Consultation Response on the Welsh Hydrogen Policy

We are publishing our response to the Welsh Government’s hydrogen policy consultation to ensure transparency and contribute to an open, informed dialogue on the role of hydrogen in Wales. Our aim is to share insights not only from our work on Hyppo but also from a broader perspective — supporting the development of a sustainable, resilient hydrogen economy that benefits all sectors and communities.

Consultation Response on the Welsh Hydrogen Policy

Hyppo Hydrogen Solutions welcomes the Welsh Government’s hydrogen policy consultation and supports the ambition to integrate hydrogen into Wales’ decarbonisation and economic strategy. To fully realise the potential of hydrogen, we believe there should be additional focus on addressing the fundamental challenge of scaling the hydrogen economy: the interdependence of supply and demand.

Solving the Hydrogen Economy’s “Chicken-and-Egg” Challenge

A major barrier to hydrogen deployment is the lack of coordinated demand across sectors, which creates uncertainty for infrastructure investment. Without guaranteed offtake, producers hesitate to scale production. Similarly, end-users are reluctant to adopt hydrogen technology without reliable supply and refuelling infrastructure. This conundrum slows investment and risks delaying the transition to a hydrogen-based economy. Wales has the opportunity to break this cycle by strategically concentrating demand across multiple sectors within a region. By fostering industrial, transport, and energy applications in parallel, we can create a stable and growing hydrogen market that gives investors confidence. Public sector support for demand-side initiatives will be critical in ensuring early success and long-term scalability.

Wales’ Opportunity as a Hydrogen Leader

The Welsh Government’s leadership in hydrogen will not only help decarbonise industry and transport but also position Wales as a prime location for hydrogen innovation and investment. Historically, Wales leveraged its coal reserves to attract industry during the Industrial Revolution. Now, with abundant renewable energy potential, including floating offshore wind in the Celtic Sea, Wales can once again become a powerhouse—this time for the green economy.The strategic advantages of Wales include:

• Maximising renewable energy potential – Pairing hydrogen production with floating offshore wind in the Celtic Sea will enhance energy security and sustainability.

• Leveraging freeports – The freeports in Neath Port Talbot and Pembrokeshire provide an ideal environment for hydrogen trade, manufacturing, and export, further boosting economic opportunities.

• Building cross-sector hydrogen demand – By fostering partnerships in transport, logistics, industrial processes, and power generation, Wales can create a reliable demand base that justifies large-scale production and infrastructure investment.

Key Policy Recommendations

To accelerate the hydrogen economy in Wales, we recommend the following policy enhancements:

1. Investing in Demand-Side Growth

• Prioritise demand aggregation across transport, industrial heat, and power applications to ensure stable offtake for hydrogen producers.

• Implement targeted incentives to encourage industries to transition to hydrogen, including manufacturing, logistics, and steel production.

• Encourage public sector hydrogen adoption, particularly for fleets, public transport, and municipal energy projects.

2. Leveraging National & Regional Funding to Accelerate Hydrogen Deployment

• Align Welsh hydrogen projects with UK national investment priorities to maximise funding opportunities.

• Encourage the Development Bank of Wales to increase equity funding for hydrogen-focused companies.

• Support hydrogen micro-grids to improve cost-effectiveness and integrate local renewable energy.

• Engage with the National Wealth Fund to access the recently announced funding for Green Hydrogen infrastructure.

3. Expanding Hydrogen Transport Beyond Heavy Vehicles

• Develop refuelling infrastructure for taxis, ride-hailing services, and fleet operations.

• Encourage back-to-base fleet hydrogen adoption to optimise infrastructure efficiency.

• Support shared mobility schemes to demonstrate hydrogen’s viability in diverse applications.

4. Strengthening Supply Chains & SME Participation

• Provide dedicated funding for SMEs involved in hydrogen-related manufacturing, logistics, and maintenance.

• Implement skills development programs to build a hydrogen-ready workforce.

• Attract global hydrogen technology firms through targeted inward investment incentives.

5. Fast-Tracking Private Sector-Led Hydrogen Ecosystems

• Prioritise support for existing projects like H2Bay, where private investment is already committed.

• Facilitate public-private partnerships to co-fund infrastructure and reduce risk.

• Streamline planning and permitting processes to expedite project delivery.

6. Facilitating Access to UKRI & Horizon Europe Funding

• Establish a dedicated hydrogen funding support service to assist Welsh businesses with bid writing and project structuring.

• Provide match-funding for feasibility studies to help SMEs de-risk early-stage projects.

• Create a Hydrogen Innovation Hub to coordinate industry, academia, and government efforts.

7. Attracting Inward Investment to Position Wales as a Hydrogen Nation

• Develop strategic partnerships with hydrogen leaders like Japan, South Korea, and Germany.

• Create investment incentives, including tax breaks and grants, for foreign hydrogen companies establishing operations in Wales.

• Promote Wales as a centre for hydrogen R&D, manufacturing, and export.

Conclusion

Hyppo Hydrogen Solutions strongly supports Wales’ hydrogen ambitions and believes the Welsh Government’s leadership can unlock significant economic and environmental benefits. By addressing the chicken-and-egg dilemma through demand aggregation, leveraging renewable energy, and attracting investment, Wales can establish itself as a global hydrogen leader. We welcome further discussions on these proposals and look forward to continued engagement with the Welsh Government on hydrogen policy development.

Chris Foxall

CEO, Hyppo Hydrogen Solutions Limited

https://www.gov.wales/hydrogen-policy-html