Ofgem has agreed that three gas distribution networks (GDNs) who lead East Coast Hydrogen can spend around £96 million on front end engineering design (FEED) for a regional hydrogen transport and storage network.
Ofgem said that, “there is consumer value in providing some funding for the highest priority hydrogen feasibility and FEED studies. The studies will assist understanding of the costs of hydrogen infrastructure and the proposed level of repurposing that could be expected to reduce the stranding risk of existing gas network assets”. It gave the go-ahead for £71.3 million in funding in 2018/2019 pricing, adjusted to £96 million in the 2025/26 price base, to National Gas, Cadent and Northern Gas Networks. Ofgem’s confirmation follows shortly after the government announced £500 million for regional hydrogen transport and storage networks as part of the Spending Review.
The East Coast Cluster aims to be a low-carbon hydrogen region that could connect hydrogen supply to industries across Humber, the East Midlands and Teesside.
However the energy regulator also confirmed it would not allow funding for Wales and West Utilities, to carry out FEED studies for hydrogen pipeline in South Wales. The regulator said its strategic value had been weakened by changes in steelmaking in the region. Ofgem said, “We consider that the reduction in demand for hydrogen for steel making in South Wales weakens the case for a hydrogen network pipeline in the area.”