative is part of the national goal to achieve a clean energy system by 2030 and strengthen the country’s energy security.

H2P: A Key Technology for the Energy Transition

H2P, which involves converting low-carbon hydrogen into electricity, is presented as a key technology for achieving an effective energy transition. According to the National Grid ESO (Electricity System Operator), between 40 and 45 GW of long-duration flexible capacity will be needed to ensure a stable and balanced energy system by 2030.

In this context, H2P will be crucial as it enables inter-seasonal energy storage and provides services similar to those of traditional gas plants, such as voltage stabilization and peak demand management.

Barriers to H2P Deployment

Despite its benefits, the government has identified significant barriers to implementing this technology. These include investment risks associated with it being a pioneering technology (First of a Kind, FOAK) and reliance on critical infrastructure that is still under development, such as hydrogen production, transportation, and storage.

To overcome these barriers, DESNZ has proposed a business model based on a Dispatchable Power Agreement (DPA) mechanism. This scheme aims to reduce financial risks by offering stable payments, thus incentivizing the development of H2P projects while consolidating the necessary supporting infrastructure.

Clear Routes to Market for H2P

Additionally, the UK government plans to enable H2P’s participation in the Capacity Market as soon as possible. This strategy will provide H2P developers with clear and predictable revenue streams, even as market conditions evolve to incorporate low-emission technologies.

Next Steps and Collaboration with the Sector

To move forward with these goals, DESNZ will publish a document in the spring of 2025 outlining the H2P business model design and will convene an Expert Working Group on H2P. This group will be crucial in refining the necessary policies and ensuring that the proposed solutions align with the energy sector’s expectations.

The announcement has been well received by key players in the sector. According to Hydrogen UK: “H2P will be a key tool in achieving clean energy and our net-zero targets. Hydrogen UK and our members look forward to working with the government next year to develop a suitable and detailed H2P business model that supports the development of world-leading hydrogen-to-energy conversion projects.”

Boosting Green Hydrogen in the UK

The UK has intensified its commitment to green hydrogen, allocating £2 billion (more than €2.3 billion) over the next 15 years to promote its production. This investment supports projects such as Exolum’s, which has launched the world’s first commercial-scale hydrogen transportation and storage project in Immingham. Additionally, companies like Lhyfe have announced plans to build green hydrogen plants in the northeast of England, supporting the country’s energy neutrality goals. These initiatives reflect the UK’s progress towards a more sustainable economy and its leadership in renewable energy adoption.

With these actions, the UK is positioning itself at the forefront of the global energy transition, ensuring that hydrogen plays a central role in creating a cleaner and more sustainable future.