Based on feedback and further policy development work, UK Government has made some modifications to the Fund’s design to maximise its impact. It proposes to split the NZHF’s grant allocation into the following 4 strands:Strand 1: DEVEX (development expenditure) for FEED studies and post FEED costsStrand 2: CAPEX (capital expenditure) for projects that do not require revenue support through the hydrogen business modelStrand 3: CAPEX for non-CCUS enabled projects that also require revenue support through the hydrogen business modelStrand 4: CAPEX for CCUS-enabled projects that require revenue support through the hydrogen business modelUK government response focuses on how it has incorporated this feedback into the final scheme design for strands 1 and 2, along with an overview of our approach to strands 3 and 4. It has made the following key modifications to the Fund’s design for strand 1 and 2:Hydrogen production projects will be able to apply for co-funding through strand 1 if they require support with DEVEX costs for FEED and post-FEED costs. Feasibility and pre-FEED will not be coveredWhere appropriate, support will also be available for FEED and post-FEED costs for associated on-site transport and storage infrastructureTo ensure the NZHF delivers a diverse and balance spread of projects, we intend to adopt a portfolio approach which will build in additional policy levers / controls to the project selection processStrand 1 projects could receive up to 50% of their total eligible costs and strand 2 projects could receive up to 30%The competition briefs for Strand 1 (projects seeking DEVEX) and strand 2 (projects seeking NZHF capex co-funding alone) will be published by UKRI on 19 April 2022. The first wave of funding for these strands will open on 25 April 2022. The application window for strand 1 will close on 22 June and strand 2 will close on 6 July 2022.If projects are looking to combine capital funding from the Net Zero Hydrogen Fund with revenue support from the Hydrogen Business Model, they will instead need to apply through the joint allocation round which we intend to open in summer. The market engagement exercise (see below) sets out more detail and seeks further input on this joint allocation round. We will open the first joint allocation round window in early July 2022.CCUS-enabled projects applying for a hydrogen business model through Phase-2 of the CCUS cluster sequencing process will have an opportunity to apply for NZHF capital co-funding (strand 4).UK Government plan tso launch a strand 4 NZHF ‘Expression of Interest’ process following the announcement of the Phase-2 shortlisted projects, followed by a strand 4 application process in early 2023.