First Hydrogen CfDs Awarded

From NOT A LOT OF PEOPLE KNOW THAT

By Paul Homewood

The first three CfDs have been announced for the Hydrogen Allocation Round 1.

All prices are at 2022 prices, so at current prices they range from £213 to £242/MWh. As with other CfDs, the hydrogen producers will be given a guaranteed, index linked price.

But on top of that is the cost of transporting the hydrogen to where it can be used or stored. The LCCC give an estimated cost for this – at Cromarty, for instance, it is £24.37/MWh.

So in total, the total cost of hydrogen will be up to £266/MWh. In comparison the wholesale price of natural gas is around £34/MWh.

It is expected that the cost of this subsidy will be added to gas bills.

Hydrogen Allocation Round 1 offered contracts to eleven producers, with a total capacity of 125 MW, and output of around 500 GWh a year, just 0.07% of the UK’s total gas consumption.

The subsidy varies relative to changes in the market price of gas, but at current levels would amount to around £120 million a year.

The three have 31.8 MW capacity