First Hydrogen CfDs Awarded

From NOT A LOT OF PEOPLE KNOW THAT

By Paul Homewood

https://register.lowcarboncontracts.uk/?search=hydrogen

The first three CfDs have been announced for the Hydrogen Allocation Round 1.

All prices are at 2022 prices, so at current prices they range from £213 to £242/MWh. As with other CfDs, the hydrogen producers will be given a guaranteed, index linked price.

But on top of that is the cost of transporting the hydrogen to where it can be used or stored. The LCCC give an estimated cost for this – at Cromarty, for instance, it is £24.37/MWh.

So in total, the total cost of hydrogen will be up to £266/MWh. In comparison the wholesale price of natural gas is around £34/MWh.

It is expected that the cost of this subsidy will be added to gas bills.

Hydrogen Allocation Round 1 offered contracts to eleven producers, with a total capacity of 125 MW, and output of around 500 GWh a year, just 0.07% of the UK’s total gas consumption.

The subsidy varies relative to changes in the market price of gas, but at current levels would amount to around £120 million a year.

The three have 31.8 MW capacity

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strativarius
February 6, 2025 2:53 am

 H2 – up to £266/MWh

A price like that makes offshore wind almost appear competitive.

In bang for your buck terms H2 yields ~5.3 MJ/kg, whereas from natural gas (that you don’t have mess around with) the yield is ~55 MJ/kg

Government policy – past and present – seems to be to take any useless failed idea and run with it at great loss, CCS being the most recent.  All this against a backdrop of breathtaking profligacy in loony government expenditure. Not to mention their own personal efforts and sacrifices to save the planet…

“Labour ministers in the first three months following the election spent over £2 million on their private jet habit. £2,085,547.67 to be exact… That’s £160,427 per week on jets.”
https://order-order.com/2025/02/05/labour-private-jet-spending-could-hire-240-coppers/

Hey bud, can you print off another quid?

oeman50
Reply to  strativarius
February 6, 2025 3:29 am

I see what you did there, “bang for your buck.”

strativarius
Reply to  oeman50
February 6, 2025 3:46 am

Yes, I’m English. Pretty clever eh!

alradlett
Reply to  strativarius
February 6, 2025 3:36 am

Reading about all the subsidies and other moon dream costs being added to our electricity bills makes your blood boil. But it’s only the relatively few of us here on WUWT that are really aware of it. It’s time someone, with more knowledge that me, constructs a list of all the subsidies being added to our bills. It needs to be a clear, simple, VERIFIABLE list that has a short description of each subsidy/boondoggle and it’s cost to the us. This list then needs to be circulated as wide as possible: social media, any newspaper that will publish it (not the Guardian or the BBC obviously); Notices up in supermarkets anything that will get this information the “the Man in the Street” We need to get a campaign going to fight back against the Green Lunacy that is draining our pockets.

Can anyone come up with such a list

strativarius
Reply to  alradlett
February 6, 2025 3:47 am

Keep an eye out for Kathryn Porter. Funnily enough, only GB News will interview her….

Dave Andrews
Reply to  strativarius
February 6, 2025 9:21 am

Kathryn’s blog is https://watt-logic.com

Reply to  strativarius
February 6, 2025 9:46 am

She has been a regular on Talk TV with Mike Graham. She also did an extensive piece at Unherd, available here:

hdhoese
Reply to  strativarius
February 6, 2025 7:39 am

One of the best things I ever did was take a short course in thermodynamics during the first round of long extinct whirleybirds. Excellent instructor blew up a balloon with hydrogen and lit it. Impressive but very instructive especially in not doing the same with natural gas.

Rick C
Reply to  hdhoese
February 6, 2025 2:46 pm

I used to do a similar demonstration when training gas appliance techs. I’d fill one balloon with natural gas and a second with a stoichiometric mixture of air and natural gas. Lighting the NG only balloon produces a nice bright fireball and goes “woof”. Lighting the second produces a truly load and scary bang. (Caution – Do not try this at home.)

dh-mtl
Reply to  strativarius
February 6, 2025 8:24 am

‘In bang for your buck terms H2 yields ~5.3 MJ/kg, whereas from natural gas (that you don’t have mess around with) the yield is ~55 MJ/kg’.

