Boost to East Coast hydrogen network plans after regulator agrees £91m for FEED work

The consortium’s gas distribution networks (National Gas, Cadent and Northern Gas Networks) sought the funding in 2024 to carry out engineering, planning and public consultation ahead of a decision on government finding. Ofgem’s confirmation follows shortly after the government announced £500m for regional hydrogen transport and storage networks as part of the Spending Review.

The East Coast Cluster aims to be a low-carbon hydrogen region that could connect hydrogen supply to industries across Humber, the East Midlands and Teesside. Ofgem said that, “there is consumer value in providing some funding for the highest priority hydrogen feasibility and FEED studies. The studies will assist understanding of the costs of hydrogen infrastructure and the proposed level of repurposing that could be expected to reduce the stranding risk of existing gas network assets”. It awarded £71.3m in funding in 2018/2019 pricing, adjusted to £96m in the 2025/26 price base.

Ofgem had 31 responses to a consultation on the funding, and it said stakeholders agreed that a hydrogen network is needed to connect the hydrogen production projects planned for the East Coast region to local industry. They said hydrogen is a solution which offers near-term emission reduction, supporting the decarbonisation of critical industry

Among the respondents was Air Products, which said it planned a project in Immingham that could fulfil 3% of a government target for 10GW of hydrogen generating capacity by 2030. It said it planned to deliver hydrogen to customers within few kilometres by local pipelines (North Lincolnshire and North East Lincolnshire) but more remote customers “can only be reached by East Coast pipeline networks proposed by Cadent, NGN and NGT”.

It said the needs of merchant customers (including mobility customers) will be met by road deliveries throughout the UK.

Air Products added, “The East Coast network would allow us to develop our site to its full potential and provide most choices or options of supply to hydrogen off takers”. It would be able to deliver hydrogen to customers all the way to Rotherham via Cadent’s network, access hydrogen storage facilities and customers in the West riding of Yorkshire (Goole area), Hull and all the way to Teesside. It said the network “would also provide confidence to off takers that if their primary supply of hydrogen is down, they can access hydrogen from other producers which will encourage off takers to take final investment decisions on their transition plans to net zero”.

The company said “clarity on the timelines and commitment that such infrastructure will be delivered is essential” so both producers and offtakers could make strategic and investment decisions. Air Products said it had not taken FID on its project and it “relies on government support and right policies to be in place to proceed”.

The energy regulator also confirmed a decision not to allow funding for another gas distribution network, Wales and West Utilities, to carry out FEED studies for hydrogen pipeline in South Wales, because of a lack of potential customers. The regulator said a pipeline “may still be a cost-effective means to transport hydrogen within the region,” but its strategic value had been weakened by changes in steelmaking in the region. The application said “connecting south Wales depends on the role hydrogen plays in decarbonising the steel industry, making up over 90% of emissions in the area” and “If the steel industry does not require hydrogen, then the case for a hydrogen pipeline to the area is weakened”. Ofgem said, “We consider that the reduction in demand for hydrogen for steel making in South Wales weakens the case for a hydrogen network pipeline in the area.”