UK hydrogen funding: three assessments to help win HAR2 allocations

The U.K. is progressing toward its vision of thriving hydrogen energy production with 27 proposed projects recently shortlisted for potential government funding. The progress is compelling, yet enthusiasm needs to be tempered. It’s time to remove the hydrogen hype and start working in reality.

Green hydrogen development from FEED studies to deployment

Enthusiasm for hydrogen has grown rapidly, thanks to its potential to drive the transition to low-carbon energy. Hydrogen’s promise includes its ability to lower emissions in sectors that are difficult to decarbonize. It also offers versatile production and storage and beneficial environmental impacts.

To date, however, the projects have not fully lived up to expectations. The path from potential to projects has proved challenging to complete. Costs have been prohibitive. Transportation of hydrogen has proved problematic. Project development has not been straightforward.

The market is changing. As Black & Veatch director of hydrogen and ammonia Bryan Mandelbaum said in an Argus interview, the project pipeline is improving. Focus has shifted to what’s realistic, practical and financially sound. The Advanced Clean Energy Storage I (ACES I) in the U.S. is a green hydrogen project like the 27 projects shortlisted for the second Hydrogen Allocation Round (HAR2) in the U.K. It proves hydrogen is more than hype.

The U.K.’s Hydrogen Allocation Rounds (HARs) are a government funding mechanism. For HAR2, the shortlisted projects represent 765 megawatts of production capacity across the U.K. To move forward, they must show their viability via a rigorous cost assessment and due diligence process.

Black & Veatch understands the challenge. For 80 years, we have played key roles engineering and building projects involving hydrogen. The work includes hydrogen production via electrolysis as well as gasification. We bring expertise throughout the lifecycle of projects, from FEL and FEED studies to construction and deployments. From experience, we have identified three critical assessments that any HAR2 project – for that matter any fledgling hydrogen production project – needs to implement to advance to full funding.

Assessment 1: Site optimisation

Put the key piece of the project first: the offtaker(s) committing to purchasing the hydrogen. Assess their consumption. How will they reliably receive your product? How will your site need to operate to meet delivery expectations? What site availability is needed to fulfill demand? Do you have the right technology? Site design must be optimised.

Assessment 2: Constructability

Site access, simultaneous operations, integration of utilities and adjacent infrastructure are some of the operational factors that must be considered to mitigate your risks. Underestimating a project’s true complexity typically results in poor constructability planning.

Assessment 3: Resourcing

Expect fierce competition for the best resources to design and build your project. Few companies have built large-scale hydrogen production facilities. They are in demand for projects globally. Plan how to secure the resources your project needs.

In the U.K., government commitment to the HAR process is promising for project development. For those shortlisted for HAR2, as well for projects no matter where they’re to be built, assessment of their site, constructability and resource requirements will be critical to securing funding.

Contact us to learn more about hydrogen project planning. We can help you address your project’s commercial, technical and regulatory realities, to advance your project to full funding.