Government Signs Landmark Contracts for Three New UK Projects

The Low Carbon Contracts Company (LCCC) has signed the first three contracts under the Hydrogen Allocation Round 1 (HAR1), marking a pivotal moment for the UK’s hydrogen economy. These contracts, part of the Hydrogen Production Business Model, aim to accelerate clean hydrogen production, reduce emissions, and create regional jobs and investment opportunities.

The inaugural contracts include the Cromarty, Whitelee, and West Wales projects, representing the UK’s first-ever hydrogen production agreements. Once operational, these facilities will deliver a combined capacity of 31.8MW—a significant milestone in the UK’s decarbonization journey.

The Hydrogen Production Business Model builds on the success of the Contracts for Difference (CfD) scheme and adapts it to hydrogen technology. This government-backed framework offers long-term revenue support for hydrogen producers, minimizing investment risks and positioning the UK as a global leader in low-carbon innovation.

Key Highlights:

1. Largest Electrolytic Hydrogen Allocation in Europe

   • HAR1 comprises eleven projects, making it Europe’s largest single allocation of commercial-scale electrolytic hydrogen projects.

2. First-of-a-Kind Mechanism

   • HAR1 introduces a globally unique policy framework designed to de-risk hydrogen investments and accelerate deployment.

3. Decarbonizing Hard-to-Abate Sectors

   • These projects will focus on reducing emissions in industries where electrification is not feasible, contributing significantly to the UK’s Net Zero targets.

4. Economic Benefits

   • Beyond decarbonization, the projects are expected to drive regional economic growth, create jobs, and attract investments across the UK.

   
   

The LCCC continues to extend its expertise beyond electricity-focused CfD schemes, applying its contract and policy acumen to innovative technologies like hydrogen.

The remaining eight contracts are set to be signed in early 2024. This initiative solidifies Great Britain’s position as a key player in clean hydrogen technology and reinforces its commitment to Net Zero ambitions.

Industry Minister Sarah Jones said:

“On the heels of the recent launch of the UK's carbon capture and storage sector, we're moving swiftly to develop the infrastructure necessary for Net Zero while creating good jobs and developing the skills of the future.

“These projects are helping our mission to make Britain a clean energy superpower, ensuring hydrogen will become an important part of the UK’s future energy mix.”

Neil McDermott, Chief Executive at LCCC said:  

"We are proud to sign the first three of these pioneering contracts under Hydrogen Allocation Round 1 (HAR1) that will enable the production of 31.8MW of low carbon hydrogen. 

This milestone signifies our commitment to accelerating Britain’s journey towards a Net Zero future and underscores our pivotal role in delivering transformative projects, utilising cutting-edge technology, that drives decarbonisation. 

We are eager to partner with our new stakeholders to deliver these groundbreaking projects."

Clare Jackson, CEO of Hydrogen UK, said:

"Signed contracts for these first three projects is a landmark achievement for the UK hydrogen sector. It demonstrates the confidence and commitment of both Government and industry in building a sustainable hydrogen sector.

We look forward to maintaining this momentum and ensuring that the remaining eight projects progress swiftly. With full focus in January, we can build on these first projects and deliver a thriving hydrogen industry which will be vital for meeting the UK’s Net Zero targets, driving economic growth, and creating jobs.”