Notice

Industrial Fuel Switching: questions and answers from innovation scoping event

Updated 28 July 2021

Questions about industrial fuel switching (IFS) technologies and Lots

1. Can you clarify that electrification of heat to displace fuel use will be seen as fuel switching?

Yes, providing that the fuel switch is innovative, compatible with net zero, and the heat is used to power/fuel an industrial process.

2. How will hybrid solutions and projects that cross between lots be handled? If a project proposal or innovation contained work on multiple Lots, would separate applications to each Lot be required?

If the innovation contains work which would fit multiple Lots, the primary focus/process of the innovation would determine the Lot, or applicants should be able to select multiple lots if the project is an equal mix. It is currently proposed for funding to be soft ringfenced, so it may be moved between Lots to promote a balanced and high-quality portfolio of solutions.

It is currently proposed that lead organisations only enter one application into each Lot as the project lead. Technology providers and original equipment manufacturers (OEMs) may also only enter one application per Lot, for a particular technology or solution requiring development.

3. With the Waste/Biomass/Other being stipulated as “where other low carbon options are not viable” - what criteria are to be used to judge this?

The criteria for this are currently being developed and will be published in the potential competition guidance. Potential applications should provide assurance that fuel switches to other low carbon options, such as to hydrogen or electricity, are not viable for the specific fuel switch.

4. How are ‘unsustainable biomass sources’ defined?

The criteria for this are currently under consideration and will align with net zero ambitions and as much as possible with other BEIS competitions and policy.

5. How will the competition deal with concerns about food waste being diverted to energy generation and away from the animal feed supply chain?

Assessment criteria for sustainability of biomass or waste sources will align with net zero ambitions and with other BEIS competitions and policy, as far as possible. BEIS will consider asking potential applicants to provide assurance that sources are sustainable. This may include evidencing that the proposed use for the waste does not detract from more important uses.

6. Can you give some examples of the types of biomass projects you envisage?

Switching of higher carbon fuels to biomass to fuel industrial processes, such as direct reduction processes (where other lower carbon alternatives are not possible).

7. Are there any restrictions of the use of biomass in terms of the temperature of application?

This is still under consideration and any restrictions on technologies would be published in a potential competition guidance notes or invitation to tender (ITT) document.

8. Electrification of heat will require upgrades to incoming supplies, how will the competition handle this?

Eligible costs will be in line with Small Business Research Initiative (SBRI) rules. Funding can cover costs related to carrying out the innovation project, which may include the portion of costs of supply upgrade needed for the innovation.

Questions about hydrogen production and supply

1. Is BEIS able to support with obtaining the hydrogen (or other fuels) for trials, or is this all down to the proposer/industrial consumer?

The responsibility for obtaining hydrogen or other fuels will be down to the proposer/ industrial consumer. It is recommended that hydrogen/ fuel suppliers are included in the bid, as a partner or sub-contractor. BEIS is currently considering how to facilitate potential applicants forming connections with hydrogen suppliers.

2. How does the funding for hydrogen technology development ensure there are no limitations in Hydrogen supply (if it is not a self-generating activity) which may impact delivery of a project?

It will be down to the applicant to ensure they secure a supply of hydrogen, BEIS is considering how to facilitate connections between applicants and hydrogen suppliers.

3. Is there an understanding of the gap in hydrogen requirement and availability?

Yes, this was an issue which arose during the previous, Energy Innovation Portfolio (EIP) IFS programme. Hence, any applications for the hydrogen Lot will need a detailed plan for hydrogen delivery.

4. The ambition for supply of hydrogen in the 2030s and 2/3 industrial decarbonisation by 2035 do not seem compatible - can you explain?

The focus of the speculative Industrial Fuel Switching Competition is on developing technology and solutions to achieve industrial decarbonisation by 2050.

5. Positioning electrolysis at site to use O2 and H2 = less overall H2. The power supply may be off site, thus incurring huge costs - does this project help?

The production of hydrogen or any fuel for the fuel switch is not currently envisaged to be part of the scope of a potential IFS competition, but this will be considered further by BEIS during the design of the competition.

Additionally, in any potential application, project costs, financing, and case for public funding, would be assessed on a case-by-case basis.

6. There is unlikely to be any UK production of blue hydrogen before 2025. Is this a concern? Does hydrogen need to be blue or green (i.e. not grey)?

As a potential IFS competition focuses on the fuel switch rather than fuel production, any type of hydrogen could be used for the purposes of innovative demonstration projects.

