Net Zero Hydrogen Fund: Strand 2 Capital Expenditure Round 2

Key Features

Strand 2 of the Net Zero Hydrogen Fund will provide capital expenditure (CAPEX) support for new low carbon hydrogen production facilities to begin deployment in the early 2020s.

Programme:     Net Zero Hydrogen Fund

Award:     Share of up to £45 million

Opens: 11th Apr 2023

Closes: 7th Jun 2023

! This scheme is now closed


This competition will support capital expenditure (CAPEX) costs for projects that do not require a hydrogen specific business model. The aim is to support low carbon hydrogen projects that can deploy on the basis of capital expenditure support and are able to start construction rapidly.


This competition will provide capital expenditure (CAPEX) to support low carbon projects to take a Final Investment Decision (FID) and begin deployment in the early 2020s. Your project must not require support from a hydrogen production business model as these projects are covered in Strands 3 and 4 of the Net Zero Hydrogen Fund (NZHF).

This competition supports the following hydrogen production pathways:

  • electrolysis
  • biomass or waste gasification

Your project’s eligible costs can include a request for support for:


  • the electrolyser system (the stack)
  • compressor costs integrated into main production facility, considered on a case-by-case basis
  • all necessary balance of plant including drier, cooling, de-oxo and water supply and de-ionisation equipment
  • civil works, for example building and foundations
  • on-site small-scale hydrogen storage costs, for example static storage units
  • electricity grid connection costs
  • planning applications and surveys, environmental permitting costs

Biomass or waste gasification:

  • feedstock storage
  • the gasifier
  • Syngas treatment unit
  • air separation unit
  • shift conversion unit
  • acid gas removal unit
  • sulphur recovery unit
  • CO2 drying & compression unit
  • methanator unit to convert residual carbon oxides
  • civil works
  • monitoring instrumentation and control systems
  • necessary balance of plant
  • on-site small-scale hydrogen storage costs, for example static storage units
  • electricity grid connection costs
  • planning applications and surveys, environmental permitting costs

Net Zero Hydrogen Fund will not provide CAPEX for:

  • costs for electricity generation assets (wind farm, turbine acquisition or solar array)
  • compressor costs that are separate from the main production facility
  • costs of refuelling equipment and infrastructure
  • labour costs not associated with eligible costs listed above
  • pre-FID costs (feasibility studies, front-end engineering studies (FEED))
  • land value costs
  • hydrogen transportation costs
  • large long-term hydrogen storage costs

These lists are not exhaustive.

Please note: the funder will decide an eligible or ineligible cost on a case-by-case basis

Portfolio approach

Net Zero Hydrogen Fund 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

Net Zero Hydrogen Fund will fund capital projects which do not require support from a Hydrogen production business model.


Your project must:

  • have a total grant request of between £200,000 and £20 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)

The project timelines are fixed. Do not apply if you cannot complete your project work in the timeframes outlined above.

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.

Each partner organisation must be invited into the Innovation Funding Service by the lead to collaborate on a project. Once accepted, partners will be asked to login or to create an account and enter their own project costs into the Innovation Funding Service.

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 or 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 or a 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.

You must amend your application based on the updated scope and questions 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
  • require a hydrogen production business model (HBM)
  • are not building new low carbon hydrogen production facilities
  • have total grant requests or CAPEX support outside the specified range and have not been approved in advance by Innovate UK
  • rely on gas blending into the gas network as a sole offtaker
  • are not able to take a Final Investment Decision (FID) within 3 months of receipt of a conditional grant offer letter

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

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 2.

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 capital expenditure (CAPEX) support, you could get funding for your eligible project costs of up to 30% 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 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.