Green Hydrogen to Increase Gas Bills
Green hydrogen is expensive and the Government is planning to increase your gas bill to pay for it
David Turver
Mar 30, 2025
Introduction
We have covered in earlier articles how the UK has the highest electricity prices in the developed world and very high gas prices compared to international competitors like the US and Canada.
The problem of high energy prices has become mainstream with even the Energy Security and Net Zero Select Committee in Parliament launching inquiry into high energy costs. [Note that I have submitted written evidence to the inquiry, but cannot publish it until they have, so watch this space]. Readers will be dismayed to learn that the Government is now consulting on its latest cunning wheeze to further increase our energy bills by charging the cost of their cherished green hydrogen plans to our gas bills using the Gas Shipper Obligation (GSO).
Green Hydrogen Plans
Of course, hydrogen is a colourless and odourless gas, but hydrogen is assigned different colours according to the method of production. We covered the hydrogen rainbow in an earlier article. Green hydrogen is produced by electrolysis powered by renewables like wind and solar. Blue hydrogen is produced from natural gas and the resulting carbon dioxide emissions are captured and stored.
The last Conservative Government launched its hydrogen delivery roadmap back in December 2023. This called for “up to” 10GW of hydrogen production capacity by 2030 made up of 6GW of green hydrogen and 4GW of blue hydrogen.
The first tranche of this capacity was also announced in December 2023, with 11 projects totalling 0.125GW of capacity being announced in the first hydrogen allocation round (HAR1) at a strike price of £175/MWh (in 2012 prices) or about £244/MWh in 2024 money. By way of comparison, today’s elevated gas price is ~99p/therm or £34/MWh. Green hydrogen will cost about seven times the current UK gas price or ~23 times US gas prices. The Government gleefully announced that these projects would receive over £2bn of revenue support from the Hydrogen Production Business Model (HPBM). The 125MW of contracts awarded in HAR1 is only the tip of the iceberg though because HAR2 is aiming to support seven times that with 875MW of capacity under consideration.
https://davidturver.substack.com/p/green-hydrogen-to-increase-gas-bills
