REG - EnergyPathways PLC - Government update on Climate Change Levy

EnergypathwaysAnnouncement

03/04/2025 11:00

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RNS Number : 5442D  EnergyPathways PLC  03 April 2025

3 April 2025

EnergyPathways plc

 

("EnergyPathways" or the "Company")

 

UK government to remove Climate Change Levy (CCL) costs from electrolytic
hydrogen production

 

EnergyPathways (AIM: EPP), an energy transition company, notes with interest
the update provided by the UK government within the Spring Statement 2025,
regarding the removal of Climate Change Levy (CCL) costs from electricity used
in electrolysis to produce hydrogen. This measure supports the growth of low
carbon electrolytic hydrogen production in the UK, which benefits
EnergyPathways' wider hydrogen ambitions.

 

EnergyPathways' Planned MESH Project

 

EnergyPathways' planned MESH project ("MESH" or the "Project") is an
integrated energy storage hub with an estimated storage capacity of up to
20TWh, equivalent to 7% of the UK's current annual electricity demand.

 

The Project is expected to include the development of a large-scale salt
cavern hydrogen storage facility (to be known as MESH-H2) of up to 640 MW,
with total storage capacity of 2.8 TWh. The hydrogen storage facility will be
integrated with the wider MESH project and linked to regional offshore wind to
store and supply decarbonised energy. MESH-H2 will potentially be the UK's
largest hydrogen storage facility.

 

The MESH project will also include the development of a 400 MW compressed air
Long Duration Energy Storage (LDES) facility, providing a multi-day clean
power supply. Once developed, it will have the potential to be the largest
LDES facility in Europe. MESH can be enhanced to provide up to 700 MW of
low-carbon flexible power through a highly flexible future-proofed hybrid
compressed air storage system (H-CAES) that can be transitioned to carbon free
hydrogen based power.

 

EnergyPathways plans to submit an application in the UK Government's planned
Hydrogen Storage Allocation Round and believes the MESH H2 design has
competitive attributes that can attract Government support.

 

EnergyPathways has also submitted a gas storage licence application to the
Government regulator in relation to both hydrogen and natural gas storage
development and operations. If successful, EnergyPathways will further
progress the MESH development.

 

Department of Energy Security and Net Zero (DESNZ) Consultation:

 

In its Spring Statement 2025, the UK government committed to removing CCL
costs from electricity used in electrolysis to produce hydrogen, currently
charged at a rate of £7.75 per MWh. This will support the growth of low
carbon electrolytic hydrogen production, which will play an important role in
decarbonising the power system and hard to electrify industrial and transport
sectors.

 

In conjunction with this commitment, DESNZ has issued a consultation that
seeks views to determine the best legislative route to remove these CCL costs
and ensure their removal is delivered in a way that achieves the government's
objectives, whilst avoiding unintended consequences. The consultation
acknowledges that the wider energy landscape has changed significantly since
CCL was introduced, and will continue to develop, therefore the government
also announced that it will conduct a wider review of CCL.

 

The consultation recognises that electrolytic hydrogen has the potential to
support the delivery of net zero in several different ways and references the
Autumn Budget 2024 in which the government confirmed that it would support
projects awarded contracts in the first electrolytic Hydrogen Allocation
Round, harnessing renewable energy to decarbonise industry and transport
across the length and breadth the of the UK.

 

To inform the scope of this review, the consultation seeks views on other
areas where CCL may need to be reviewed to ensure it is aligned with
developments in the changing energy landscape and the government's clean power
and net zero missions

 

The consultation can be viewed here:
https://www.gov.uk/government/consultations/climate-change-levy-electrolytic-hydrogen-and-energy-context
(https://www.gov.uk/government/consultations/climate-change-levy-electrolytic-hydrogen-and-energy-context)

 

Ben Clube, CEO of EnergyPathways said:

 