Strativariius, I am sorry to rain on your parade, but the above statement is both inaccurate and irrelevant.

  1. While your correct that the gross heating value of natural gas (methane) is 55 MJ/kg, your are wrong about hydrogen. It’s heating value is not 5.3 MJ/kg but rather 142 MJ/kg.
  2. You are comparing apples and oranges. Natural gas is a primary energy source. Hydrogen, like electricity, is a secondary energy source (i.e. an energy carrier, which is derived from a primary energy source).

Hydrogen is best thought of as mobile electricity. It’s real competition is batteries. And yes, the premium paid for mobility is high, whether by battery or by hydrogen. Perhaps, one day, if the technical issues with hydrogen are solved, then it might find a niche market in electric mobility.

strativarius
Reply to  dh-mtl
February 6, 2025 8:50 am

Very funny stuff

Denis
Reply to  dh-mtl
February 6, 2025 9:01 am

dh-mtl, the problem with hydrogen is not its energy content per kilo, it is its energy content per cubic foot as any fuel gas is sold these days. Hydrogen cannot easily be liquified because its liquefaction temperature is close to absolute zero – expensive to attain and maintain – so it must be shipped as a gas. As a gas, it can be compressed to a few thousand psi but it is much more expensive to do so as is compression of methane, because of hydrogens thermodynamic properties. It cannot be shipped in current natural gas pipelines because of excessive leakage. Hydrogen is very sneaky and can and will leak through gasketed closures and even pipe walls and it will embrittle those pipes. It cannot be shipped in a large cylindrical tank comparable to that seen in gasoline carriers because the wall thickness would be to great – the truck would weigh so much that it couldn’t move. Instead is would be shipped in semis equipped with a dozen or so narrow diameter cylinders. About 12 such trucks of compressed hydrogen would be needed to deliver to a “gas” station as much energy as is carried by a single gasoline tanker. And either the truck or station would need a hydrogen compressor to transfer the truck’s contents to the station’s cylinders. These and many other problems associated thermodynamic properties of hydrogen make it very unsuitable as an energy carrier. When all are considered, much or even all of its energy content is used up in the handling of it. And then, there are its explosive properties…

Dave Andrews
Reply to  Denis
February 6, 2025 9:33 am

Some time ago the magazine Rail Engineer looked at Scotland’s plans for hydrogen trains and concluded that a hydrogen fleet would require 14 times as many road tanker deliveries than a diesel fleet if the hydrogen was not produced on site.

https://www.railengineer.co.uk/scotlands-hydrogen-trains-supporting-the-hydrogen-economy/

Denis
Reply to  dh-mtl
February 6, 2025 9:20 am

Per cubic foot, as it is sold and distributed, natural gas has a heating value of just over 1,000 BTU/ft3. Hydrogens heating value is just over 300 BTU/ft3 as a gas and that is what counts. As liquids, hydrogen has more energy per pound than natural gas, but neither can be shipped or sold to end users as liquids, except for rockets where cost doesn’t count, because the temperatures required are very very low, especially for hydrogen. When considering handling of hydrogen as a fuel, the energy of the essential handling process is often greater than its energy content. It is not an energy carrier, it is an energy consumer.

dh-mtl
Reply to  Denis
February 6, 2025 9:54 am

Denis,

I do not disagree with any of the points that you make in the above two comments.

However, I think that the comparison with natural gas is irrelevant. Hydrogen’s only significant market would be as an alternative to batteries in electric mobility. And as I alluded to in my comment, there are a number of technical issues to be solved, which you have described in detail in your comments, before this can become a commercial reality.

One of the solutions for the transportation and storage of hydrogen, that bypasses most of the technical issues that you outline, is the use of metal-hydride adsorption. This technology, as I understand it, requires much lower pressures than hydrogen compression or liquification, while offering energy densities, including the metal hydrides, that are similar to that of gasoline. Perhaps one day this technology will be come cost competitive.