There are efforts within BEIS to support and accelerate hydrogen production in the UK; such as the Low carbon Hydrogen Supply Competition 2.0.

Questions about the IFS competition process

1. What is expected by demonstration? 10% scale for a 200 tpd process may not be feasible in 20 months.

The definition and scale of demonstration will remain wide, as this will differ with each innovation project. The project should demonstrate an entire fuel switching solution, key components, or a prototype in a relevant environment, depending on what is possible within the time and budget constraints of the competition.

2. Given Phase 2 likely to take the longest and some projects ready, why can’t Phase 2 Part 1 be opened at the same as Phase 1, and then run a Phase 2 Part B later?

BEIS is currently considering the best procurement route for this competition, and whether a market exists to keep Phase 2 open, as well as the timing of the Phases.

3. Would it be possible to split Phase 2 into two stages, with the first stage opening with the Feasibility studies?

Whilst remaining within the SBRI process, BEIS is considering how Phase 1 and Phase 2 of the potential competition could work.

Questions about the IFS eligibility and scope

1. Is funding just for equipment, what happens if land purchase is needed to facilitate equipment development?

Eligible costs will be in line with SBRI rules. This may include the portion of cost of land purchase directly associated with the fuel switching innovation project as an overhead. All applications must have a strong case for public funding in the context of industrial fuel switching for decarbonisation.

2. How does the competition cope with those projects needing planning permission or permit variations for construction (and associated timescale issues)?

Any issues with planning permissions or permit variations will need to be resolved by the project to enable the project to complete within the timescale of the programme. All Phase 2 (demonstration) projects must complete by December 2024.

3. Can non-UK companies be part of bids?

Yes, but assessment of applications will consider the benefits for the UK resulting from the project, and the majority of work must take place in the UK. For clarity, at least 50% of the work at feasibility stage needs to be carried out in the UK, and the demonstration stage (if applicable) has to be based in the UK.

4. Will funding be Company SIC code restricted as was IETF?

BEIS is currently considering whether to restrict by SIC codes.

5. Can funding be directly accessed by an RTO or does it need to be in partnership with industry?

Yes, it can do but a well detailed plan for commercialisation and development in industry must be part of the application.

6. Will the projects cover industrial plant that has to be converted now but it may be 3 -5 years before a full H2 capability is available?

If the innovation is at TRL 4-7 at the start of the project and the full project can be completed by December 2024, it may be in scope. Funding and projects cannot extend beyond this date within this competition.

7. Would hydrogen production be considered to enable the fuel switch as part of the demonstration project?

Any fuel production for the fuel switch is not currently covered by this competition, but BEIS will consider this during the competition design. Hydrogen production is a focus of the Low carbon Hydrogen Supply Competition 2.0: https://www.gov.uk/government/publications/hydrogen-supply-competition

8. Will there be anything for alternative fuel sources - synthetic etc. for use by transport/shipping/air/rail etc.?

This competition covers industrial processes only, hence production of fuel for transport is not included. Upcoming innovation work on a red diesel replacement innovation programme may be of interest for some of these sectors.

9. Are any technologies/ fuels specifically excluded?

Yes, a list of proposed exclusions was given in the presentation, please see slide 17.

The reason for such exclusions is generally that; BEIS does not want to promote technologies that do not fit with net zero objectives, certain technologies are unlikely to fit within the scope of innovation, or they are the focus of other funding competitions.

10. Are you focusing on any areas/sectors and what TRL levels are being considered?

At present, the focus will be on fuel switches or the technology to enable a fuel switch to hydrogen, electrification, or biomass/waste/other (where other low carbon alternatives are not viable). The competition will focus on the fuel that drives any industrial process; no specific sectors are prioritised at present. The technology must be at TRL 4 to 7 at the beginning of the project.

11. As waste will have fossil fuel contributions there is a need for carbon capture and storage (CCS), so should the funding not refer to CCS opportunities?

Carbon capture, utilisation and storage (CCUS) technologies are currently excluded from the IFS scope. This is the focus of the NZIP CCUS Innovation 2.0 Call

12. Will the scope of the call include energy transition to continue into net negative emissions (removing CO2)?

Assessment processes will consider fuel switching innovations in the context of current net zero targets. If an application demonstrates potential for contributing to achieving future negative emissions, this would be considered when scoring under the assessment criteria.

13. Does support for storage systems include the use of battery technology for electricity storage and subsequent use of that stored electricity?

