Memorandum of Understanding between the Department for Energy Security and Net Zero and the Welsh Government relating to funding for the Holyhead Hydrogen Hub Project

The signatories to this Memorandum of Understanding (“MoU”) are:

• The Department for Energy Security and Net Zero (“DESNZ”), and
• The Welsh Government (“WG”)

(each a “Participant” and, together, the “Participants”).

2.1 This MoU sets out the understanding between DESNZ and WG regarding the working arrangements and transfer of £4.8 million in funding for the delivery of the Holyhead Hydrogen Hub (“HHH”) project in Anglesey, Wales.

2.2 This MoU is not legally binding or enforceable and does not purport to create any legal rights or obligations, whether between the Participants or otherwise.

2.3 The MoU outlines:

• The aims of the funding
• Funding schedule and AO responsibilities
• Assurance and information
• Management and governance arrangements
• Communications protocol

3.1 In 2021 the HHH was allocated £4.8 million of funding from DESNZ to support the construction of an electrolytic hydrogen facility located in Ynys Môn (Anglesey), Wales.

3.2 DESNZ and His Majesty's Treasury (HMT) have agreed with WG that this funding will be transferred from DESNZ to the WG for them to take over the management of the funding and full delivery responsibility for the HHH.

3.3 Accordingly, the funding (as defined below) to be transferred from DESNZ to WG in accordance with this MoU is to fund the construction of the HHH.

4.1 DESNZ will transfer £4.8 million in capital funding to the WG for the HHH project (the “Funding”) using the Supplementary Estimates process in Financial Year 2025/2026.

5.1 The Permanent Secretary of the Welsh Government is the Principal Accounting Officer for the Welsh Government by virtue of section 129(6) of the Government of Wales Act (GOWA) 2006. Overarching accountability for the administration of the Funding rests with the Permanent Secretary of the Welsh Government. The Permanent Secretary is supported in this role by nominated Additional Accounting Officers. This includes the need to assure themselves that deployment of the Funding meets the 4 accounting officer standards of regularity, propriety, value for money and feasibility.

5.2 To enable the DESNZ Principal Accounting Officer to discharge his personal responsibilities under Managing Public Money for funds transferred to WG, WG will provide timely, accurate, and comprehensive assurance and information in accordance with paragraph 6 below.

6.1 WG will provide DESNZ with a quarterly progress report at the end of each financial quarter on the delivery of the HHH which includes:

1. Key milestones achieved in the preceding quarter, for example FID taken, offtake agreements signed, construction progress, plant commencement of duty, etc.
2. A summary of the disbursement of any of the Funding the construction of the HHH in accordance with this MoU.
3. A high-level summary setting out anticipated project delivery milestones expected over the next quarter.
4. An assurance from WG of compliance with the four Accounting Officer tests for decisions and approvals taken on the HHH project during the quarter that involve the expenditure of the Funding.

6.2 WG will notify DESNZ at the earliest possible opportunity if:

1. WG become aware of significant risks to the delivery of the HHH (e.g. unable to secure sufficient offtakes for its hydrogen)
2. WG anticipate that upon completion the HHH project will not have spent all the Funding; in such circumstances WG will notify DESNZ to discuss the return of unspent Funding.
3. WG take a decision at any stage to terminate the HHH project prior to its completion, in which case, WG will notify DESNZ at the earliest possible juncture to discuss the return of or unallocated Funding. Welsh Government officials will also ensure that any award of funding letter incorporates a clawback mechanism.

7.1 This MoU is underpinned by the principles for intergovernmental relations, as set out in the Review of Intergovernmental Relations. In line with these principles, the Participants jointly decide the following:

1. Both Participants commit to open and transparent communication and will engage and communicate as required on project progress.
2. Publicity and communications will be coordinated between the Participants, with joint messaging from both governments on the project.
3. Branding and signage for the HHH project should reflect that the project has been funded by DESNZ and the WG.

8.1 WG assume overall responsibility for allocation, distribution, and administration of the Funding.

8.2 WG will manage equalities considerations, fraud risk, and subsidy control.

8.3 Both Participants are committed to the prevention and elimination of modern slavery within the supply chains of activities supported by the Funding. The Welsh Government will require that projects receiving Funding take proportionate measures to prevent and eliminate modern slavery within their supply chains, including through the incorporation of appropriate modern slavery clauses in any onward funding or contractual documentation. Both Participants will take proportionate and reasonable steps to identify and address modern slavery risks at the earliest appropriate stage, recognising that full assessment of such risks may, in some cases, be undertaken as part of onward due diligence and funding agreement processes.

9.1 The Participants will share relevant data to enable appropriate information exchange in relation to the Funding and this MoU.

10.1 Both participants are committed to resolving disagreements relating to this MoU at the lowest appropriate level possible within existing inter-governmental structures relating to the HHH. If a disagreement cannot be resolved, either Participant may refer it to the IGR Secretariat as a dispute under the arrangements for dispute resolution and avoidance set out in the Review of Intergovernmental Relations.

11.1 Each Participant will provide information reasonably requested by the other, subject to confidentiality constraints and statutory rules on disclosure. The Participants will consult each other before significant disclosures under the Freedom of Information Act 2000.

12.1 This MoU commences from the date of the last signature below and will end on 31 March 2028, unless extended or terminated by a joint decision of the Participants in writing.