Hydrogen to Power Business Model: Consultation Response

I am tabling this statement to inform Members of the publication of the hydrogen to power market intervention consultation response on 9 December 2024. This response commits to delivering a hydrogen to power business model to support the accelerated deployment of hydrogen to power as low-carbon long-duration flexible electricity generating capacity.

Making Britain a clean energy superpower by 2030 is one of the Prime Minister’s five missions. Unabated gas currently provides the majority of flexibility in Great Britain and so the deployment of hydrogen to power—the conversion of low-carbon hydrogen to produce low-carbon electricity—will play an important part in displacing unabated gas generation from the power system, to support the clean power mission, and the Government’s legally binding target to reduce greenhouse gas emissions to net zero by 2050.

Low-carbon hydrogen can make our energy system more flexible, resilient, and independent. When connected with large-scale storage, hydrogen to power can provide electricity to cover longer periods of lower renewable output, while also creating a decarbonisation pathway for unabated gas power plants. The hydrogen to power business model will de-risk investment in hydrogen to power by mitigating the deployment barriers we identified, through a dispatchable power agreement-style business model, helping to support the unlocking of investment in hydrogen to power and improving the pipeline of projects.

The response document commits to:

Delivering a Hydrogen to Power Business Model based on a Dispatchable Power Agreement-style mechanism to support the deployment of hydrogen to power.

Publishing a Hydrogen to Power Business Model market engagement document in 2025 outlining further detail on the proposed design of the Hydrogen to Power Business Model and plans for launching the first allocation round.

Establishing a hydrogen to power industry expert working group. This will provide a key forum for Hydrogen to Power Business Model design and strategic policy considerations.

Enabling hydrogen to power to participate in the Capacity Market as soon as practical.

This publication is an important step towards supporting the deployment of hydrogen to power, a key low-carbon flexible technology, and therefore facilitating a clean power system. It will build on the positive stakeholder feedback received through the consultation and provide industry with clarity on Government’s position on the technology and the next steps for implementing the market intervention.

[HCWS288]