Grant information


open    Opened: 25 April 2022   |   Closes: 06 July 2022

Overview

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.

Description

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 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 business model (HBM) 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 only.

Strand 1 is being delivered through a separate competition. Strands 3 and 4 will be delivered by BEIS. Projects which require support from a Hydrogen Business Model must apply to either Strand 3 or Strand 4, and not to Strand 2.

Innovate UK recognises that some projects may be considering revenue support through both the Hydrogen 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 Innovate UK would not look to allow projects to claim both sources of funding for the same volumes of hydrogen. Innovate UK would envisage these projects applying for support through strand 3 (the joint NZHF-HBM allocation round), but further detail will be provided on this before the close of the strand 2 application window to allow projects to consider before finalising their arrangements. Applicants will need to satisfy themselves that they have applied to the appropriate strand for the requirements of their project.

 

Your proposal for strand 2 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 towards the 10GW production target by 2030 set out in the Energy Security Strategy UK Hydrogen Strategy.

 

Hydrogen production projects will be able to apply for co-funding through Strand 2 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 challenge competition for their project.

 

You will not be able to transfer your application 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.

Innovate UK reserves the right to cancel, amend or vary the competition processes, including any envisaged stage and any document issued pursuant to it, at any point and for any reason.

Funding Type

Grant

Project size

Your total grant request must be between £200,000 and £30 million.

Who can apply

Your project

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:

 

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 eligible project costs.

Subcontractors

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

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.

Previous applications

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

Innovate UK will not award you funding if you have:

Subsidy control (and State aid where applicable)

This competition provides funding in line with the UK's obligations and commitments to Subsidy Control. Further information about the UK Subsidy Control requirements can be found within the EU-UK Trade and Cooperation agreement and the subsequent guidance from the department of Business, Energy and Industrial Strategy (BEIS).

 

BEIS and Innovate UK are unable to award funding to organisations that are considered to be in financial difficulty. Innovate UK 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.

 

Further Information

If you are unsure about your obligations under the UK Subsidy Control regime or the State aid rules, you should take independent legal advice. Innovate UK is unable to advise on individual eligibility or legal obligations.

 

You must make sure at all times 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.

 

If there are any changes to the above requirements that means Innovate UK needs to change the terms of this competition, theywill tell you as soon as possible.

Funding

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.

 

For more information on company sizes, please refer to the company accounts guidance. This is a change from the EU definition unless you are applying under State aid.

 

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.

 

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

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