Net Zero Hydrogen Fund: Strand 2 Capital Expenditure Round 2

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.