ScottishPower halts hydrogen project developments in ‘challenging market’

ScottishPower has halted all its renewable hydrogen project developments amid "challenging market opportunities," the company said Sept. 2.

The decision comes despite ScottishPower having secured funding for two projects under the UK's first electrolytic hydrogen allocation round.

"Green hydrogen production faces challenging conditions and a limited route to market despite extensive efforts to support the new and emerging technology," the company said in an emailed statement.

The company spokesperson told Platts, part of S&P Global Energy, that ScottishPower had not drawn down any grant moneys as the projects had not reached final investment decisions.

"While we continue to be supportive of the technology to aid decarbonization, we have taken the decision to pause our green hydrogen projects," the spokesperson said.

The UK Department for Energy Security and Net Zero did not respond to a request for comment.

ScottishPower said it was continuing to invest over GBP24 billion ($32 billion) in UK electrification out to 2028, focusing on renewables and grid infrastructure.

The UK government awarded funding to 11 projects totaling 125 MW under HAR1 at an average strike price of GBP241/MWh (around GBP9.50/kg, $12.50/kg) in December 2024.

Platts assessed the cost of producing hydrogen via alkaline electrolysis in the UK -- including capex -- at GBP5.46/kg ($7.31/kg) Sept. 1, based on month-ahead grid power prices.

The ScottishPower projects were among the first HAR1 projects to sign grant contracts.

ScottishPower signed HAR1 grant agreements for the 7.1-MW Whitelee project in Scotland and an initial strike price of GBP188.56/MWh and for the 10.6-MW Cromarty joint venture project with Storegga at GBP214.27/MWh. Storegga was contacted for comment.

The Whitelee project was to supply transport and industry, while offtake for Cromarty was whisky distilleries.

10 of the 11 original successful projects have signed grant agreements, with the first project starting production over the summer.

HyMarnham Power started producing renewable hydrogen in July, with initial volumes of 8 mt/week, ramping to 30 mt/week in October.

The final project on the list -- the 7.5-MW HyBont facility in Wales -- secured planning approval in April and aims to start construction later in the year.