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Hydrogen Investor Roadmap
Hydrogen Investor Roadmap
Roadmap
Leading the Way to Net Zero
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April 2022
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Hydrogen Investor Low carbon hydrogen will be vital to achieving net zero by
2050, with the potential to help decarbonise key UK industrial
Roadmap sectors and provide energy across power, transport and heat.
Leading the Way to Net Zero After setting out an aim for 5GW of low carbon hydrogen
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production capacity by 2030 in the UK Hydrogen Strategy we
are now doubling our ambition to up to 10GW by 2030,
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subject to affordability and value for money, with at least half
from electrolytic hydrogen.
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long-term revenue support, and a Low Carbon Hydrogen
Standard to enable market access and certainty represent the
next substantial step forward to developing a thriving UK
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Innovation
Portfolio
■ Lowest and most stable labour costs in
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Western Europe (compared to Germany,
France and Italy)
4 1st
Most active, ■ The most business-friendly employment
of the world’s
top 10
deepest capital laws in Europe
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markets in
universities
Europe
■ The UK-EU Trade Cooperation
Agreement post EU exit allows zero
tariff market access with the EU
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allocate business model support in 2023
and 2024. Ambition to subsequently run
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yearly electrolytic allocation rounds
Up to Up to
10GW £240m £100m ■ Regulatory environment: a new Low
Carbon Hydrogen Standard
Net Zero Hydrogen
ambition by 2030, Fund provides for initial electrolytic ■ Existing natural assets and expertise:
at least half from CAPEX/DEVEX H2 projects through salt caverns, depleted oil & gas fields and
electrolytic H2 Business
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support gas pipeline infrastructure can be
hydrogen Model
redeployed
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ongoing or pending (e.g. Acorn,
Gigastack, H21), two CCUS clusters
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UK hosts COP 26: Glasgow 2GW of hydrogen Up to 10GW
Breakthrough on Hydrogen Design of business production in of Hydrogen
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model complete construction or production
operation
Launch of Phase-2 Cluster
Second wave of NZHF
Sequencing Process. (Strands 1 & 2) - tbc
Village sized trial Potential hydrogen
Launch of NZHF Launch of 2nd 100% heating heated town
(Strands 1 & 2) electrolytic
allocation round
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2035
2021 2022 2023 2024 2025 2030
Phase 2 of
Publication of
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Industrial Energy
Net Zero Transformation Hydrogen heating 4 CCUS clusters
Strategy Fund decision (2026) operational
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Industry TWh*
system, becoming comparable in scale to existing electricity use by 2050. by 2035
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Power
0 - 45
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TWh*
by 2035
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20 - 45
Heat in TWh*
buildings by 2035
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Transport
Source: Central range – illustrative net zero consistent scenarios in CB6 Impact Assessment. Full range – based on whole range from UK Hydrogen *Illustrative demand based on analysis for the UK Hydrogen Strategy (2021)
Strategy Analytical Annex. Final energy consumption from ECUK (2019). https://www.gov.uk/government/publications/uk-hydrogen-strategy
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Production ■ Supporting variety of production methods through innovation and ■ Progress research and innovation to bring forward a range of low
deployment support – NZHF and hydrogen business model. carbon production technologies. Move towards Final Investment
Decision on basis of support policies to help reach up to 10GW
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ambition by 2030.
Use ■ Stimulating demand by supporting research, development and ■ Embrace fuels of the future and trial the use of hydrogen in
demonstration of hydrogen use across UK industry, power, heat manufacturing operations, power generation, domestic heating
and transport to support our energy transition. and a range of transport modes.
Infrastructure ■ Supporting innovation in hydrogen infrastructure, and the ■ Explore and identify suitable infrastructure options for
development of network and storage facilities through the design their needs.
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of new business models for hydrogen transportation and storage
(T&S) infrastructure that will provide the commercial framework
and reduce risk.
Funding support ■ Providing funding schemes to support early market development. ■ Develop low carbon hydrogen projects in response to Net Zero
Hydrogen Fund and Hydrogen Business Model allocation
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rounds and lower costs of hydrogen production.
Regulation ■ Using regulation to unlock access to energy markets and provide ■ Working with government and regulators to deliver a robust
greater certainty on rules and frameworks. regulatory framework.
Supply Chain ■ Working with industry to build a world class supply chain for ■ Support growth of the UK supply chain. Nurture and train
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hydrogen in the UK, attracting investment and facilitating new employees to be the low carbon hydrogen leaders of tomorrow.
