Research and analysis

Hydrogen production business model

Updates on the hydrogen production business model, including the Low Carbon Hydrogen Agreement.

• From: Department for Energy Security and Net Zero
• Published: 13 December 2022
• Last updated: 9 August 2023 — See all updates

Documents

Low Carbon Hydrogen Agreement: Standard Terms and Conditions

PDF, 6.45 MB

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Low Carbon Hydrogen Agreement: Front End Agreement

PDF, 342 KB, 23 pages

Low Carbon Hydrogen Production Business Model: Heads of Terms

PDF, 992 KB, 59 pages

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Low Carbon Hydrogen Production Business Model: full contract drafting of the payment calculations

PDF, 555 KB, 34 pages

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Low Carbon Hydrogen Production Business Model: Heads of Terms comparison with the indicative Heads of Terms published in April 2022

PDF, 1.64 MB, 70 pages

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Details

These documents provide details of the government’s design for a low carbon hydrogen business model.

Low Carbon Hydrogen Agreement (published August 2023)

The Low Carbon Hydrogen Agreement is the contract which underpins the hydrogen production business model.

The business model will provide revenue support to hydrogen producers to overcome the operating cost gap between low carbon hydrogen and high carbon fuels. It has been designed to incentivise investment in low carbon hydrogen production and use, and in doing so deliver the government’s ambition of up to 10GW of low carbon hydrogen production capacity by 2030.

The business model will be delivered through a private law contract (the Low Carbon Hydrogen Agreement) between a government appointed counterparty and a hydrogen producer.

The Low Carbon Hydrogen Agreement includes the following documents:

• Low Carbon Hydrogen Agreement: Standard Terms and Conditions
• Low Carbon Hydrogen Agreement: Front End Agreement

Heads of Terms for the Low Carbon Hydrogen Agreement (published December 2022)

The Heads of Terms for the Low Carbon Hydrogen Agreement sets out the government’s proposal for the final hydrogen production business model design. The Heads of Terms reflect the proposed business model design in December 2022. We have updated some of the policy proposals in the Low Carbon Hydrogen Agreement, published August 2023.

This set of documents includes:

• Low Carbon Hydrogen Production Business Model: Heads of Terms
• Low Carbon Hydrogen Production Business Model: full contract drafting of the payment calculations
• Low Carbon Hydrogen Production Business Model: Heads of Terms comparison with the indicative Heads of Terms (April 2022)

Consultation: design of a business model for low carbon hydrogen

For further information see the design of a business model for low carbon hydrogen consultation documents.

Published 13 December 2022
Last updated 9 August 2023 + show all updates

1. 9 August 2023

   Published the Low Carbon Hydrogen Agreement: Standard Terms and Conditions / Front End Agreement.

2. 16 December 2022

   Updated Heads of Terms document to include explanatory diagrams. Added a comparison of Heads of Terms docs (April and December 2022 versions), and full contract draft of the HPBM payment calculations.

3. 13 December 2022

   First published.