HAR1 contract announcement ‘huge milestone’ for UK hydrogen sector

Stacey Collins, energy transition expert at Pinsent Masons, was commenting on the “big news for the UK sector”. These contracts are set to create jobs, drive investment, and significantly reduce emissions across industries, he said.

Collins said: “These contracts are some of the first government-backed hydrogen projects in the world, and a big step towards the UK’s ambition to be a clean energy superpower. The UK has the opportunity, and skills, to drive all the different low-carbon solutions forward, so as to achieve its net zero carbon commitments. However, there remains much to be done, and 2025 will be a crucial year in terms of turning policies into measurable action.”

HAR1 is a government funding initiative designed to support the development of low-carbon hydrogen production. It is part of the broader hydrogen production business model (HPBM) support scheme, which aims to provide financial support to hydrogen producers to help bridge the cost gap between low-carbon hydrogen and traditional high-carbon fuels. HAR1 offers long-term revenue support to hydrogen production projects through the HPBM.

The newly signed contracts will support the development of the Cromarty, Whitelee, and West Wales hydrogen projects, which collectively boast a capacity of 31.8 megawatts (MW). These projects represent the first-of-their-kind hydrogen projects producing low-carbon hydrogen, a crucial component in decarbonising sectors that are challenging to electrify, such as heavy industry and transportation.

The HPBM builds on the success of the contracts for difference (CfD) scheme, which has been instrumental in promoting renewable energy projects across the UK. By adapting this proven framework to the hydrogen sector, the government aims to provide long-term revenue support for low carbon hydrogen producers, thereby reducing investment risks and accelerating the development of the hydrogen economy.

The HAR1 initiative includes eleven electrolytic hydrogen projects, making it the largest single allocation of such projects at a commercial scale announced simultaneously in Europe. The remaining eight contracts under HAR1 are expected to be signed early in the new year alongside the ongoing second phase (HAR2) process, aiming to further expand the UK’s hydrogen production capacity.

“It is hoped that the government maintains the momentum by getting the other HAR1 projects over the line swiftly, and announcing the long-awaited HAR2 shortlist,” said Collins.