In the Spring Statement 2025, the Government quietly made a significant move that could reshape the UK’s hydrogen economy: removing the Climate Change Levy (CCL) from electricity used in electrolysis.
For those developing renewable energy, building industrial infrastructure, or relying on high-temperature processes, this is more than a policy shift—it’s a potential game-changer.
A commercial boost for Green Hydrogen
Electrolytic hydrogen—produced using electricity and water—has long struggled to compete on cost with fossil-based alternatives. The Climate Change Levy only increased the burden, increasing electricity costs and tilting the scales against low-carbon production.
With the levy now set to be removed for electrolysis, green hydrogen becomes significantly more viable, particularly for:
- Renewable energy developers seeking flexible offtake options or co-location models to reduce curtailment
- Industrial developers looking to secure low-carbon energy for new or retrofitted sites
- Offtakers in hard-to-abate sectors—chemicals, steel, cement—who need credible pathways to decarbonisation under investor and regulatory pressure
The change could also help unlock more Long Duration Energy Storage (LDES) projects by tipping the economics in favour of hydrogen, where battery storage may not be the best fit.
Why this matters now
The Government has stated that this measure aims to support growth in the hydrogen economy and speed up the decarbonisation of energy-intensive sectors. It follows previous announcements around funding for HAR1 projects and broader planning and regulatory reform.
From a commercial perspective, it marks a shift in the total cost of ownership and feasibility of green hydrogen infrastructure—especially when co-located with renewables or deployed as part of an industrial cluster.
The opportunity for Long Duration Energy Storage
With the UK’s Battery Energy Storage System (BESS) pipeline currently oversubscribed, the need for alternative LDES technologies is pressing. Green hydrogen offers a compelling solution, particularly for projects facing:
- Long grid connection timelines
- High curtailment risk
- The need for dispatchable power beyond 4–8 hours
- Industrial users requiring both heat and power
According to the Department for Energy and Net Zero (DESNZ), there hasn’t been significant deployment of LDES in the UK for decades—yet policy, market signals, and now energy levies are aligning to create fresh momentum. Developers may press on irrespective of their place in the grid queue if hydrogen gives them an alternative to conventional connections—or offers greater flexibility in how and when value is captured.
Policy Is Shifting – and You Can Help Shape It
The Government is currently conducting a consultation on how best to implement the CCL exemption. This is the industry’s chance to help shape the final design of the exemption—and influence how future hydrogen policy supports deployment.
🔗 View the Government’s consultation here
How BWB can help you deliver hydrogen projects
Whether you’re a renewables developer seeking new revenue streams, an industrial client under pressure to decarbonise, or an exploration of hydrogen as a storage or offtake strategy, the landscape is shifting in your favour.
Now’s the time to revisit the business case—and we’re here to help you shape it.
At BWB, we work with developers, operators, and industrial clients to bring hydrogen and renewable energy projects to life. We offer:
- Feasibility and site appraisal for co-location with renewables
- Infrastructure design for hydrogen production, distribution and integration
- Grid and flexibility strategy, helping you navigate queue constraints and maximise value
- Environmental Impact Assessments tailored to complex energy infrastructure
- Carbon analysis and ESG reporting aligned with client and investor goals
We also support:
- Stakeholder and community engagement to secure social and political support
- Digital visualisation tools that bring hydrogen concepts to life for planners, investors, and the public
- Policy monitoring and consultation support, ensuring your voice is heard as regulations evolve