A new green hydrogen production facility has been given the go-ahead in Wales, marking one of the very first of its kind here in the UK. 

The facility, which is to be sited at Milford Haven, South Wales, is being developed by MorGen Energy, a subsidiary of Trafigura, and will be located within the ‘Celtic Freeport’ energy cluster. 

Having recently announced that the project has successfully reached Final Investment Decision (FID), MorGen Energy expects construction to begin later this year, and the facility to start operating around 2028. 

Green Hydrogen for Use in Industrial Processes

Intended to produce green hydrogen specifically for industrial processes, the facility is expected to have an impressive 20MW electrolyser capacity with 2000 tonnes of hydrogen produced annually; the equivalent of around 65 - 70 GWh of energy per year. 

Most notably, Milford Haven’s new green hydrogen facility will account for approximately 15000 tonnes of CO2 emissions avoided per year compared to conventional hydrogen production, seeing this exciting new project fit very comfortably into the UK’s Net Zero and low carbon initiatives where the UK is aiming to produce 10 GW of low carbon hydrogen by 2030.

And, currently, hydrogen is increasingly being explored as a low-carbon alternative for a range of industrial applications where electrification alone is not always practical; incentivised by government policies and initiatives, such as the Hydrogen Allocation Round 1 (HAR1) programme, which provides revenue support similar to a Contracts for Difference model and provides valuable support to the Milford Haven project. 

Processes such as high-temperature heating, chemical manufacturing, refining and certain forms of heavy processing have historically relied on natural gas or fossil-derived hydrogen, but green hydrogen offers a potential route to reduce emissions in these sectors while maintaining the high heat and consistent energy supply many industrial processes require. 

As projects like Milford Haven move forward, hydrogen is beginning to transition from a largely conceptual solution into a practical energy source for parts of the UK’s industrial base.

This is more important than one may first believe as heavy industry accounts for near 16% of UK emissions, and is therefore a key sector hydrogen production aims to decarbonise. 

The Cost of Hydrogen Production

One of the main challenges facing hydrogen adoption today is cost and producing green hydrogen through electrolysis remains significantly more expensive than traditional fossil fuel alternatives, largely because of the electricity required to power the process and the relatively early stage of the technology’s commercial rollout. 

At present, green hydrogen can cost in the region of £4–£9 per kilogram to produce, which is considerably higher than hydrogen produced from natural gas through conventional methods.

In the short term, this cost differential means hydrogen is unlikely to compete directly with natural gas for widespread domestic heating or everyday energy use. 

For industrial applications, however, where high heat and consistent energy supply are essential, hydrogen is increasingly being viewed as a viable decarbonisation pathway despite the higher cost. 

Government support mechanisms such as the UK’s Hydrogen Allocation Round 1 programme are designed specifically to help bridge this gap while the sector scales and technology matures.

Over the longer term, production costs are widely expected to fall as electrolyser manufacturing expands, renewable electricity becomes cheaper, and supply chains mature. As with many emerging energy technologies, early projects like Milford Haven play an important role in demonstrating feasibility, building expertise and establishing the infrastructure required for wider adoption.

While hydrogen production is still too expensive to serve as a universal replacement for fossil fuels, projects such as this represent an important first step. 

As the technology develops and costs begin to stabilise, green hydrogen could become an increasingly practical component of the UK’s low-carbon energy mix, particularly for industries where alternative decarbonisation options remain limited.

A Pivotal Shift in the UK’s Energy Landscape

The approval and funding of the Milford Haven facility signal a pivotal shift in the UK’s energy landscape. While the economic hurdles of green hydrogen - namely the current production cost disparity - cannot be ignored, the project demonstrates that the transition is no longer a theoretical exercise. 

By focusing on hard-to-abate industrial sectors where electrification falls short, this facility provides a blueprint for how high-density energy needs can be met without compromising Net Zero targets.

Ultimately, the success of the Celtic Freeport energy cluster will depend on this delicate balance between government-backed revenue support and the gradual maturation of supply chains. 

As construction begins, Milford Haven stands as more than just a production site; it is a live laboratory for the UK’s industrial future, proving that with strategic investment and technical precision, green hydrogen can evolve from a niche innovation into a cornerstone of a decarbonised economy.