Hydrogen to power in the UK: market intervention need and design consultation – EUGINE Contribution
06 March 2024
On December 14, 2023, the UK Department for Energy Security and Net Zero launched a public consultation seeking feedback on the need and potential market interventions to boost the deployment of Hydrogen to Power (H2P) plants, which are seen as a critical technology to balance electricity supply and demand.
As the association representing engine power plant manufacturers, EUGINE supports the UK government’s view that, in a decarbonised power system, hydrogen power plants will provide key low carbon flexible generation capacity and be a pathway for existing unabated gas power plants to decarbonise. We stand for the rapid deployment of H2P to effectively support power sector decarbonisation, ensure security of supply, and reduce technology costs.
As the electricity system decarbonises, H2P will serve various roles and applications. Hydrogen power plants will be key to ensuring grid stability and covering the residual load during periods of low wind and solar PV generation (mostly in winter) or demand peaks. When running as Combined Heat and Power (CHPs), they will also contribute to meeting peak seasonal heat needs. Therefore, it is crucial to continue developing the hydrogen market and provide physical access to hydrogen for power plants.
Our key messages:
- Immediate support is essential to mitigate investment risks for H2P across all plants, regardless of their capital expenditure intensity.
- The “Dispatchable Power Agreement” (DPA) should be tailored to address specific system needs of the plant and incorporate the ability to serve various flexibility timeframes.
- Regarding the mechanism’s scope, we strongly advocate for a technology-neutral approach.
- To foster an efficient and competitive market, we recommend designing market interventions to establish a level playing field among different technology archetypes.
- Until hydrogen becomes cost-competitive with other fossil fuels, a variable payment mechanism is necessary to prioritize the integration of H2P into the merit order.