& Skills export opportunities through UK Export Finance, DIT and FCDO
overseas networks. Leveraging existing expertise and ensuring we
have the right skills at the right time.
Innovation ■ At least £100m of funding as part of the Net Zero Innovation ■ Projects that accelerate the commercialisation of innovative, low
Portfolio to support industry to switch to low carbon fuels, including carbon technologies and support government aims, such as
hydrogen. Includes £60m Hydrogen Supply 2 to support innovative reducing costs of hydrogen supply, increasing carbon saving
hydrogen production, transport and storage technologies. potential, building knowledge and skills.
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What we have done What we are doing What we committed to
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The Hydrogen Strategy published in Reducing financing costs with grant Ambition for up to 2 GW capacity in
2021 sets out our ‘twin track’ funding through the £240m Net Zero operation or construction by 2025
approach, supporting a variety of Hydrogen Fund
Up to 10 GW production ambition by
production methods, including
Providing long-term certainty to 2030, subject to affordability and
electrolytic & CCUS-enabled
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investors through revenue support via value for money
hydrogen
the Hydrogen Business Model
Aim for four CCUS clusters by 2030
Confirmed initial funding for hydrogen
Identifying a potential UK pipeline of
Supporting business model under the Industrial
up to 20GW production capacity
production Decarbonisation and Hydrogen
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Revenue Support Scheme
Announced the first two CCUS cluster
sites under phase 1 of sequencing
process
Hydrogen use in transport supported
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by Renewable Transport Fuel
Obligation
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5. EMEC 33. H2 to Humber Saltend East & West Midlands
6. ERM (Dolphyn) 34. Aldbrough storage (SSE) 47. Tyseley Energy Park
7. ERM (Salamander) 4
35. Protium 48. Shropshire Council
10
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8. H2 Green 36. EDF Tees Green 49. Octopus Hydrogen /MIRA
9. Hy2GO 37. ECC pipeline (Nat Grid Ventures) Technology Park
8
10. Cromarty Firth Green Hydrogen 2
38. Project Union (Nat Grid Gas)
15 6
11. Repsol Sinopec 39. East Coast Hydrogen (NGN)
12. Scottish Power (Whitelee)
17 16
40. Tees Valley Transport Hub CCUS enabled projects
3 7
13. Shetlands Island Council 41. Octopus Hydrogen Electrolytic projects
14. Octopus Hydrogen 1 42. Anonymized
15. Kittybrewster HRS 43. Project Mayflower Storage & Distribution
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12
16. Aberdeen Hydrogen Hub 14 9
17. BayoTech 23
East England
25
40 36 50. Sizewell
North West England 24
30 35 51. Octopus Hydrogen Electrolytic end use (indicative)
32
18. Hynet: HPP 39
52. Lowestoft Port
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19. Trafford Green /Carlton Power 38
Note: Includes plans and proposals for projects that are in the public domain. Many more projects are under development in all parts of the UK.
Total UK pipeline estimated up to 20GW as of April 2022. Location of projects on this map is approximate.
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What we have done What we are doing What we committed to
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£315m Industrial Energy Following a Call for Evidence, Working with cluster projects to better
Transformation Fund for equipment exploring whether to enable or require understand the opportunities for
Industry deployment hydrogen-ready industrial boilers, industrial sites to foster an initial
which could be a significant source of market for low carbon hydrogen
early demand for low carbon hydrogen
Published a Call for Evidence in 2021 Publishing a Decarbonisation Assessing potential for hydrogen in the
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on Decarbonisation Readiness for Readiness Consultation in Summer future power system through providing
combustion power plants through either 2022. Actioning Net Zero Strategy firm, dispatchable low carbon
Power CCS or hydrogen generation commitment to explore the need and generation as new renewables are
technology case for further market intervention on integrated
hydrogen in power
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£25m Hy4Heat programme Working with industry and others to Government is aiming to make a
completed critical technical innovation deliver a neighbourhood trial by 2023, decision on blending by end of 2023
Heat in work on potential of domestic H2. HSE a village scale trial by 2025 and a and plans to take decisions in 2026 on
buildings overseeing trials assessing the impacts potential hydrogen heated town by the role of hydrogen in heating
of hydrogen blending on consumer 2030
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appliances
Launched UK’s first £23m Hydrogen Transport Programme Continuing multi-million pound support
‘Hydrogen Transport Hub’ delivering new hydrogen refuelling for transport decarbonisation, including
in Tees Valley in 2021, delivering pilot stations, upgrading existing stations deployment, trials & demonstration of
Transport trials on hydrogen propulsion and deploying hundreds of new hydrogen buses, HGVs, shipping,
technologies across all transport modes hydrogen vehicles aviation and multi-modal transport
