Energy Pathways plc, an energy transition company developing low carbon integrated energy solutions in the UK, is pleased to advise that Department of Energy Security and Net Zero (DESNZ) has invited Energy Pathways to participate in the H₂ Storage Business Model (HSBM) Design Group. This group comprises a select number of companies, including several Tier-One companies that are at the forefront of the UK's energy transition.

The HSBM, when finalized following consultation with the Design Group, will define DESNZ's new investment support scheme to promote the development of H₂ storage projects. Energy Pathways expects the first DESNZ H₂ Storage Allocation Round to be launched during 2025 and intends to submit an application for its large-scale MESH natural gas and green H₂ storage project.

H₂ storage in the UK. In order to achieve the UK's ambitions of up to 10 GW of low-carbon H₂ production capacity by 2030, a significant build-out of H₂ storage and transport infrastructure will be needed. H₂ storage at scale will be important in the UK's future energy systemin order to harness renewable power that would otherwise be wasted. Excess electricity generation from renewable sources, arising due to network constraints or low demand ,is already a challenge for the UK, with wind generators being paid to turn-down or curtail. The UK's annual constraint costs are expected to rise from around £2 B per year to around £8 B per year by 2030.

The initial focus of government support in the first H₂ Storage Allocation Round is expected to be on scalable geological storage for green H₂. The National Grid Energy System Operator suggests that up to 2 TWh of geological storage could be required by 2030 and that somewhere between 11 TWh and 56 TWh of storage could be required by 2050. Locating electrolyzers and H₂ storage behind network constraints is seen as the best means to utilize these otherwise wasted constraint costs.

Government guidance indicates that projects will be prioritized that can unlock whole of energy system benefits, enable decarbonization at pace and advance the development of a H₂ market. Projects that are expected to be ranked highly will:

• Connect H₂ producers with consumers and balance misalignments in energy supply and demand
• Enable low carbon-fueled flexible power generation to complement intermittent renewable generation
• Provide at pace decarbonization pathways for unabated gas generation and gas use
• Be capable of repurposing natural gas infrastructure and reducing decommissioning costs
• Connect new H₂ production to new demand centers.

DESNZ has indicated that it plans to complete the design of the HSBM in 2025 and aims to announce the launch of the first H₂ Storage Allocation Round during 2025. Through this process, a shortlist of projects will to be taken to due diligence and negotiations stage, with successful projects announced after approximately 12 months, subject to administrative and legislative arrangements including licensing.