British utility Scottish Power has decided to pause development of its renewable hydrogen projects in the UK, despite having already signed final subsidy agreements for two facilities in Scotland.
"Green hydrogen production faces challenging conditions and a limited route to market despite extensive efforts to support the new and emerging technology," the company told Argus. "Whilst we continue to be supportive of the technology to aid decarbonisation, we have taken the decision to pause our green hydrogen projects."
Earlier this year, Scottish Power signed the final contracts-for-difference (CfD) agreements for the 10MW Cromarty project, developed jointly with Storegga, and the 7MW Whitelee facility.
The UK government selected the two projects for subsidies in December 2023 under its first Hydrogen Allocation Round (HAR1).
Under the CfD scheme, projects would receive the difference between their negotiated fixed strike price and their fluctuating "reference price" — the hydrogen sales price, or the natural gas price, whichever is higher.
The Whitelee project CfD was signed at a strike price of £188.56/MWh ($252.31/MWh), which equals around £7.38/kg based on hydrogen's lower heating value of 33.33 kWh/kg. The agreement for Cromarty was settled at £214.27/MWh.
Scottish Power previously announced initial plans for other facilities in the UK, but has not provided meaningful updates on these beyond saying it would conduct feasibility studies.
Shoreham Port, in southeast England announced in February a partnership with Scottish Power to assess the development of a renewable hydrogen facility at the port. In March 2023, Scottish Power secured close to £2mn ($2.7mn) to carry out a feasibility study for a 100MW project at the Port of Felixstowe, in England's Suffolk.
Out of the 11 selected HAR1 projects, 10 have so far signed final CfD agreements, data from the government-backed Low Carbon Contracts Company show. Scottish Power is the first firm to put winning projects on hold. Industry participants previously said that they expected some of the winners not to go through with their projects despite the subsidy support, as many plans still face a range of different challenges.
