Net Zero Hydrogen Fund: Strand 2 Capital Expenditure Round 2 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. Eligibility This competition is open to single applicants and collaborations. To lead a project or work alone your organisation must: be a UK registered business of any size carry out project work in the UK Academic institutions,research and technology organisations (RTOs), public sector organisations or charities cannot lead or work alone. Open now Opened: 11 April 2023 Closes: 7 June 2023
Programme: Innovate Uk
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.
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 will help us reach our commitment to reach net zero by 2050.
The NZHF will deliver up to £240m via four strands as follows:
Strand 1: Development Expenditure (DEVEX) support for front end engineering design (FEED) studies and post-FEED studies, to grow the future pipeline of hydrogen projects in the UK.
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 (this strand).
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 2 (Round 2) only.
We recognise that some projects may be considering revenue support through both the Hydrogen production business model and the Department for Transport’s Renewable Transport Fuel Obligation (RTFO) scheme. Subject to compliance with subsidy control principles, it is our intention to develop arrangements that could support dual participation in both schemes – although we would not look to allow projects to claim both sources of funding for the same volumes of hydrogen. We would envisage these projects applying for support through strand 3. Applicants will need to satisfy themselves that they have applied to the appropriate strand for the requirements of their project.
Your proposal for this strand must demonstrate how you will develop a credible project that will contribute to the at-scale production of low carbon hydrogen by 2025. Funded projects must support the delivery of the 10GW production ambition by 2030 set out in the Energy Security Strategy.
Hydrogen production projects will be able to apply for co-funding through this strand if they require CAPEX support to take a Final Investment Decision (FID) and begin deployment in the early 2020s.
It is the responsibility of the applicant to ensure that they are entering the appropriate competition strand for their project.
You will not be able to transfer your application between strands and it will not be sent for assessment if it is out of scope.
In applying to this competition, you are entering into a competitive process. This competition closes at 11am UK time on the deadline stated.We reserve the right to cancel the competition and amend or vary the competition processes, including any envisaged stage and any document issued pursuant to it, at any point and for any reason.
Your project’s total grant request must be between £200,000 and £20 million.
Your project must:
The project timelines are fixed. Do not apply if you cannot complete your project work in the timeframes outlined above.
If your total grant funding request or CAPEX support falls outside our eligibility criteria, you must provide justification by email to firstname.lastname@example.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.
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.
More information on the different types of organisation can be found in our Funding rules.
To collaborate with the lead, your organisation must be one of the following UK registered:
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.
Number of applications
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.
We will not award you funding if you have:
This competition provides funding in line with the Subsidy Control Act 2022. Further information about the Subsidy requirements can be found within the Subsidy Control Act 2022 (legislation.gov.uk).
Innovate UK is unable to award organisations that are considered to be in financial difficulty. We will conduct financial viability and eligibility tests to confirm this is not the case following the application stage.
EU State aid rules now only apply in limited circumstances. Please see our general guidance to check if these rules apply to your organisation.
If you are unsure about your obligations under the Subsidy Control Act 2022 or the State aid rules, you should take independent legal advice. We are unable to advise on individual eligibility or legal obligations.
You must always make sure that the funding awarded to you is compliant with all current Subsidy Control legislation applicable in the United Kingdom.This aims to regulate any advantage granted by a public sector body which threatens to, or actually distorts competition in the United Kingdom or any other country or countries.
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:
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.
For more information on company sizes, please refer to the company accounts guidance.
If you are applying for an award funded under State aid Regulations, the definitions are set out in the European Commission Recommendation of 6 May 2003.
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: