The development of the UK’s low carbon hydrogen sector is gaining traction, with a current pipeline of production capacity estimated to be 27GW and several government-led initiatives being planned or implemented to support the sector.

Projects in energy markets often use debt financing because it is cheaper than equity and enables rapid scaling. The question this report set out to answer is whether low carbon hydrogen projects can/are able to access this type of funding.

This report not only answers this question, but shares a series of recommendations to address the challenges faced by hydrogen projects. It is based on insights captured through over 40 interviews conducted between January and April 2024 with a broad range of stakeholders. They included commercial and development banks, funds, insurance companies, advisers and central and devolved government institutions, along with small and medium sized enterprise (small corporate) project and technology developers.

Key findings

• Offtaker commitments are key. The Department for Energy Security and Net Zero, and industry need to expedite the creation of a liquid market.
• Assurance and insurance solutions need further development.
• A Hydrogen Debt Fund could help finance small projects which are needed to kickstart a liquid hydrogen market and sustain innovation.