On October 26th, 2023, the UK Energy Act passed with approval from King Charles the third, and is expected to provide £100 bn of private funding for energy infrastructure, scaling up jobs and supporting the drive towards Net Zero. These aims will also include huge benefits for the Hydrogen industry, including a mechanism for funding government-backed investments.
Alongside the plans to fund energy infrastructure, scaling up jobs and supporting the drive towards net zero, the funding will go towards providing a starting point for the UK’s future hydrogen economy, through the creation of a Hydrogen Production Business Model, plus a Hydrogen Transport and Storage Business Model. This is the plan according to the CEO of Hydrogen UK, Clare Jackson, who happily welcomed the passage of the Act. The method behind these decisions is the aim to achieve an incentive to invest in low-carbon hydrogen production, and meet the government’s 10GW capacity target by 2030, through the business model. Furthermore, the aim of the transport and storage models is to develop infrastructure which connects production and demand. How this plan will be implemented will be decided through consultation and secondary regulation. Also, the discussion of who the levy for these investments would fall onto, originally landed on taxpayers, however after discussing this earlier in 2023, the government decided that because a levy on taxpayers would increase the average dual-fuel household’s energy bills by £119 annually, this decision was amended and it was decided that the bill would be placed on ‘gas shippers’.
The focus on the hydrogen projects carries through to the Government’s aim to be Net Zero by 2050. The government plans to run a hydrogen heating trial, in which the first large hydrogen village will be facilitated in order to conduct research and show technology’s role in decarbonising heat. Despite the National Infrastructure Commission (NIC) stating that using hydrogen for domestic heating would not be a viable option, the government believes that this plan is a “pragmatic, proportionate and realistic way” to determine if using hydrogen for heating could be a possible route to achieving Net Zero by 2050. Therefore, they have begun a plan to convert a large village of 1,000-2,000 properties to hydrogen and alternative solutions instead of natural gas. The purpose of this hydrogen village project will be to trial the conversion of existing gas network infrastructure to carry 100% hydrogen.
Northern Gas Networks (NGN) and Cadent have both seen promise in this plan and have put forward proposals to host the trial in Redcar and Whitby respectively. Unfortunately, due to a lack of local support, Cadent was ruled out by the government, leaving Redcar and NGN in the running. Currently no decision has been made around this project and all industries involved are waiting to see if it will go ahead and if so, which company will be selected.
The government have also mentioned that there will be systems and precautions put in place with this new act, in order to reduce costs for consumers further and to prevent events such as energy companies merging.
The Energy Security Secretary, Claire Courtinho, commented, “The Energy Act is the largest piece of energy legislation in a generation. It will boost investment in clean energy technologies and support thousands of skilled jobs across the country. It lays the foundations for greater UK energy independence, making us more secure against tyrants like Putin, and helps us to power Britain from Britain. The Act also supports our new approach to make sure that families don’t feel a disproportionate financial burden as we transition to Net Zero and forms a central part of our efforts to keep people’s bills affordable in the long-term.”