The UK today released a "final draft" for its hydrogen project subsidies, but industry association Hydrogen UK said projects cannot take final investment decisions until it is finalised.

 

The "heads of terms agreement" fleshed out details of the contracts for difference (CFD) the government will offer to hydrogen producers. The document has trbeled in length since the previous version, but the full version will not be published until May 2023. One change that project developers will welcome is the decision to award 15-year contracts, where previously London had been considering 10-15 years.

 

"It is a step forwards but it has by no means answered all questions or addressed all outstanding issues," Hydrogen UK chief executive Clare Jackson said.

 

More uncertainty has arisen from the UK's decision to review its definition of low carbon hydrogen. Today London said it will publish revisions "early next year," which could either bring relief or force some projects to adjust their plans.

 

The UK treasury must also allocate the funds to back up the various hydrogen subsidy schemes, Hydrogen UK said. So far, the treasury has only committed to ￡100mn for 250MW of electrolytic production, Jackson said.

 

"No moves can be made until this funding is allocated and it is important this happens by the middle of next year or we'll start to see [project] leakage to the US," she said. Hydrogen advocates in the UK and Europe fear generous US subsidies could lure investment away.

 

Today's UK government update also failed to address hydrogen industry calls to bring forward a funding scheme for hydrogen storage and transport systems from 2025.

 

But in a move that will please some, the UK did launch a consultation on a policy to make all newly-installed household boilers in the UK 'hydrogen-ready' from 2026. Most studies suggest electrification using heat pumps would be a better route to decarbonise home heating, but Jackson said installing hydrogen-ready boilers would be a "no brainer," as they have the same upfront costs as conventional natural gas boilers and could accept hydrogen if it becomes available.

 

This view was echoed by other trade associations including the Energy and Utilities Alliance, whose chief executive Mike Foster called hydrogen-ready boilers a "no-regret option."

 

Today the UK government also launched a ￡25mn technology pilot programme for hydrogen from sustainable biomass with carbon capture and storage. Separately, it released a study on the country's requirements for hydrogen transport and storage infrastructure.