Ofgem has confirmed a total of £164 million for three National Gas projects that will accelerate the development of the Project Union core hydrogen network, including the route from St Fergus near Aberdeen to Teesside in North-East England. Ofgem has also announced an additional £107 million in funding for two new projects, in addition to the £57 million confirmed in June for Project Union: East Coast. These investments will enable more than 50% of National Gas’s proposed core hydrogen network, known as ‘Project Union’, to advance into the detailed engineering design phase.
Project Union aims to repurpose existing natural gas pipelines and construct new ones where necessary to establish a 1,500-mile core hydrogen network across Britain. The two new projects will lay the groundwork for connecting regional hydrogen industrial clusters in the North of Scotland, including Grangemouth, as well as in North East and North West England. Funding for the East Coast section, announced in June, will connect critical industries across Teesside and the Humber region.
What Project Union signifies for Scotland:
- Connecting Key Industrial Clusters: Linking the major industrial hubs at Grangemouth and St Fergus with demand centres in the North of England.
- Harnessing Scottish Renewables: Enabling the use of Scotland’s vast wind and other renewable resources to produce green hydrogen, which can then be transported to power industry and homes.
- Driving Investment and Jobs: Early analysis indicates Project Union could support around 3,100 jobs at peak construction and deliver £300 million in annual value to the economy.
- Enable access to cost-effective, low-carbon hydrogen across the UK, helping decarbonise industry, power generation and transport, while bolstering Britain’s energy security.
As the UK accelerates investment in electricity networks, this announcement also demonstrates that hydrogen transport and storage infrastructure are moving forward, complementing electrification and ensuring the UK has a diverse, resilient, and secure energy system for the long term.
By linking hydrogen production with end-use demand in industrial clusters, the project will help attract private investment, drive innovation, and develop new regional skills in engineering, manufacturing, and clean-energy services.
Industry leaders across Scotland have welcomed the news as a critical step from planning to delivery.
Nick Stapley, Hydrogen Business Development Manager at global energy investor and Hydrogen Scotland member RWE Generation: “RWE supports Ofgem’s decision in awarding FEED funding to National Gas for Project Union: St. Fergus to Teesside and Project Union: North West projects. These projects are crucial in connecting the large, important industrial clusters of HyNet, Teesside and Grangemouth and additionally, key offtakers and inland industrial regions alongside the pipeline routes. RWE’s view is that a hydrogen backbone pipeline network is essential and necessary for an inclusive and successful hydrogen economy. Enabling the connection between hydrogen production, demand and storage, plus other distribution networks, creates a landscape for hydrogen uptake to be accelerated; it is inclusive for all hydrogen offtakers irrespective of size and geography.”
Ian Radley, Chief Commercial Officer at National Gas, said: “This is a hugely significant moment for Britain’s hydrogen journey. With Ofgem’s support, we’re moving from discussion to delivery – taking significant strides towards building Britain’s core hydrogen network. Project Union will unlock significant investment, create a critical pathway for hard-to-electrify heavy industries to decarbonise, and safeguard jobs – all while advancing the Government’s clean energy ambitions and strengthening Britain’s energy security. Hydrogen will sit alongside electrification as a vital part of a cleaner, more resilient energy system – and this funding shows that future becoming a reality.”
Gavin Catto, CEO of Scotland-based green hydrogen project developer, Green Cat Hydrogen, said: “This is a valuable step towards facilitating the transport of green hydrogen from supply centres to demand centres. System benefits can then be realised by utilising otherwise curtailed and/or constrained renewable generation in Scotland, and making the resulting green hydrogen available to high energy demand centres like Teesside. There, it can effectively decarbonise hard-to-electrify industries. Projects like these will help establish Scotland – and the UK – as global leaders in the green hydrogen economy, encouraging investment and creating high skilled jobs.”
Nigel Holmes, CEO of Hydrogen Scotland, added: “This decision by Ofgem on FEED funding for Project Union Teesside to St Fergus is a critical step towards establishing the UK’s core hydrogen network. The new hydrogen pipeline connection from Teesside will enable connections between large scale hydrogen production across Scotland and the increasing hydrogen demand from industry and responsive power generation throughout the UK.”
The future
The announcement by Ofgem reflects Britain’s ambition to build world-class hydrogen infrastructure – supporting up to 10 GW of low-carbon hydrogen production by 2030 and a sector capable of delivering tens of thousands of jobs and billions in annual economic value. The need for a core hydrogen network was clearly identified by the Climate Change Committee, the Second National Infrastructure Assessment and in the Government’s Hydrogen Transport and Storage Networks Pathway.
Nigel Holmes, CEO of Hydrogen Scotland, concluded: “The proposed Project Union core hydrogen network will provide resilient energy infrastructure for making, moving, storing, and using hydrogen as an integral part of a low-carbon energy system which provides cost-effective energy security for Scotland and the UK. Members of Hydrogen Scotland look forward to hearing more about Project Union Scotland and providing input to National Gas for the development of the FEED study.”
By progressing Project Union, Ofgem and National Gas are taking a crucial step towards building Britain’s core hydrogen network which will connect hydrogen producers, storage, and consumers across key regions, unlock industrial decarbonisation at scale, and strengthen energy security and flexibility within the UK’s future net zero system.
