The first two strands of the UK’s £240mn ($186mn) Net-Zero Hydrogen Fund will open for applications on Monday.

The UK doubled its hydrogen targets in early April and now aims for 10GW of hydrogen production capacity by 2030, with at least half of this being green hydrogen.

To achieve this goal, the country has laid out three main funding streams: a contract for difference (CfD) operational support scheme, an industry innovation fund and a Net-Zero Hydrogen Fund.

The Net-Zero Hydrogen Fund is the first to get underway and aims to make awards from the end of 2022. The scheme will provide capex support for the initial construction of green and blue hydrogen production projects via four strands.

Strand one will support project development by helping fund Feed and post-Feed studies, while strand two will provide capex support for projects that do not require revenue support through the CfD scheme—referred to as a hydrogen business model (HBM).

£240mn – Capex funding available

Both strands will be delivered by UK innovation agency Innovate UK, with applications opening on Monday.

Strand three will provide capex for projects that require a HBM and are not involved in the phase-two cluster sequencing process. Strand four is for carbon capture, utilisation and storage (CCUS)-enabled projects that require a HBM and are part of the phase-two cluster sequencing process.

Projects can receive revenue support through both the HBM and the Department for Transport’s Renewable Transport Fuel Obligation scheme, although they would not be allowed to claim both sources of funding for the same volumes of hydrogen.

“We would envisage these projects applying for support through strand three, but further details will be provided on this before the close of the strand two application window,” says Innovate UK.

Applications open

In strand one, total grant requests can be for between £80,000 and £15mn for studies on equipment specifications and pricing, plant layout, cost estimation and environmental impacts as well as other relevant areas.

In strand two, total grant requests can be for between £200,000 and £30mn to support projects that can take FID and begin deployment in the early 2020s.

The government wants to fund a wide portfolio of projects based on location, technology, project scale and cost, environmental impact and offtaker type.

It will not fund projects that are not compliant with the low-carbon hydrogen standard that has been published in draft form by the Department for Business, Enterprise and Industrial Strategy, and will likely become policy in this form in the next two months.

The strand one competition closes on 22 June, while the strand two competition closes on 6 July.

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Author: Tom Young