Hydrogen to Power Business Model
Published 4 November 2026
© Crown copyright 2026
This publication is licensed under the terms of the Open Government Licence v3.0 except where otherwise stated. To view this licence, visit nationalarchives.gov.uk/doc/open-government-licence/version/3 or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: psi@nationalarchives.gov.uk.
Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned.
This publication is available at https://www.gov.uk/government/publications/energy-independence-bill-factsheets/hydrogen-to-power-business-model
Factsheet relating to the Energy Independence Bill.
Summary
The Hydrogen to Power Business Model will provide financial support to hydrogen-fired power stations to de-risk investment and accelerate their deployment. In doing so, the Hydrogen to Power Business Model will support the government’s objective to deliver homegrown clean energy we control by enabling the deployment of critical low carbon dispatchable power to support a renewables-led power system. As hydrogen to power deploys at scale, it will support the delivery and maintenance of a net-zero power system at a lower overall system cost for consumers, whilst reducing the UK’s exposure to volatile global gas markets. The scope and scale of support will be made through Hydrogen to Power Business Model allocation rounds.
Why are we legislating?
The 2024 Clean Power Action Plan identified the need for low carbon dispatchable generation which can replicate the role of unabated gas and provide a secure supply of electricity to support intermittent renewable generation. As one of only a small number of technologies that are capable of providing low carbon dispatchable generation, hydrogen to power can play a critical role in delivering a cost-effective transition to a decarbonised power system – supporting the delivery of homegrown clean energy we control.
The 2024 hydrogen to power consultation response[footnote 1] showed strong support for market intervention to overcome 2 key deployment barriers to using hydrogen in our power system: ‘cross-chain risks’ from a nascent hydrogen network, and increased risk and uncertainty caused by hydrogen to power being a first-of-a-kind technology.
This legislation will ensure that the Hydrogen to Power Business Model can address the unique deployment challenges that hydrogen-fired power stations face. It will allow a framework to be set up to provide financial support to de-risk investment, accelerate deployment, and enable projects to integrate effectively into the hydrogen value chain.
What are the government’s objectives with this measure?
The deployment of hydrogen to power will support the delivery and maintenance of a clean power system, whilst also enhancing the security and independence of our energy system. For example, when combined with geological storage and domestic electrolytic hydrogen production, hydrogen to power can help to minimise the cost of a clean power system by utilising otherwise curtailed electricity during periods of excess renewable generation. In doing so, hydrogen to power has the capability to support displacing the residual role of unabated gas in providing system flexibility and enable a more secure power system.
Hydrogen to power will also be a key source of demand for any future wider hydrogen network, helping to stimulate investment across the hydrogen value chain. This will support regional growth and jobs across the UK’s industrial heartlands.
How will this measure deliver the objectives?
This measure will allow the government to support electricity made using hydrogen. It will enable the government to create a revenue support scheme through regulations and guidance, setting out which types of projects can receive support and how projects will be selected. Decisions on the scope and scale of support will be made through Hydrogen to Power Business Model allocation rounds.
This measure provides for:
A designated counterparty: A counterparty will be appointed to enter into revenue support contracts with eligible hydrogen power generators, and to manage those contracts and associated payments.
A competitive allocation process:Projects are initially expected to be selected through an allocation round, followed by bilateral contract negotiations. Over time, the Bill allows for the introduction of a more competitive process—such as an auction—and standard contract terms, similar to existing Contracts for Difference (CfD) allocation rounds. The Bill provides flexibility to change the allocation approach over time and to appoint specific allocation bodies if needed.
Funding the Hydrogen to Power Business Model: Provisions would enable the Hydrogen to Power Business Model to be funded through a levy on electricity suppliers, similar to the mechanism used for the CfD. Regulations would set out how a levy would be designed and operated. There is also a financial assistance power which can be used to support hydrogen to power, in a similar way to other hydrogen business models.