UK Targets 10GW Low-Carbon Hydrogen Production by 2030, Accelerates Hydrogen-Ready Building Policy and Infrastructure Investment

Morson Praxis UK

Overview

The UK government aims to achieve 10 GW of low-carbon hydrogen production capacity by 2030, with at least half from electrolysis, accelerating hydrogen infrastructure development. From 2026, the National Energy System Operator will strategically manage hydrogen transport and storage. The Autumn 2024 Budget allocated over £2 billion in revenue support for 11 Hydrogen Allocation Round 1 (HAR1) projects, totaling 124 MW capacity. However, hydrogen’s role in residential heating remains uncertain, with heat pumps currently receiving primary policy support.

In Depth

Key Findings

The UK government has set an ambitious target to establish 10 gigawatts (GW) of low-carbon hydrogen production capacity by 2030, with at least 5 GW derived from electrolysis, and is accelerating the development of hydrogen infrastructure and related policies to achieve this. Starting in 2026, the newly appointed National Energy System Operator will assume strategic responsibility for hydrogen transport and storage infrastructure, enhancing national-level coordination and planning. The Autumn 2024 Budget committed over £2 billion in revenue support for 11 projects selected under Hydrogen Allocation Round 1 (HAR1), totaling 124 MW of production capacity. This demonstrates the UK’s strong commitment to commercializing green hydrogen production.

Policy and Infrastructure Details

The UK’s hydrogen strategy aims to decarbonize industry, stabilize the electricity grid, and eventually contribute to heating. The government prioritizes the development of transport and storage infrastructure to ensure reliable hydrogen supply. The substantial revenue support for HAR1 projects is designed to mitigate the high initial costs associated with electrolyzer construction and operation, thereby facilitating Final Investment Decisions (FIDs). Specifically, several projects have secured government funding, including the 20MW West Wales Hydrogen development involving ITM Power and the 15MW Cromarty Hydrogen Project by Protium Green Solutions and ITM Power. These initiatives aim to supply green hydrogen to industrial customers.

Background & Industry Context

Similar to many other nations globally, the UK emphasizes the role of clean hydrogen in achieving its net-zero targets. However, the role of hydrogen in residential heating remains a subject of ongoing debate, with uncertainties regarding its safety, efficiency, and compatibility with existing infrastructure, leading to policy ambiguity. Currently, heat pumps receive primary policy support as the leading decarbonization technology for residential heating. Decarbonizing the industrial sector is a clearer priority, with hydrogen expected to play a key role in hard-to-electrify sectors like steel, cement, and chemical industries. The UK aims to create new industrial jobs and economic growth through green hydrogen production and infrastructure development.

Strategic Significance & Outlook

Over the coming years, the UK is expected to steadily expand its low-carbon hydrogen production capacity and accelerate the development of hydrogen transport and storage infrastructure. Centralized management by the National Energy System Operator will enhance coordination among projects and contribute to the construction of an efficient system. While the evaluation of hydrogen’s role in residential heating continues, industrial demand is anticipated to drive early market formation. From a long-term perspective, the UK’s hydrogen strategy aims to strengthen domestic energy security and establish its position as a global leader in clean energy technologies. However, careful progress is required, balancing technical challenges, economic feasibility, and societal acceptance.