It is currently proposed that if the storage system is innovative and enables a fuel switch, such as to electrification via on-site renewable energy generation, this would be included. Energy or electricity storage alone, without a fuel switch, is not within the IFS competition scope.

14. Is renewable energy generation onsite for a fuel switch to electricity in scope as its not on the list?

The generation is currently out of scope as this is fuel production for the fuel switch. However, innovation for the fuel switch element, including energy storage that may be required to enable the fuel switch, would be in scope.

15. If biomethane is replacing natural gas and removing the source material from the waste chain then there is a net environmental benefit, so why not include it if a Life Cycle Assessment (LCA) can prove this?

The proposed exclusion or inclusion of biomethane as an industrial fuel switching solution is under consideration for off (gas) grid sites.

16. Would upgrading/torrefying biomass in fuel production be included?

This would be out of scope as it does not include an industrial fuel switch.

17. Can previous successful feasibility studies from round 1 apply to this call with a similar technology but an improved phase 2 approach?

Previous successful applicants for the industrial fuel switching programme can apply again, but must apply with a different innovation, as BEIS cannot fund the same project twice. At present, BEIS is considering whether to open Phase 2 within the SBRI procurement process, which would allow previous participants of Phase 1 to bid into Phase 2.

18. Will it be possible to discuss eligibility with BEIS prior to submission?

Eligibility criteria would be published in detail within any potential guidance notes or ITT. BEIS will consider setting up eligibility assistance prior to submission.

19. Would a feasibility study for co-firing hydrogen in a gas turbine be eligible for this competition?

If the potential plant changes are innovation(s) that would enable the fuel switch for an industrial process, then this could be within scope for the Phase 1 feasibility study.

20. Is the funding exclusively for demonstration projects, or would feasibility studies or FEED studies be eligible if they helped to develop commercial viability of a fuel switching technology?

The funding is being proposed for feasibility studies in Phase 1 and demonstration projects in Phase 2, as long as the TRL is at 4-7 at the start of the project.

Other support packages may be available for deployment stages, such as the Industrial Energy Transformation Fund (IETF). Read more details about the IETF.

21. Are biogas and/or liquefied bio-gases likely to be included?

In most cases, natural gas to biomethane/synthetic methane switches will likely be excluded, as this will require little or no innovation for the end user. However, the proposed exclusion or inclusion of biomethane as an industrial fuel switching solution is under consideration for off (gas) grid sites.

For other switches, biogas and liquefied biogases may be eligible if; other low carbon solutions are not suitable, innovation is required for the fuel switch, and the proposals align with net zero objectives and relevant sustainability criteria for biomass sources, which will be provided within the ITT. Additional assurances on the sustainability of the biomass/waste sources will also be required within any applications for funding.

22. To clarify, is it the case that a project must be 100% funded by BEIS? So if a feasibility study cost more than £300,000, it would not be eligible (as the company involved could not part fund the study)?

As funding is being proposed via the SBRI procurement route, any project must be 100% funded by BEIS.

Questions about IFS application assessment

1. With individual sites being potentially assessed separately, how does the overall check that these are feasible at UK level happen?

Development plans to provide a clear and detailed route to deployment should be a part of any applications for innovation funding. These plans and the scalability potential of the innovation would then be assessed as part of the assessment criteria.

2. How are you determining the suitability/potential of the example technologies across industrial sectors?

A potential applicant should provide detail on the suitability and potential of any innovation for relevant sectors, with evidence to support this, within their application. The credibility of such detail would then be judged by technical assessors of the bids.

3. How do you value protecting existing jobs, GVA etc.?

One of the assessment criteria will be social value, focusing on wider social benefits of the contract, where aspects around skills and jobs are likely to be assessed. Details will be available with the potential competition guidance notes or ITT.

Read further general guidance on social value.

4. Is there any weighting on the assessment questions?

Yes, assessment criteria will be weighted. Any weighting would be announced within the potential competition guidance notes or ITT.

5. How will you be assessing novelty? Will this be assessed in terms of the UK or global market?

Novelty would be assessed against competing IFS technologies or solutions in the UK and globally. A technology that has not been previously demonstrated in the UK may be considered to be novel.

General questions about the speculative IFS competition

1. Is there a single repository with links for all these competitions and findings?

You can find links to other competitions on the Net Zero Innovation Portfolio (NZIP) page.

2. Are there any opportunities for BEIS work on industrial fuel switching to link into UK involvement with relevant Horizon Europe activities?

There are no direct links between this proposed competition and the Horizon Europe activities. Specific opportunities will be considered on a case-by-case basis.

