Hydrogen Allocation Round 2

Infrastructure and Construction

Record date: 31 March 2026

Whole-life cost: £9.4bn
Published schedule: 14/12/2023 – 31/12/2041
NISTA delivery confidence: RED
Senior responsible owner: Stefanie Murphy

What the project is for

The second hydrogen allocation round 2 (HAR2) is a competitive allocation round designed to provide long term revenue support via the Hydrogen Production Business Model to hydrogen production projects. In alignment with HAR1, HAR2 aims to unlock private investment, accelerate early hydrogen deployment and support the growth of hydrogen supply chains, whilst contributing to long term decarbonisation and energy system resilience. The Hydrogen Production Business Model (HPBM) is designed to provide revenue support to low carbon hydrogen producers once their project is operational, helping them to overcome the operating cost gap between low carbon hydrogen and high carbon fossil fuels. HAR2 contract allocation is pending, with 27 projects shortlisted and the due diligence phase now complete. The round aims to significantly scale up the UK’s green economy, with successful projects expected to be operational in the coming years.

Departmental delivery commentary

There is no comparison to financial year 24/25 Q4 as this project was added to GMPP in financial year 25/26 Q3. Compared to the previous quarter, the delivery confidence rating remains at Red as the project has not currently progressed to the 'Invite to Offer' (ITO) stage. This is primarily due to delays in OBC Approval (from September 2025) and subsequent delays to the commencement of the ITO and Negotiations phase. Ongoing delays will impact on our ability to deliver HAR2 contract awards within the timelines set out in the HAR2 published guidance

Schedule

There is no comparison to financial year 24/25 Q4 as this project was added to GMPP in financial year 25/26 Q3. Compared to Q3, the end date remains the same. This is primarily due to the following factors: If we can sign contracts with projects by -financial year 26/27 Q3, the HAR2 end date of 31/12/2041 would still apply. However, we are unable to produce meaningful baseline and forecast dates until we have clarity on ITO start and therefore the HAR2 end date may be subject to change.

Cost

WLC are £9427.02m in Real Prices 24/25 as calculated by NISTA based on £9061m (DESNZ Nominal Pricing)

Benefits

Benefits are £5626.77m in Real Prices 24/25 as calculated by NISTA based on £5408m (DESNZ Real Prices Calendar Year 2023)