hubs
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What we have done What we are doing What we committed to
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■ Set out in government responses in Currently undertaking a review into ■ Significant development of new H2
Hydrogen 2022, early development of T&S systemic H2 network & storage network and
Transportation infrastructure for initial H2 production requirements in 2020s and beyond, storage infrastructure to support the
& Storage (T&S) projects supported by business model & including need for economic regulation & growth of H2 economy through the
Net Zero H2 Fund funding, with update provided for in H2 design of new business models for
Infrastructure Business Model government response transportation and storage by 2025
Since 2002, the Iron Main Risk Reduction To support network transition, Parts of existing gas network could be
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Program replacing iron gas distribution industry will test transporting hydrogen used to transport H2 and we plan on
networks with plastic, which is well-suited through the gas network as part of engaging stakeholders on the future of
to transporting H2 FutureGrid the gas system in 2022
Industry has undertaken a series of projec Industry exploring the potential for a Working with industry to deliver H2
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ts to build the evidence base for using hydrogen transmission network heating trials including a neighbourhood
Networks pipelines to transport H2 as part of H21 transporting hydrogen between the trial by 2023, a village scale trial by 2025
clusters as part of Project Union & a potential hydrogen heated town
by 2030, resulting in building a
new network for the neighbourhood trial
and repurposing the existing network for
the village trial
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■ In 2021, we launched a £60m Hydrogen Industry developing plans for one of the ■ Working with industry to deliver hydrogen
Supply 2 competition to support range of world's largest H2 storge facilities at heating trials, resulting in the
demonstration projects, including H2 Aldbrough on the East Yorkshire coast assessment of storage needs for a
Storage storage technologies working hydrogen heating system
■ In 2021, we launched a £68m Longer
Duration Energy Storage Demonstration
competition
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What we have done What we are doing What we committed to
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■ Publication of consultation on Fund Using grants to de-risk projects and ■ Up to £240 million, delivered between
design unlock private capital 2022 - 2025, to support new H2
production in UK
■ Split funding into four strands to align Targeted Development Expenditure
with IDHRS* and CCUS (DEVEX) support to stimulate project ■ CAPEX grant funding to be delivered
timelines, enabling projects to apply pipeline in tandem with a long-term revenue
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over a longer time period: settlement provided through IDHRS
Phased approach to get funding to
Net Zero 1. DEVEX grant co-funding to support
projects as quickly as possible ■ Open funding windows to our first two
strands in early 2022
Hydrogen FEED studies Complement and maximise the impact
Fund 2. CAPEX grant co-funding for projects of other BEIS innovations – notably ■ Allocate funding for electrolytic
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that do not require IDHRS support IDHRS and the CCUS programme projects via the hydrogen business
3. CAPEX grant co-funding for non- model and NZHF strand 3 in 2023
Stimulating new build low carbon
CCUS projects that are seeking hydrogen production projects
revenue support through IDHRS
4. CAPEX grant co-funding for CCUS-
enabled projects that are seeking
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* Net Zero Hydrogen Fund & Industrial Decarbonisation and Hydrogen Revenue Support (IDHRS)
revenue support through IDHRS together aim to:
Enable commercial deployment of low carbon hydrogen, CCUS and the required infrastructure in
the 2020s
Deliver sufficient capacity to meet our legally binding carbon budgets and net zero
Create a framework to reduce costs and risks to have a cost-competitive and self-sustaining market
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What we have done What we are doing What we committed to
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■ Publication of government response on Developing detailed model design to ■ Finalise the business model in 2022
business model design, alongside provide producers with revenue
indicative Heads of Terms of the support and help overcome operating
■ Support up to 1GW of electrolytic
hydrogen projects in operation or
business model contract cost gap between hydrogen and fossil
construction via initial two allocations
fuels and an ROI
■ Launch of process to allocate funding to in 2023 and 2024.
initial CCUS-enabled hydrogen Designing an allocation round for
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Hydrogen production projects through CCUS electrolytic hydrogen projects and
■ Announce funding envelope in 2022
Business to support delivery of up to 1GW of
cluster sequencing Phase-2 engaging industry through a Market
CCUS-enabled hydrogen by mid-
Model ■ Announcement of Industrial Engagement exercise, with the aim of
2020s.
