Hitting refresh – what industry needs from a revised Hydrogen Strategy

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8 September 2025

At RenewableUK’s Future Energy System conference and exhibition, taking place this Wednesday 10 September in Liverpool, one of the hot topics will be the Government’s upcoming, revised Hydrogen Strategy.

Green hydrogen production will play a vital role in the decarbonisation of the UK’s economy, as it can be a source of zero carbon fuel for heavy industry and transport, as well as providing the opportunity for long duration storage of energy. In this way, green hydrogen partners well with the renewables sector, offering a flexible source of power demand, and helping to manage a renewables-based system by tackling grid constraints and generation variability. Developing the hydrogen sector could create 30,000 jobs and generate £7 billion GVA by 2030.

The previous Hydrogen Strategy, published in 2021 , set an ambitious target of 5GW of low carbon hydrogen production by 2030. However, due to delays in allocation rounds and a lack of firm offtake arrangements, this target is unlikely to be met, with only around 20MW of green hydrogen production currently operational.

It's clear that there is a need for an updated strategy to re-establish a clear path and reinvigorate the Government’s ambition for this essential sector of the net zero economy, so we are pleased that it has committed to publishing a revised version later this year.

But what exactly does industry need to see in it? This blog sets out five key areas that must be included to ensure a successful green hydrogen industry in the UK.

Define hydrogen’s role in a net zero economy

There continues to be debate about when hydrogen should be used, versus electrification, in a net zero future. The Government’s revised strategy should be explicit about where the use of hydrogen is essential and where electrification is preferable. This dynamic should take into consideration the fact that, in some cases, hydrogen may offer a more practical solution even where electrification is theoretically possible.

The revised strategy should also articulate how hydrogen production, associated infrastructure, and hydrogen demand will be coordinated. This necessarily includes a clear vision of the role of industrial hubs and the integration of hydrogen into the power system.

Update hydrogen demand, as well as production targets

Targets are conducive to growing an industry by providing clear market signals. However, whilst ambitious, the previous strategy’s targets are no longer useful. The revised strategy should therefore update production targets, and support their delivery by:

• Ensuring that the chosen targets remain ambitious but reflect current market expectations.


• Outlining a long-term production trajectory and explanation of how future allocation rounds will support delivery of these targets. This visibility is essential to underpin investor confidence and enable supply chain planning.


• Including expected production volumes in tonnes or terawatt hours, as well as capacity in gigawatts.Providing indicative demand levels for various sectors - at a minimum across industry, power, and transport – which will offer clearer market signals.

Address key barriers to market growth

The revised strategy must identify key barriers to delivery and set out coordinated solutions. One challenge that needs to be addressed is the offtake market, where restrictive rules and the exclusion of ‘risk-taking intermediaries’ have hindered many projects. The requirement for a 15-year agreement to buy hydrogen is simply too much for many companies, as well as banks, to agree to. Risk-taking intermediaries could play a vital role in support of the growth of a more vibrant market for hydrogen, and the revised strategy should set a course toward more flexible, liquid offtake markets and build demand confidence.

A second key barrier is building the necessary associated infrastructure for green hydrogen, including storage and transport infrastructure. The revised strategy should confirm Government support for a ‘hydrogen backbone’, such as Project Union, which would connect hydrogen production and demand clusters. It should also define the role and location of salt cavern storage and provide indicative timelines for its delivery.

The revised strategy will be published ahead of the Strategic Spatial Energy Plan, and it is essential that these, as well as the Clean Power 2030 Plan, are all integrated and coordinated.

Reduce hydrogen production costs

For green hydrogen to become successful, it must become cost competitive with electricity and natural gas. Due to being an emerging technology, it is currently significantly more expensive than other energy sources , with HAR1 producing an average weighted strike price of £241/MWh (£175/MWh in 2012 prices), although this is comparable with other nascent electricity generation technologies.

As set out in RenewableUK and Hydrogen UK’s 'Splitting the Difference' report , electricity costs account for around 70% of green hydrogen production. The revised strategy should therefore outline how the Government intends to lower electricity costs for hydrogen producers, including refining the Hydrogen Production Business Model (HPBM), aligning it with Contracts for Difference, and enabling access to low-cost, curtailed renewable power.

Planning and permitting processes must also be streamlined to reduce upfront costs and improve project viability.

Collaborate cross-Government

While the Department of Energy Security and Net Zero (DESNZ) leads on hydrogen policy, there is a need for coordination and engagement with other departments. For example, the Department for Transport (DfT) oversees key policies including the Renewable Transport Fuel Obligation (RFTO) and sustainable air fuels (SAF). Aligning hydrogen production with RTFO and SAF eligibility is critical, yet current barriers limit its use in transport.

In conclusion

The revised Hydrogen Strategy is an excellent opportunity to reset the UK’s hydrogen path and ensure a successful green hydrogen economy, starting with these key five steps.

Do you agree with these key areas? Join the great and the good of our industry at RenewableUK’s Future Energy System to contribute your ideas to this discussion!