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Net Zero Hydrogen Fund: Strand 2 Capital Expenditure Round 2

Fund Name

Net Zero Hydrogen Fund: Strand 2 Capital Expenditure Round 2

Project Length

6-17 months

Project Value

£200k - £20m

Deadline

07.06.2023

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.

There are two strands to this competition – this strand and Net Zero Hydrogen Fund: Strand 1 Development Expenditure Round 2.

Check Your Eligibility

Fund details

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:

Electrolysis:

  • the electrolyser system (the stack)
  • compressor costs integrated into a main production facility, considered on a case-by-case basis
  • all necessary balances of the 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

Innovate UK 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 on an eligible or ineligible cost on a case-by-case basis.

Portfolio approach

Innovate UK 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, the longer-term cost to the taxpayer
  • projects awarded funding through related BEIS and UKRI competitions
  • off-taker 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.

Innovate UK 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 off-taker
  • are not able to take a Final Investment Decision (FID) within 3 months of receipt of a conditional grant offer letter

Eligibility

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)

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.

Talk to us today if you would like to apply for this opportunity.

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