Return To Main Page
Contact Us

Three green hydrogen projects drop out of first UK production subsidy round ahead of negotiations

16 August 2023
By Polly Martin


A computer-generated image of the proposed Gigastack hydrogen production facility.Photo: Gigastack

The government plans to award operational support to 250MW by end of year, but 262MW is still in the running

The UK government has today (Wednesday) announced that 17 green hydrogen projects will move forward to the negotiations stage of the first allocation round for the so-called Hydrogen Business Model (HBM) subsidy, to be awarded in Q4 this year.

This means that three projects — the Commercial Scale Demonstrator led by ERM Dolphyn, Gigastack led by Phillips 66 and Ørsted, and Quill 2 led by Inovyn ChlorVinyls — representing a combined 146MW have withdrawn during the due diligence stage.

While little information has been released about Quill 2 based at the Inovyn site in Runcorn, both Gigastack and the Dolphyn demonstrator project aimed to use offshore wind to produce green hydrogen.

Gigastack was set to use a 100MW electrolyser supplied by ITM, with electricity supplied by Hornsea 2 offshore wind farm, in order to supply renewable hydrogen to the Phillips 66 Humber refinery.

A spokesperson for Phillips 66 and Ørsted confirmed to Hydrogen Insight that the project has been paused.

“Phillips 66 Limited and Ørsted believe that further project maturation together with supply chain development is required to unlock the maximum potential of this world-scale electrolytic hydrogen project,” the spokesperson added.

“We will continue to work with the governments of the UK, industry and stakeholders to help realise the enormous potential of green hydrogen.”

Meanwhile, ERM Dolphyn planned to construct 10MW of electrolysis capacity integrated with a floating offshore wind platform and desalination unit.

The developer has clarified in a statement that it withdrew from the competition in order to increase the capacity of its first deployment and would thereby need other sources of funding.

Similarly, a spokesperson for Inovyn tells Hydrogen Insight that while Quill 2 remains “a high value strategic project that will deliver a large-scale electrolysis plant... having developed the project programme based on real-world lead times, it is clear that Quill does not align with the timescales required by HAR1 as these are based on smaller scale investments”.

However, the company has not confirmed whether it plans to submit the project for future funding rounds.

The HBM effectively provides a subsidy during operations via a private law contract with the government that covers the difference between a “strike price” reflecting the cost of producing green hydrogen and a “reference price” for the market value of grey H2.

In March, the government announced that 20 projects representing 408MW had been shortlisted for the support scheme — but only 250MW would be funded for this round, which seeks to back projects that can start operations in 2025.

The remaining 17 projects (listed below) have a combined capacity of 262MW:


However, the government has called for the three projects that dropped out of the competition to apply for support in its second HBM allocation round (HAR2), due to open at the end of this year.

HAR2 aims to award contracts to up to 750MW of capacity in early 2025, in a bid to guarantee the targeted 1GW of green hydrogen plants by that year are at least under construction.

The government announced earlier this month that it will hold annual tenders to support hydrogen projects.

Updated to include comment from Gigastack developers Phillips 66 and Ørsted and Quill 2 developer Inovyn.(Copyright)

 

 

 

 

Green Play Ammonia™, Yielder® NFuel Energy.
Spokane, Washington. 99212
509 995 1879 Cell, Pacific Time Zone.
General office: 509-254 6854
4501 East Trent Ave.
Spokane, WA 99212