Funding for development of hydrogen projects

This fund was created to support renewable hydrogen production projects in Scotland with a production capacity of between 5 and 400 megawatts.

The UK government's Second Hydrogen Allocation Round (HAR2) guidance defines renewable hydrogen as being (at least one of the following):

• Electrolytic
• From gasification, pyrolysis of biomass, or wastes
• From gas splitting that produces solid carbon

This call is specifically for projects seeking research and development (R&D) support for development expenditure (DEVEX) on stages including feasibility studies, pre-Front End Engineering Design (FEED), and in some instances FEED work (select and define), ahead of Final Investment Decisions (FID) being taken.  

Priority will be given to projects that contribute to achieving Scotland’s strategic objectives of:

• Growing the hydrogen economy
• The future development of regional hydrogen hubs
• Benefitting the supply chain
• Obtaining value for money

Funding may also be allocated to other projects that will develop the supply chain. For example, these could include – but are not restricted to – the design and manufacturing of electrolysers or other core components for activities such as hydrogen transport and storage. 

At present, funding is only available for activities completed within the current 2024 to 2025 financial year, up to 31 March 2025. 

However, we encourage applicants to provide details in their Expression of Interest (EoI) of additional activities and costs that would extend beyond 31 March 2025. This will help us better understand future market needs, and we may also be able to signpost you to other funding opportunities.

Your application must demonstrate that your project:   

• Will be operational by 31 March 2030
• Would not go ahead or would progress at a much slower rate or on a smaller scale without the requested funding
• Has access to finance from other sources to cover the total project costs
• Will finalise its eligible deliverables by the specified project end date (31 March 2025)
• Uses core technology that has been tested in a commercial environment at technology readiness level 7 or higheropens in a new window 
• Can identify the supplier(s) of this core technology (for example, an electrolyser), or has a defined process in place to do so

If your project will be producing hydrogen, your application should also show evidence of engagement with at least one domestic off-taker that meets the definition of a qualifying off-taker in the UK government hydrogen production business modelopens in a new window. This can take the form of an agreement (or evidence of progress toward an agreement) such as a letter of intent or Memorandum of Understanding. Projects that target additional customers in an export market (UK-wide and Europe) will also be considered.

Projects in receipt of other sources of public funding – such as matched funding from another government fund – may be considered ineligible if they breach subsidy control limits.

Projects that produce hydrogen for use on the same site – that is, where the producer is also the off-taker – are eligible.  

Projects that produce hydrogen to make hydrogen derivatives – including, but not limited to, e-methanol, sustainable aviation fuel (SAF), ammonia, and liquid organic hydrogen carriers (LOHC) – as their final sale product are also eligible.

Applicant criteria 

The funding call is open to all public and private sector applicants. Proposals will be welcomed from single organisations or consortia. For consortia, a lead partner must be identified. 

The project lead must be an organisation of any size registered in the UK.  

Third parties (for example, a consultancy) may prepare an Expression of Interest (EoI) or an application on behalf of the lead applicant. However, the grant provider will not have a legal relationship with or pay money to any party other than the lead applicant.  

If consortium members are part of multiple applications, they must confirm that they would be able to deliver all projects if successful.  

Subcontractors are allowed and can be based in Scotland, the UK, or internationally, as long as their costs are justified and appropriate to the total eligible costs. 

Similarly, consortia may include international partners, but we will only support costs incurred by the UK-registered partners.

The minimum grant that will be considered for each project is £150,000. The maximum is £2 million. 

The grant can cover up to 50% of eligible costs.

All grants will be provided under Scottish Enterprise's Research and Development and Innovation Scheme for 2022 to 2025. Details will be published on the UK government's transparency database to ensure compliance with the interim subsidy control regime.  

The grant contribution requested should take account of subsidy controlopens in a new window (formerly state aid) parameters based on the type of project and type of project partner. The proposed subsidy control rate put forward by bidders will then be subject to discussion and agreement.