How the UK Priced Its First 125 MW of Green Hydrogen

In December 2023 the UK government picked the first projects it would pay to produce green hydrogen. Eleven of them, spread from Pembroke Dock to the Cromarty Firth. Together they add up to less electrolyser capacity than a single mid-sized solar farm, and the price agreed for their output tells you why the government still thought it worth backing them.

Key takeaways

• On 14 December 2023 the UK government selected 11 green hydrogen projects with a combined capacity of 125 MW under its first Hydrogen Allocation Round (HAR1), launched in July 2022.
• The 11 HAR1 green hydrogen projects were agreed at a weighted average strike price of $302.4 per MWh, according to Enerdatics' record of the allocation.
• Leap records the UK government's commitment to support green hydrogen projects at $2.5 billion (GBP 2 billion) over 15 years, which differs from early reports of GBP 2.5 billion; Leap carries no structured amount for the HAR1 award itself.
• Carlton Power holds three of the 11 HAR1 projects, Barrow Green (21 MW), Trafford Green (10.5 MW) and Langage Green (7 MW), a combined 38.5 MW or about 31 percent of the round's capacity.
• The largest HAR1 project is Hygen Energy's 24.5 MW Bradford Low Carbon Hydrogen, and the smallest are Marubeni Europower's Hybont and EDF Renewables Hydrogen's Tees Green Hydrogen at 5.2 MW each.

What did the UK actually commit?

A price, more than a pot of money. HAR1 support is built around a strike price: a guaranteed value per MWh of hydrogen that the producer is paid towards over the contract term. That structure means the cost to government depends on how much hydrogen the projects make and what the alternative fuel costs, not on a single up-front grant.

That is why Leap holds no structured amount for this award. The headline commitment of $2.5 billion (GBP 2 billion) is a 15-year envelope for green hydrogen support. Early reports, including the original version of this page, described it as GBP 2.5 billion. The sterling figure in Leap's record is GBP 2 billion; the 2.5 is the dollar equivalent.

Only one project in Leap's record carries an individual figure. Barrow Green Hydrogen, Carlton Power's 21 MW scheme in Barrow-in-Furness, Cumbria, will receive a total of about $50 million, roughly $2.4 million per MW of electrolyser capacity.

Why is the strike price so high?

Because small electrolysers make expensive hydrogen. A weighted average of $302.4 per MWh sits well above the cost of the natural gas that green hydrogen is meant to replace in industrial heat and transport. The gap is the subsidy, and it reflects where the technology sat at the end of 2023: first-of-a-kind plants, built at a few megawatts each, with no economies of scale yet.

The project sizes make the point. The 11 schemes average about 11.4 MW. Eight of them are 10.6 MW or smaller. These are pilot-scale plants, not national supply.

The cost per megawatt follows from that. If the full $2.5 billion commitment were spread across the 125 MW selected, it would equal about $20 million of support per MW over 15 years. That is a rough ceiling rather than a forecast, since actual payments depend on output and reference prices, but it shows the scale of public money per unit of capacity in the first round.

Who won the most capacity?

Carlton Power, by some distance. Its three projects in Barrow-in-Furness, Trafford in the North West and Langage in the South West total 38.5 MW. No other developer won more than two.

The full list of HAR1 projects in Leap's record is:

• Barrow Green Hydrogen, 21 MW, Carlton Power, Cumbria
• Bradford Low Carbon Hydrogen, 24.5 MW, Hygen Energy, Yorkshire
• Cromarty Hydrogen, 10.6 MW, Scottish Power and Storegga, Scotland
• Green Hydrogen 3, 10.6 MW, HYRO (RES and Octopus Energy), South East England
• Hybont, 5.2 MW, Marubeni Europower, Pembroke Dock, Wales
• HyMarnham, 9.3 MW, JG Pears and GeoPura, East Midlands
• Langage Green Hydrogen, 7 MW, Carlton Power, South West England
• Tees Green Hydrogen, 5.2 MW, EDF Renewables Hydrogen, North East England
• Trafford Green Hydrogen, 10.5 MW, Carlton Power, North West England
• West Wales Hydrogen, 14.2 MW, H2 Energy and Trafigura, Wales
• Whitelee Green Hydrogen, 7.1 MW, Scottish Power, Scotland

Scottish Power appears twice, once alone at Whitelee and once with Storegga at Cromarty. The rest of the field ranges from large energy groups such as EDF to specialist hydrogen developers such as Hygen Energy and GeoPura.

Enerdatics' data shows how unusual HAR1 is among UK hydrogen financings. Leap records 20 UK hydrogen financings announced between January 2022 and December 2024. Thirteen are government grants, six are equity raises and one is debt. Of the eleven other grants with a disclosed amount, ten are below $50 million, three of them under $1 million, while the largest disclosed grant is $408.6 million in April 2022. The largest private raise is a $150 million Series C for a hydrogen aviation developer in September 2024. Against that backdrop of grants for equipment and technology, HAR1 stands out because it prices the hydrogen itself.

What does the round signal for UK green hydrogen?

It shows the government buying learning at a high unit cost. Spreading 125 MW across 11 sites and eight developer groups gives the state a range of locations, customers and operating models to compare before the next round. A single larger award would have been cheaper per MWh and taught far less.

It also sets the benchmark later rounds will be measured against. Any future allocation will be judged on how far its strike price falls from $302.4 per MWh, and on whether project sizes move from around 10 MW towards something closer to industrial scale.

For investors, the round confirms that UK green hydrogen economics rest on policy support rather than on market prices. A contracted strike price over 15 years turns a pilot plant into something a lender can assess. Without it, at these costs, the 11 projects would be hard to finance on their own.

Frequently asked questions

How many projects did HAR1 support? Eleven green hydrogen projects with a combined capacity of 125 MW, selected on 14 December 2023 under the UK's first Hydrogen Allocation Round.

What strike price did HAR1 projects agree? A weighted average strike price of $302.4 per MWh, according to Enerdatics' record of the allocation.

How much funding did the UK commit to green hydrogen? Leap records a commitment of $2.5 billion (GBP 2 billion) over 15 years to support green hydrogen projects. Early reports cited GBP 2.5 billion, and Leap carries no structured amount for the HAR1 award itself.

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