UK Government says the money is still allocated but project lead Menter Mon faces challenging hurdles to secure the funds
Fears have been raised over the planned Holyhead hydrogen hub as it’s revealed UK Government funding has not yet been secured. The hub at Parc Cybi, Holyhead, by social enterprise Menter Môn, obtained planning permission last year.
Under the scheme green hydrogen would be produced at the site and distributed as fuel for zero emission hydrogen-powered vehicles. It was hoped the site would be in operation by 2025 and had funding and support from Welsh Government and Anglesey council.
Prime Minister Rishi Sunak gave the scheme a huge boost in 2021 when as chancellor he allocated £4.8m from UK Government. Last November – as PM – he told Parliament the government had invested in the Holyhead hydrogen hub.
But while the funds remain allocated the final investment has not taken place. Menter Môn were told in February it could not be supported in its “current form”. They now face challenging hurdles to meet a tight deadline to secure the funding.
These include securing off taker agreements for 100% of production capacity by July – a difficult proposition for any new scheme, and particularly one involving a relatively new technology.
Ynys Mon MS Rhun ap Iorwerth has raised concerns after discovering the funds had not yet been delivered. He was told by First Minister Mark Drakeford that UK Government “haven’t come to the table with the funding that they had already announced”.
The Business, Energy and Industrial Strategy (BEIS) said funding had been allocated and they were supporting Mentor Môn as they work through the process of drafting their business case.
Menter Môn said they welcomed the engagement over the hub but that the issues raised in the business case are not “likely to be resolved quickly”.
‘Seriously disappointed’
Plaid MS Mr Iorwerth said: “I’m seriously disappointed to hear that the Conservative UK Government is delaying the development of the Holyhead Hydrogen Hub project. Having previously led the first Senedd debate on the developing the hydrogen sector, highlighting Holyhead’s hydrogen potential, I was pleased when the then Chancellor Rishi Sunak made £4.8m available in 2021 for a pilot project in his 2021 budget. Now, we hear that the funding still hasn’t materialised, despite the business case being submitted last year.
“This is a rapidly developing sector. Here we have a great pilot project by Menter Môn that’s ready to go, with real potential for Ynys Môn to be among the leaders in the field. Now UK Government appears to be moving the goal posts on the funding conditions, and time is being lost. I will be writing to the Prime Minister to insist that this funding promise must be kept.”
What Menter Môn say
Menter Môn said: “We have been developing the Holyhead Hydrogen Hub project since 2019. The aim is to use renewable power generated by the Morlais tidal energy project to produce green hydrogen. In doing so we also want to create employment and ensure that Ynys Môn is leading in this exciting sector. In the first two years several feasibility studies were completed with EU and Welsh Government funding.
“In the 2021 UK Budget the then Chancellor of the Exchequer, Rishi Sunak, announced that £4.8 million had been allocated for the Holyhead Hydrogen Hub project. We welcomed this unexpected intervention which gave the project a much-needed boost. Subsequently the project was referred to by name in several UK Government announcements.
“With Welsh Government funding we continued to develop the project. This involved progressing the planning application, purchasing the land and securing a grid connection. We also appointed specialist consultants (ARUP) to prepare the Business Plan with input from the Isle of Anglesey County Council, Welsh Government, Bangor University and other key stakeholders. Throughout this period there was ongoing dialogue with UK Government’s Department for Business, Energy and Industrial Strategy (BEIS).
“Having presented an outline business case in late Spring 2022, we were subsequently tasked with submitting a final business case by September 30th, 2022. Given the relatively short turnaround we took a pragmatic view as to what could be achieved in terms of private sector investment and securing off-taker agreements. For this reason, we focused on what could be delivered within the sum already allocated (£4.8 million) and continued discussions with potential off-takers in this embryonic sector.
“A response was received at the end of February 2023 which stated that they could not support the bid in its current form, however we had until July 1st, 2023, to address the issues. These were primarily the following:
- Secure off taker agreements for 100% of production capacity.
- Secure private sector investment in order to demonstrate the viability of the project and help mitigate any contravention of the subsidy control regulations.
“We very much welcomed the response, whilst recognising the challenge associated with addressing these two issues quickly. We are actively pursuing several off-taker leads, however a purchase agreement will also require a guarantee of supply. There are also potential investors, but this requires extensive due diligence and an understanding of implications of the subsidy control regulation. Neither are likely to be resolved quickly.”
They added: “The Holyhead Hydrogen Hub is progressing, and is in the fortunate position of having secured the following:
- Planning permission on Parc Cybi, Holyhead
- Land to build the HHH
- Grid connection
- Potential access to renewable power via the Morlais tidal energy project
“Like Morlais, this is pathfinder project that could give Ynys Môn the advantage of being the early mover in this emerging sector. We are committed to progressing the Holyhead Hydrogen Hub and will continue to work with the UK and Wales Governments, along with the private sector to realise this strategically important project.”
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A UK government spokesperson said: “The UK government’s hydrogen strategy is working to rapidly and significantly scale up low carbon hydrogen production, and we’ve recently doubled our ambition to increase production.
“As announced at the Budget in 2021, £4.8m of funding has been allocated to support the construction of the proposed Holyhead Hydrogen Hub, subject to business case. Since that announcement, we’ve been supporting Mentor Môn as they work through the process of drafting their business case. We look forward to receiving a final version when this process is complete.”
SOURCE: Daily Post
