Net Zero Hydrogen Fund – Strand 2 – Capital expenditure

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 £240 million

Opens: 25th Apr 2022

Closes: 6th Jul 2022

! This scheme is closing soon

Overview

The aim of the Net Zero Hydrogen Fund is to provide capital expenditure and development expenditure. 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 £240m via four strands.

Scope

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 business model (these projects are covered in Strands 3 and 4 of the NZHF). This competition supports multiple hydrogen production pathways.

Your project must address low carbon hydrogen production opportunities and must focus on construction of new low carbon hydrogen production facilities.

The NZHF expect credible projects to utilise one of the following hydrogen production types:

  • electrolysis
  • methane reforming
  • gasification

The NZHF 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

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

Exclusions

The NZHF will not fund projects that:

  • do not focus on low carbon hydrogen production at scale and the immediate supply chains
  • require a hydrogen business model (HBM)
  • are not building new low carbon hydrogen production facilities
  • have total grant requests or timescales outside the specified range
  • 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
  • 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
  • are 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

 

Eligibility

Your project must:

  • have a total grant request of between £200,000 and £30 million
  • start by 1 January 2023
  • end by 31 March 2025
  • last between 6 and 27 months
  • carry out all of its project work in the UK
  • intend to exploit the results from or in the UK
  • meet the Draft Low Carbon Hydrogen Standard
  • be using core technology that has been tested in a commercial environment, Technology Readiness Level (TRL) 7 or more

If your project’s total grant request, duration or CAPEX support falls outside our eligibility criteria, you must provide justification by email to support@iuk.ukri.org at least 20 working days before the competition closes. We will decide whether to approve your request.

If you have not requested approval or your application has not been approved by us, you will be made ineligible and your application will not be sent for assessment.

Lead organisation

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

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

Project team

To collaborate with the lead, your organisation must be one of the following UK registered:

  • business of any size
  • academic institution
  • charity
  • not for profit
  • public sector organisation
  • research and technology organisation (RTO)

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.

Subcontractors are allowed in this competition.

You cannot use a previously submitted application to apply for this competition.

Funding Costs

Up to £90 million has been allocated to fund projects across strands 1 and 2 for this competition. 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 the majority of your organisation’s work on your 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.

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.

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.