Net Zero Hydrogen Fund: Strand 1 Development Expenditure Round 2

Key Features

Strand 1 of the Net Zero Hydrogen Fund will provide development expenditure (DEVEX) support for front end engineering design (FEED) and post-FEED studies for new low carbon hydrogen production facilities.

Programme:     Net Zero Hydrogen Fund

Award:     Share of up to £45 million

Opens: 11th Apr 2023

Closes: 31st May 2023

! This scheme is now closed


This competition will support development expenditure (DEVEX) costs for front end engineering design (FEED) and post-FEED studies. The aim is to build the pipeline of hydrogen production projects and measurably move them closer to deployment. This competition supports multiple hydrogen production pathways.

The aim of the Net Zero Hydrogen Fund (NZHF) is to provide capital expenditure (CAPEX) and development expenditure (DEVEX). This will support the commercial deployment of new low carbon hydrogen production projects during the 2020s.

This is to ensure the UK has a diverse and secure decarbonised energy system fit for meeting our ambition of up to 10GW low carbon hydrogen production by 2030, and commitment to reach net zero by 2050.

The NZHF will deliver up to £240 million via four strands as follows:

Strand 1: Development expenditure (DEVEX) support for front end engineering design (FEED) and post-FEED studies, to grow the future pipeline of hydrogen projects in the UK (this strand).

Strand 2: Capital expenditure (CAPEX) for projects that do not require a hydrogen specific business model. These are low carbon hydrogen projects that can deploy on the basis of capital expenditure support and are able to start construction rapidly.

Strand 3: CAPEX for projects that require a Hydrogen production business model and sit outside of the Phase 2 cluster sequencing process.

Strand 4: CAPEX for carbon capture usage and storage (CCUS) enabled projects that require a hydrogen specific business model and are part of the Phase 2 cluster sequencing process.

This competition relates to Strand 1 (Round 2) only.


This competition will support development expenditure (DEVEX) costs for front end engineering design (FEED) and post-FEED studies. The aim is to build the pipeline of hydrogen production projects and measurably move them closer to deployment.

This competition supports the following hydrogen production pathways as listed in the Low Carbon Hydrogen Standard Version 2 (LCHS v2):

  • electrolysis
  • natural gas reforming, with carbon capture and storage (CCUS)
  • biomass or waste conversion to hydrogen, with or without CCUS

If a CCUS-enabled project is unable to access a track-1 or track 2 cluster, including any expanded track-1 clusters, then we will reserve the right to reject their application on the basis that the project does not have a clear route to market.

Your project must address low carbon hydrogen production opportunities and must focus on FEED studies, post-FEED studies or both.

FEED studies can include:

  • equipment definition, for example equipment data sheets, specifications
  • equipment pricing, for example bid lists, bid packages
  • plant layout and model, for example plot plan
  • material quantification, for example material take-off, physical drawings
  • engineering, procurement and construction (EPC) and execution planning, for example EPC schedule, contract plan
  • cost estimation, for example capital costs, operating costs
  • commercial proposal, for example cost, schedule, performance guarantees
  • environmental impacts and mitigation

Post-FEED and pre-final investment decision (pre-FID) studies can include:

  • refinement of the outputs of FEED, particularly the cost estimates
  • planning applications

These lists are not exhaustive.

Hydrogen production projects will be able to apply for co-funding through this strand if they require DEVEX support for the cost of front-end engineering design (FEED), post-FEED expenditures, or both. Where appropriate, support will also be available for FEED and post-FEED costs for associated on-site transport and storage infrastructure.

We want to fund a portfolio of projects, across this competition, based on:

  • geographical location
  • project scale and replicability
  • project cost and funding available
  • project timescales
  • hydrogen production technology type
  • hydrogen production commercial readiness
  • alignment with and contribution to wider cross-economy decarbonisation
  • environmental impacts
  • use of additional low carbon electricity
  • affordability considerations, for example, longer term cost to the taxpayer
  • projects awarded funding through related BEIS and UKRI competitions
  • offtaker type
  • additionality of electricity and wider system benefits

This will support the twin-track approach to hydrogen production as outlined in the UK Hydrogen Strategy.



Your project must:

  • have a total grant request of between £80,000 and £10 million
  • start by 1 November 2023
  • end by 31 March 2025
  • last between 6 and 17 months
  • carry out all of its project work in the UK
  • intend to exploit the results from or in the UK and be able to demonstrate relevant commercial engagement
  • be using core technology that has been tested in a commercial environment, Technology Readiness Level (TRL) 7 or more
  • meet the Low Carbon Hydrogen Standard Version 2 (LCHS v2)

To lead a project or work alone your organisation must be a UK registered business of any size.

You will not be permitted to change your company structure or the lead organisation after you have submitted your application. Doing so may disqualify you from the competition.

Academic institutions, research and technology organisations (RTOs), public sector organisations or charities cannot lead or work alone.

Your project can include partners that do not receive any of this competition’s funding, for example non-UK businesses. Their costs will count towards the total project costs.

Subcontractors are allowed in this competition.

Subcontractors can be from anywhere in the UK and overseas.

All subcontractor costs must be justified and appropriate to the total project costs.

In this strand a business can lead on up to 2 applications, which must be materially different, and can be included as a collaborator in a further 2 applications.

An academic institution, research and technology organisation (RTO), charity, not for profit or public sector organisation can collaborate on any number of applications.

You can use a previously submitted application to apply for this competition.


Net Zero Hydrogen Fund will not fund projects that:

  • do not focus on low carbon hydrogen production at scale and the immediate supply chains
  • produce hydrogen that is not compliant with the low carbon hydrogen standard
  • have total grant requests or timescales outside the specified range and have not been approved in advance by Innovate UK

Net Zero Hydrogen Fund cannot fund projects that are:

  • dependent on export performance, for example giving a subsidy to a baker on the condition that it exports a certain quantity of bread to another country
  • dependent on domestic inputs usage, for example giving a subsidy to a baker on the condition that it uses 50% UK flour in their product


Net Zero Hydrogen Fund will not fund the following costs for projects:

  • deposits on long lead items
  • grid connection fees
  • buying physical equipment or services necessary to deliver your project
  • financial and banking advisory costs
  • legal advisory costs
  • regulatory support costs
  • tax advisory costs
  • insurance advisory costs
  • commercial advisory costs

Funding Costs

Up to £45 million is available for projects across strands 1 and 2 for this round of the competition. Funding will be in the form of a grant.

The total funding available for this competition can change.

The funders have the right to:

  • adjust the funding allocations between the two competition stages
  • apply a ‘portfolio’ approach

The breakdown between Strands 1 and 2 is not fixed, but the NZHF is primarily a deployment fund and this may influence your expectations on funding for Strand 1.

If your organisation’s work on the project is commercial or economic, your funding request must not exceed the limits below. These limits apply even if your organisation normally acts non-economically but for the purpose of this project will be undertaking commercial or economic activity.

For development expenditure (DEVEX) support you could get funding of up to 50% of your eligible project costs if you are a UK registered business of any size.

Research participation

The research organisations undertaking non-economic activity as part of your project can share up to 30% of the total eligible project costs. If your consortium contains more than one research organisation undertaking non-economic activity, this maximum is shared between them.

Of that 30% you could get funding for your eligible project costs of up to:

  • 80% of full economic costs (FEC) if you are a Je-s registered institution such as an academic
  • 100% of your eligible project costs if you are an RTO, charity, not for profit organisation, public sector organisation or research organisation

Interested in applying for this competition?

Book an appointment to speak to one of our advisors to discuss your eligibility to apply for this Grant Funding opportunity.