launching the round in summer 2022
Decarbonisation and Hydrogen
■ Ambition to run yearly electrolytic
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Revenue Support scheme (IDHRS) to Selecting the first CCUS-enabled
allocation rounds for the hydrogen
fund business model hydrogen projects to enter into bilateral
business model and to move to price-
negotiations with through the CCUS
competitive allocations as soon as
Cluster Sequencing process
market conditions and legislation allow
Transport & ■ Set out in the government response on Undertaking a review of systemic H2 ■ Design new business models for H2 tr
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the H2 Business Model design, that networks and storage requirements in ansportation and storage infrastructure
Storage early development of transportation and 2020 and beyond, including economic by 2025
Business storage infrastructure for initial H2 regulation and funding
Model production projects can be covered
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What we have done What we are doing What we committed to
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■ Published the final design of the low Developing a greenhouse gas ■ Levelling the playing field by setting up
carbon hydrogen standard emissions threshold for ‘low carbon’ a hydrogen certification scheme by
hydrogen and the methodology for 2025, so the UK can play an active
The consultation sought views on
calculating emissions role in the international hydrogen
Low Carbon design options for a UK standard
market
Hydrogen defining 'low carbon' hydrogen, to Consulting on potentially including the
underpin our support for hydrogen
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Standard standard under the Green Taxonomy, Taking full advantage of future global
production to support investment in low carbon trade and investment opportunities by
hydrogen ensuring the standard is developed in
line with international developments
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Established a Hydrogen Regulators Working to identify, prioritise and Addressing regulatory barriers facing
Forum to determine current and future implement any changes to the existing first-of-a-kind H2 projects. Using
Non non-economic regulatory non-economic regulatory framework – regulation to unlock access to
Economic responsibilities across the hydrogen including addressing any gaps – to new markets. Ensuring role for H2
value chain support the growth of a hydrogen is considered in broader reviews of
Regulations economy regulation
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Hydrogen Investor Roadmap: Leading the way to Net Zero 14
World class UK supply chains, skills and innovation
Maximising UK capabilities
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What we have done What we are doing What we committed to
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Supply ■ Established strengths in Government working to promote ■ Supporting UK expertise in high-end
electrochemical technologies, including growth of UK supply chains to meet manufacturing, oil & gas, renewables,
chains fuel cells and electrolysers, which UK hydrogen deployment ambitions. chemicals, safety and EPCm
companies are exporting overseas and
UK Export Finance providing enhanced
our functional strengths in planning,
support for investment into developing
legal, professional and financial
export capabilities
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services
Skills ■ Published the Green Jobs Taskforce Working with industry and others to ■ North Sea Transition Deal includes a
report and established a Green Jobs ensure investment in skills needed commitment to facilitate the reskilling
Delivery Group with representatives across the value chain and drive local of existing parts of the oil and gas
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from industry, the skills sector and other and regional opportunities, helping to workforce to ensure people and skills
key stakeholders to support the level-up across our industrial are transferable across the wider
development and delivery of the heartlands energy sector
Government’s plans for green jobs
Continue to deliver relevant green T-
and skills
levels, apprenticeships and skills
bootcamps
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Funding ■ Government has supported the The UK co-leads the Clean Hydrogen Programme of key research and
development of innovative low carbon Mission, with the goal of reducing end- innovation challenges across all net
innovation hydrogen technologies, providing over to-end costs to $2 per kilogram by zero sectors over the next 5-10 years,
£90m in direct R&I funding across the 2030 including hydrogen. Continued
supply chain in the last 5 years. collaboration with UKRI, including
Hydrogen is a key priority area in our Innovate UK
£1bn Net Zero Innovation Portfolio
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Substantial private investment in ITM
supported (incl. £250m fundraise)
>100 direct jobs created (projected
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further 180 in supply chain & could
catalyse 1,700 over time)
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Gigastack demo project, profile from HMG award. In same period,
ITM moved into new Gigafactory site.
Project helped refine technology and scale-up production,
including via semi-automated processes. ITM says “milestones
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represent a step-change in ambition and capacity which should
enable a 40% reduction in costs for electrolyser stacks over the
next three years.”
ITM used innovation project learning to improve processes and as
part of their showcase for investors. They raised £250m in Oct 21
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to build two more Gigafactories.
At year end, ITM had a record order backlog (~500MW), and a
sizable tender pipeline (~1GW).
NZIP continues with a commercialisation focus and backs demos
of sufficient scale to interest investors, with competed-for funding
and expert monitoring.
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