"It is encouraging to see the UK government increasingly promoting the
benefits of the hydrogen economy and emphasising the important role  green 
hydrogen will play in decarbonising the UK's energy future. It is also
reassuring to see that the UK government is committing to improved fiscal
terms that encourage investment into the hydrogen sector.  As referenced in
the consultation, the changing energy landscape requires stakeholder
collaboration to collectively deliver on the UK government's clean power and
net zero mission.  It is exactly in this context that EnergyPathways is
promoting the multiple socioeconomic and environmental benefits of its planned
MESH project, that seeks to provide a secure and dependable supply of natural
gas, compressed air and green hydrogen for the UK market for over 25 years. We
believe that MESH therefore represents an important project in supporting the
delivery of the UK's energy policy. It is also noteworthy that MESH's
compressed air storage power, generated from harnessed wind power, also falls
outside the CCL remit."

 

About MESH

 

MESH is a new large scale energy storage facility that is expected to provide
a secure and dependable supply of natural gas and green hydrogen and low
carbon flexible power for the UK market for over 25 years. MESH is an
integrated energy system solution. It is electrifying and integrating existing
infrastructure, connecting gas storage, hydrogen storage, and compressed air
storage technologies with offshore wind and decarbonised power generation to
establish a new major decarbonised energy hub for the UK.

 

MESH is expected to be the UK's largest integrated energy storage facility
combining natural gas, compressed air and hydrogen storage. It will be able to
store up to 20 TWh of energy. The MESH project is intended to deliver on the
Government's 2030 Clean Power timeline and will ensure a reliable and secure
supply of energy for the UK.  MESH has been designed as a fully decarbonised
and electrified zero emission facility that is to be powered by the renewable
wind farms of the UK Irish Sea region. EnergyPathways aims to play its role in
supporting the Government in accelerating the UK's energy transition.

 

Investor Engagement with EnergyPathways

Engage with us by asking questions, watching video summaries and seeing what
other shareholders have to say. Navigate to our Interactive Investor website
here: https://energypathways.uk/link/WPGpzy
(https://energypathways.uk/link/WPGpzy)

 

Enquiries

 

 Investor questions on this announcement                                      https://energypathways.uk/announcements
 We encourage all investors to share questions on this announcement via our   (https://energypathways.uk/announcements)
 investor hub
 EnergyPathways                                                               Tel: +44 (0)207 466 5000, c/o Burson Buchanan (Financial PR)
 Ben Clube / Max Williams

                                                                              Email : info@energypathways.uk
 Cairn Financial Advisers LLP (Nominated Adviser)                             Tel: +44 (0)20 7213 0880
 Jo Turner / Louise O'Driscoll / Sandy Jamieson
 SP Angel Corporate Finance LLP (Broker)                                      Tel: +44 (0)20 3470 0470
 Richard Hail / Adam Cowl
 Global Investment Strategy UK Limited (Joint Broker)                         Tel: +44 (0)20 7048 9000
 Callum Hill / James Sheehan

 

Subscribe to our news alert service: energypathways.uk
(http://energypathways.uk/auth/signup) /auth/signup
(http://energypathways.uk/auth/signup)

 

For further information on EnergyPathways visit www.energypathways.uk and
@energy_pathways on X (formerly Twitter).

 

Forward Looking Statements

This announcement contains forward-looking statements relating to expected or
anticipated future events and anticipated results that are forward-looking in
nature and, as a result, are subject to certain risks and uncertainties, such
as general economic, market and business conditions, competition for qualified
staff, the regulatory process and actions, technical issues, new legislation,
uncertainties resulting from potential delays or changes in plans,
uncertainties resulting from working in a new political jurisdiction,
uncertainties regarding the results of exploration, uncertainties regarding
the timing and granting of prospecting rights, uncertainties regarding the
timing and granting of regulatory and other third party consents and
approvals, uncertainties regarding the Company's or any third party's ability
to execute and implement future plans, and the occurrence of unexpected
events.

 

Actual results achieved may vary from the information provided herein as a
result of numerous known and unknown risks and uncertainties and other
factors.

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