Reply to  dh-mtl
February 6, 2025 10:09 pm

But hydrogen cannot even compete w batteries. It would lose. As it would w both natural gas and oil plus derivatives.
Its loss upon loss. Then there’s the transportation issue, the combustability. And of course: price. But it seems none of that seems to matter for the greens. As long as it isnt hydrocarbons all’s fair. The irony is that in Holland they are seriously thinking of piping it into their old gas pipeline infrastructure, or produce it directly IN windturbines.
Trade offs are by default ignored. In fact, THAT is the big sin of the greens.

Reply to  strativarius
February 6, 2025 9:42 am

It is cheaper than floating offshore wind… Now imagine the cost of using that as input to offshore electrolysers (the BIG IDEA at the CCC!).

Production-weighted-wind-princes-inc-floating
February 6, 2025 3:13 am

CFD => Computational Fluid Dynamics???

Bob B.
Reply to  Johanus
February 6, 2025 3:36 am

Consumers F#@ked Daily

Richard Stout
Reply to  Johanus
February 6, 2025 7:27 am

CFD = Contract For Differences. A promise to make up the difference between the contract price and the market price of the commodity at any given hour.

Reply to  Johanus
February 6, 2025 9:51 am

It can help to understand that if you want to unravel the Contracts for Differences for hydrogen.

Explanatory note – as set out in further detail below, the main payment for each Billing Period during the Payment Period will comprise the following:

(a) the Difference Amount, which is calculated by considering Qualifying Volumes and Non-Qualifying Volumes, and will be payable by either the LCHA Counterparty (where, for Qualifying Volumes only, the Strike Price is higher than the Reference Price) or the Producer (where, for Qualifying Volumes and/or Non-Qualifying Volumes, the Reference Price is higher than the Strike Price);

(b) the Price Discovery Incentive Amount which will be payable by the LCHA Counterparty to the Producer where the Reference Price for Qualifying Volumes is greater than the Floor Price;

(c) the Sliding Scale Top Up Amount which will be payable by the LCHA Counterparty to the Producer for Qualifying Volumes in certain circumstances where the total Metered H2 Output which constitutes Qualifying Volumes, Non-Qualifying Volumes and RTFO Volumes, and any Take-or-Pay Volumes,56 is less than [fifty per cent (50%)]57 of the Reference Volume;

Hot wet towel definitely required!

strativarius
February 6, 2025 3:33 am

Story tip: The Economy v Net Zero

Not just airports?

“Reeves and Starmer are gearing up to give the green light to the UK’s two biggest offshore oil and gas projects—Rosebank and Jackdaw. The boss of energy giant Equinor has already warned Miliband that blocking these developments would wreck the UK’s reputation with investors. “
https://order-order.com/2025/02/06/labours-growth-vs-net-zero-divide-deepens-as-reeves-set-to-green-light-oil-and-gas-projects/

Not 7 days ago…

Fury at Ed Miliband after he hands climate zealots huge victory over Rosebank oil field
The climate secretary previously condemned the plans as ‘climate vandalism’ as he refused to fight the government’s case.
https://www.express.co.uk/news/uk/2007534/judges-thwart-plans-drill-rosebank

And now…

Meanwhile, the Labour Growth Group —a group of mostly New Labour MPs pushing hard on housing and infrastructure —are said to be against the oil developments. Some backbenchers are fuming, saying “This is a line in the sand for almost everyone in the PLP,” and “a breaking point for a lot of us” as more grumbles about U-turning on manifesto pledges sow deeper divides.”
https://order-order.com/2025/02/06/labours-growth-vs-net-zero-divide-deepens-as-reeves-set-to-green-light-oil-and-gas-projects/

What a mess.

Reply to  strativarius
February 6, 2025 8:39 am

“This is a line in the sand for almost everyone in the PLP,” A bit rich given the cr*p they’ve been happy to foist on the country since the election. But now is their chance to do us all a favour* – resign en masse and force another election.

(* I was going to add “…and stick to their principles”, but of course they don’t have any)

Reply to  strativarius
February 6, 2025 10:05 am

The real mess is that the Norwegians have unofficially suggested that refusal to let Rosebank go ahead could result in less gas exported to the UK, with a ready alternative market in Europe. The result would be that the UK would need to import LNG to replace the shortfall.

