Ofgem has announced a consultation regarding the return of overpaid funds from the detailed design stage of the hydrogen village trials.
The trials, conducted in Redcar and Whitby, were part of the UK government’s initiative to explore hydrogen as a means to decarbonise heating in buildings by 2026.
The funding for Stage 2 of the hydrogen village trials was provided by Ofgem through the RIIO-GD2 Net Zero Pre-Construction and Small Net Zero Projects re-opener.
On 31st March 2023, Cadent Gas and Northern Gas Networks submitted their detailed design proposals for projects in Whitby, Ellesmere Port and Redcar, Teesside.
In July 2023, the Department for Energy Security and Net Zero announced that Whitby, Ellesmere Port would no longer be considered for the trial.
By December 2023, the hydrogen heating village trial in Redcar, Teesside was also cancelled due to the unavailability of the main hydrogen supply.
Following the submission of Stage 2 close-down reports in May 2023, it was discovered that an incorrect price base was used to calculate the approved funding amount, leading to an overpayment.
As a result, Ofgem is consulting on its proposed directions to Cadent, Northern Gas Networks and National Gas Transmission to return £540,000 million and £270,000 respectively to gas consumers.
Ofgem is seeking input from stakeholders, particularly consumer groups, on these proposed directions.
The UK Government has previously outlined the need to gather evidence on the viability of hydrogen for heating by 2026.
