The Department for Energy Security and Net Zero (DESNZ) has launched a consultation seeking evidence to guide the United Kingdom’s transition towards price-based competitive allocation for low carbon hydrogen production. This consultation is set to end at 11:59 PM on August 2, 2023.
As part of the UK’s Energy Security Strategy, the aim is to implement annual allocation rounds for electrolytic hydrogen. The plan is to transition to price-based competition by 2025, given that the legislative environment and market conditions permit such a move.
The purpose of this call for evidence is manifold. Firstly, it seeks to understand the market conditions necessary for the UK to shift to price-based competitive allocation for electrolytic projects and potentially other specified non-CCUS (carbon capture, usage, and storage) technologies. Secondly, it explores the extent to which a price-based competitive allocation process could incentivise projects to support broader outcomes beyond the cost reduction of low carbon hydrogen production. These outcomes may include harnessing electricity system benefits, promoting economic benefits and supply chain development, and ensuring the security of hydrogen supply. Lastly, it aims to determine how price-based competitive allocation should be designed.
This consultation is expected to be of special interest to various parties. These include prospective developers of new electrolytic projects and other non-CCUS low carbon hydrogen production projects in the UK, businesses involved in low carbon hydrogen production supply chains, electricity suppliers, consumer and environmental groups with an interest in low carbon hydrogen production, and trade bodies with an interest in low carbon hydrogen and renewable sectors.
As part of this initiative, the DESNZ will hold a launch briefing event on the HAR2 market engagement document and the call for evidence. The event will be held online via Teams on Thursday, May 25, from 11:30 AM to 12:30 PM.
This consultation represents a significant step towards achieving the UK’s low carbon hydrogen production goals while ensuring energy security and promoting sustainable economic growth.
Documents
Price-based competitive allocation for low carbon hydrogen: call for evidence
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