Add in their attitude to electricity interconnectors, where the arithmetic looks like this:

Norway’s exports:
Norway-> UK 1.4GW North Sea Link
Norway-> Denmark 1.6GW ->UK 1.4GW Viking Link
Norway->Netherlands 0.7GW ->UK 1 GW BritNed
Norway-Germany 1.4GW ->UK 1.4GW NeuConnect from 2028

The UK has ~5GW of supply at stake if Norway cuts exports.

That doesn’t even take a policy change: all it needs is a bad snow year limiting hydro production down from ~140TWh to under 110TWh. Bad snow years seem often to come in pairs, too. Then Norway becomes a net importer.

adaptune
February 6, 2025 3:41 am

What the flog is a “CfD”??

strativarius
Reply to  adaptune
February 6, 2025 3:45 am

Put simply, it’s the means of subsidising renewables…

Contracts for Difference
https://www.gov.uk/government/collections/contracts-for-difference

Sweet Old Bob
Reply to  strativarius
February 6, 2025 4:16 am

Constantly Fill Dat trough ….

😉

Gregory Woods
February 6, 2025 3:50 am

Friday Funnies on Thursday

The possibilities of climate grief – High Country News

sample:

If we succeed in defeating the fossil fuel industry, Solnit writes elsewhere, “those who come after will look back on the age of fossil fuel as an age of corruption and poison. The grandchildren of those who are young now will hear horror stories about how people once burned great mountains of poisonous stuff dug up from deep underground that made children sick and birds die and the air filthy and the planet heat up.

strativarius
Reply to  Gregory Woods
February 6, 2025 4:09 am

Climate grief?  It rained today and I didn’t have an umbrella with me.

alchemize my own climate grief into something of use.

What are these people on? Here’s what they should do. Consult the lingo-bingo table…

In this case randomly chosen, as they should be… 3, 6, 7 – Parallel, Transitional, Projection.

Had they got 5, 3, 9 it would have been Responsive, Reciprocal, Contingency
Etc

Scissor
Reply to  Gregory Woods
February 6, 2025 4:58 am

She should do wind turbines.

Reply to  Gregory Woods
February 6, 2025 5:30 am

CV watch: As far as I can tell Rebecca Solnit has a BA in English and an MA in journalism.

Even by the standards of the Guardian she is flakey.

Reply to  Gregory Woods
February 6, 2025 8:45 am

I only suffer climate grief after a severe bout of climate incontinence. It’s not quite as bad as climate constipation, but since its all climate related its important to discuss it thoroughly in the newspaper.

MarkW
Reply to  Gregory Woods
February 6, 2025 1:00 pm

The only birds that are getting killed, are being killed by wind and solar.

February 6, 2025 9:40 am

These were actually announced over a year ago in December 2023. They have only recently appeared at the LCCC website because it took them ages to amend their database to accommodate them.

https://www.gov.uk/government/publications/hydrogen-production-business-model-net-zero-hydrogen-fund-shortlisted-projects/hydrogen-production-business-model-net-zero-hydrogen-fund-har1-successful-projects

Out of the 11 projects totalling 125MW the other 8 have yet to make it to the LCCC database: you have to ask whether they have dropped out.

Furthermore, on 9th April 2024, a fresh round of CFDs was announced as open for submissions for shortlisting with the intention that the shortlist would be published in the Autumn, and the successful CFD awards would be early this year.

https://www.gov.uk/government/publications/hydrogen-allocation-round-2

Since then there has been complete radio silence.

Olé biscuit barrel ftang ftang… has no applications at all!

Bob
February 6, 2025 1:24 pm

Stuff like this is infuriating. Get the government out of the energy business. Let’s start with no strike prices and no CfDs. Outlaw strike price and CfD for energy generation and all of this nonsense goes away.

Ed Zuiderwijk
February 7, 2025 6:52 am

Looks like Farage’s DOGE will have even more debris to clear than Trump’s.

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