This move is aligned with the objectives outlined in the British Energy Security Strategy, which aims to promote the adoption of low carbon hydrogen.
The consultation seeks to gather evidence on various key aspects.
Firstly, the government aims to understand the market conditions necessary for a successful transition to price-based competition, ensuring a fair and efficient allocation process.
Additionally, they are exploring how such a system can incentivise projects to contribute to broader outcomes, such as leveraging electricity system benefits, promoting economic growth and supply chain development, and ensuring the security of hydrogen supply.
The consultation places significant emphasis on stakeholder engagement, welcoming responses from a wide range of parties.
Those involved in electrolytic projects and non-CCUS low carbon hydrogen production in the UK, businesses operating within the low carbon hydrogen supply chain, electricity suppliers, consumer and environmental groups, as well as trade bodies in the renewables sector, are particularly encouraged to participate.