Published 13 December 2022
Last updated 19 December 2025 — See all updates
Change made:: Published Low Carbon Hydrogen Agreement: key terms
summary document with explanatory notes (Hydrogen Allocation
Round 1 – December 2024).
Low Carbon Hydrogen Agreement:
key terms summary document with explanatory notes (Hydrogen
Allocation Round 1 - December 2024)
Details
The Hydrogen Production Business Model provides revenue support
to hydrogen producers to overcome the operating cost gap between
low carbon hydrogen and high carbon fuels. It has been designed
to incentivise investment in low carbon hydrogen production and
encourage users to switch to low carbon hydrogen by making it a
price competitive decarbonisation option.
The business model is delivered through a private law contract
(the Low Carbon Hydrogen Agreement) between a government
appointed counterparty and a hydrogen producer.
The Low Carbon Hydrogen Agreement includes the following
documents:
- Low Carbon Hydrogen Agreement: Standard Terms and Conditions
- Low Carbon Hydrogen Agreement: Front End Agreement
Low Carbon Hydrogen Agreement: key terms summary document
with explanatory notes (Hydrogen Allocation Round 1 - December
2024)
This document provides a summary of the LCHA Standard Terms and
Conditions for Hydrogen Allocation Round 1 (HAR1), including explanatory
notes on the intention behind key terms. This document keeps the
same content as the key terms summary document published in
February 2025, with the addition of a column for each provision
to explain its intention. It is provided for information only and
does not constitute legal advice or alter the terms of the
LCHA.
LCHA
for HAR1 2024
(published February 2025)
These are the final versions of the Standard Terms and Conditions
and the Front End Agreement template for HAR1. The Front End
Agreement forms the front section of the LCHA and contains
project-specific information that tailors the application of the
Standard Terms and Conditions.
The completed contracts signed by individual HAR1 projects have been
published by the LCHA counterparty, the Low
Carbon Contracts Company, on their website.
The key terms summary document is intended to provide a summary
of the LCHA terms applicable
to HAR1 projects and
strengthen understanding of the LCHA amongst wider
interested stakeholders.
These documents provide details of the government's design for a
low carbon hydrogen business model.
LCHA
Development 2023
The version of the Low Carbon Hydrogen Agreement published in
August 2023 reflects the draft contract at that time.
We subsequently updated some provisions in the LCHA awarded to
successful projects in Hydrogen Allocation Round 1, as published
in February 2025.
LCHA
Heads of Terms Development 2022
The Heads of Terms for the Low Carbon Hydrogen Agreement sets out
the government's proposed business model design in December 2022.
We subsequently updated some of the policy proposals in the Low
Carbon Hydrogen Agreement, as published in August 2023 and
February 2025.
This set of documents includes:
- Low Carbon Hydrogen Production Business Model: Heads of Terms
- Low Carbon Hydrogen Production Business Model: Heads of Terms
comparison with the indicative Heads of Terms (April 2022)
- Low Carbon Hydrogen Production Business Model: full contract
drafting of the payment calculations
Consultation: design of a business model for low carbon
hydrogen
Before the publication of the Low Carbon Hydrogen Agreement Heads
of Terms in 2022, government undertook a consultation into the
design of a business model for low carbon hydrogen. For further
information see the design of a business model
for low carbon hydrogen consultation documents.
