Green Hydrogen Project in Wales Secures Final Investment Decision

What if a decommissioned oil refinery in Pembrokeshire could pivot to power sustainable industries across south Wales? That’s exactly what MorGen Energy, the hydrogen wing of Trafigura, is banking on. They’ve just given the green light to a 20MW green hydrogen facility on the outskirts of Milford Haven, turning a port once synonymous with fossil fuels into a real-world lab for hydrogen production and zero-emission innovation.

From Refinery Remnants to Renewable Hubs

Milford Haven has long been a buzzing maritime gateway—back in the day it hosted a major oil refinery until the 1990s. Fast forward to now, it’s part of the Celtic Freeport initiative, a government-backed push to fast-track clean energy and decarbonization. Repurposing the old refinery grounds makes perfect sense: you’ve already got pipelines, quays and industrial land in place, and policy is all about giving fossil-fuel sites a second lease on life in the renewable era.

Green Hydrogen Production via Electrolysis

At the core of the project is a 20MW electrolyser system from Sheffield-based ITM Power. Using renewable electricity, these polymer electrolyte membrane (PEM) electrolysers split water into hydrogen and oxygen. The setup is designed to pump out around 2,000 tonnes of low-carbon hydrogen each year—fully aligned with the UK’s Low Carbon Hydrogen Standard. That volume is earmarked for the hard-to-abate sectors—ports, manufacturing and chemical plants—where straight-up electrification often falls short.

Financing Backed by Policy and Private Capital

The financial package was stitched together by Lloyds and Société Générale, bolstered by 15 years of revenue support under the UK’s Hydrogen Production Business Model and Net Zero Hydrogen Fund. It’s a smart mix of public and private financing, born out of the UK Hydrogen Allocation Round 1 (HAR1), which aims to get early hydrogen projects off the ground without overloading the public purse.

Industrial Decarbonization in Focus

Here’s where industrial decarbonization really comes into play. By replacing grey hydrogen or fossil-based feedstocks in chemical processes and powering port equipment with fuel cells, this plant could shave off more than 15,000 tonnes of CO2e every year. Even better, it lays the groundwork for a local hydrogen infrastructure—think pipelines, storage terminals and, down the line, export docks.

Jobs, Growth, and Local Engagement

Construction is slated to kick off next year, with full commissioning expected in early 2028. MorGen Energy plans to rope in Pembrokeshire-based contractors, engineers and service providers, meaning real jobs and upskilling opportunities right in the community. It’s an all-hands-on-deck moment that’ll keep the economic boost local.

Looking Ahead: A Welsh Hydrogen Hub?

This facility isn’t just a one-off plant—it’s built to scale. It could expand or link up with neighbouring projects, carving out a south Wales hydrogen corridor. That vision dovetails perfectly with UK goals around energy security, domestic manufacturing and net-zero targets. Before long, Milford Haven might be famed for its green hydrogen exports rather than crude oil.

A Shift in Trafigura’s Strategy

Trafigura has been a heavyweight in commodities trading since 1993, dealing in everything from crude oil to metals. But as decarbonisation gains momentum, they launched MorGen Energy in 2021 to drive green hydrogen projects from concept to operation. It’s part of a broader trend: traders and oil majors alike are hedging their bets on hydrogen and ammonia to stay ahead in a low-carbon world.

Policy Landscape: Navigating UK Support Schemes

The UK’s 2021 hydrogen strategy set a bold goal—10GW of low-carbon hydrogen capacity by 2030. To jump-start that vision, HAR1 awarded production quotas and directed capital toward early movers. Layer on the Net Zero Hydrogen Fund’s grants to chip away at upfront costs, plus the Hydrogen Production Business Model’s 15-year revenue guarantee, and you’ve got a financing framework that de-risks investments and drives down the levelised cost of hydrogen.

Why 20MW Matters

A 20MW electrolyser might not grab headlines like gigawatt-scale hubs, but it’s the sweet spot for de-risking technology and commercial contracts. It’s big enough to validate pricing, offtake and operations, yet small enough to slot into existing grid and port infrastructure without triggering major upgrades. It’s a perfect test bed for first movers—manageable now, expandable later.

Technical Deep Dive: PEM Electrolysis and Integration

PEM electrolysis relies on a solid polymer membrane, giving you rapid start-up times and the flexibility to ride the ups and downs of renewable output. ITM Power’s stacked-cell design uses high-purity materials and tight manufacturing specs. At Milford Haven, the plant will tap into grid-sourced renewables today, with an eye on linking offshore wind farms as they come online—smoothing out supply and boosting system resilience.

Financing Model: Sharing Risk and Reward

Lloyds and Société Générale tailored the debt package to the project’s cashflow profile, anchored by fixed-price contracts and long-term offtake agreements. Under the Hydrogen Production Business Model, the government tops up the gap between a market reference price and a strike price, making revenue streams predictable and capping merchant risk—just the reassurance financiers need to back cutting-edge tech.

Decarbonization Potential Beyond CO2 Cuts

Sure, avoiding 15,000 tonnes of CO2e a year is a headline grabber, but the ripple effects run deeper. Green hydrogen can serve as a clean feedstock in ammonia, refining and methanol processes, power fuel cell trucks and deliver industrial heat. By nailing this model at Milford Haven, the hope is to spark demand in sectors that struggle to go all-electric.

Community and Skills: Building Local Value

Pembrokeshire boasts a proud maritime and engineering heritage, and MorGen Energy wants to tap into it. From pipe-fitters and welders to marine service providers, local firms will get their shot during construction. Once operations ramp up, the plant will need technicians, maintenance crews and process engineers—creating real career paths and new skillsets in the region.

From Pilot to Pipeline Network

The long game is a full-blown hydrogen corridor linking inland production sites to Milford Haven’s deep-water port. From there, Welsh hydrogen could sail to markets across Europe. Plans call for new pipelines, underground storage caverns and loading jetties. If the first 20MW train holds strong, additional units can be added, creating a cluster effect that attracts more investment and expertise.

Challenges on the Horizon

No major transition is without bumps in the road. Grid capacity could limit electrolyser run time, so close coordination with National Grid will be vital. Locking in enough renewable power at competitive prices is another hurdle, as is scaling the supply chain to meet growing demand. Regulatory clarity on blending hydrogen into existing gas networks and navigating cross-border trade rules will also shape the outcome.

Looking Forward

If everything goes to plan, commissioning in early 2028 will line up nicely with the next wave of wind and solar capacity, feeding even more green electrons into the system. The lessons learned at Milford Haven—from procurement to community outreach—will become best practices for future megawatt and gigawatt developments. This isn’t just a single plant; it’s the spark of a wider hydrogen infrastructure ecosystem, complete with storage, refuelling stations and export routes.

By marrying targeted policy, private capital and an industrial legacy, this project shows how you can supercharge low-carbon energy solutions. We’re not simply watching a one-off facility come online; we’re witnessing the first moves in a vibrant, evolving ecosystem that could redefine energy in Wales and beyond. All eyes will be on MorGen Energy to see if this 20MW pilot can ignite a much larger transition.

About MorGen Energy

MorGen Energy is the wholly owned hydrogen arm of Trafigura, dedicated to building large-scale green hydrogen ecosystems worldwide. Leveraging Trafigura’s trading expertise and capital strength, MorGen’s mission is to fast-track the commercialisation of renewable hydrogen and related technologies.