3. Does BEIS work on industrial fuel switching link into the recently announced UK Industrial Decarbonisation Research Innovation Centre based at Heriot-Watt university?

BEIS plans to consult with the UK Industrial Decarbonisation Research and Innovation Centre on this competition to identify any links.

4. How does this competition fit with circular economy principles, is there any scope for such an approach?

Applicants are welcome to present a circular economy approach, if the proposed solution fits with the proposed criteria of the competition.

5. How will the initiatives address the increased operational costs associated with fuel switching? E.g., for electrification, electricity is multiple times the cost of natural gas.

BEIS recognise this is an issue, which is why the proposed procurement route is through 100% funded SBRI contracts. The intention is to demonstrate technical and commercial viability of innovative fuel switching solutions.

6. How will this proposal achieve integration with the BEIS business models and other support packages?

A speculative IFS competition would align with net zero ambitions and the principles set out in the Industrial Decarbonisation Strategy.

The intention is to align with other BEIS competitions as far as possible. However, due to the novel nature of innovation, IFS projects will have a wider scope than deployment projects/competitions.

7. Given the short window and quick turnaround needed, will there be more money available in the future for further trials in sectors not ready at present? (say 1 to 4 years away?)

The funding period for the NZIP ends on 31 March 2025. It is not possible to speculate on future government policy and funding priorities.

8. As major construction changes may be needed to fuel switch to hydrogen (for example), can you elaborate on how some organisations using hydrogen (e.g., cement or glass) made fuel switches during the EIP IFS competition? Did they have spare capacity or equipment that was put in use for the trial, rather than swap lots of infrastructure to then swap back if trial unsuccessful?

Energy Innovation Portfolio (EIP) IFS projects are working on fuel switches in a number of ways, including use of spare equipment, making modifications to existing infrastructure during planned shutdowns, and testing of equipment at specialist test facilities to simulate a relevant environment.

9. What will be the greenhouse gas emissions intensity per MWh of UK grid electricity used for this competition?

This is still under consideration. Any details on this would be published in potential guidance notes or ITT.

10. Is the intention that the lead applicant will be the owner of the industrial site rather than the technology provider developing the innovation?

There are currently no restrictions on who leads the application. Determining the organisation which is the project lead will be the decision of any consortium formed.

Questions about other NZIP competitions

1. What are the timescales for IEEA and red diesel funds or competitions?

Timings for competitions are under development and will be announced by BEIS as soon as they are confirmed.

2. Could projects benefit from multiple competitions – i.e., both industrial fuel switching and CCUS?

Yes, if separate applications for funding are made to each competition, for separate innovations. Multiple applications cannot fund the same work twice and the success of one application or project should not depend on the other.

General questions about/for NZIP or BEIS

1. Have you looked at how a combination of projects in a sector approach can be used to be more effective and efficient in tackling industrial decarbonisation?

The focus of the IFS innovation competition is on developing fuel switching solutions for industry more broadly, so that impactful innovations can be supported to create a high-quality portfolio of solutions. Such demonstrated technologies may then have cross-sectional value, the potential of which will be assessed as part of the application. Evidence gathered through the IFS projects will also be communicated to policy teams to aid with wider policy design moving forward.

BEIS is considering a programme that would span thematic areas in its approach. If this programme is authorised to proceed, details will be shared at the appropriate juncture.

Please refer to the Industrial Decarbonisation Strategy for intentions on further work.

2. During the consultation of the IETF it was said it would have two blocks, Energy Efficiency Fund and Deep Decarbonisation Fund. We have seen several rounds of the Energy Efficiency Fund under IETF but none of the Deep Decarbonisation fund which should launch sometime in 2021. Could you give some clarity to it?

Details on the IETF and for contacting the team with questions or feedback, can be found on the IETF page.

3. Are there any plans to harmonise application procedures, contracts, agreements? (We have had different experiences with Innovate UK, BEIS and different BEIS programmes).

This is being investigated as a longer-term initiative, beyond the time horizon envisaged for the launch of this speculative programme. BEIS and Innovate UK currently have an arm’s length relationship and manage their own programmes independently.

4. Do we know the date for H2 strategy Publication?

The UK Hydrogen Strategy will be published later this year.

5. Why is Geothermal not included in the scope of deep decarbonisation studies under the IEFT?

Details for contacting the IETF team with questions or feedback can be found on the IETF page.

6. In the scope of the deep decarbonisation studies under the IEFT, BEIS states that biogas for fuel switching needs to be either produced onsite or transported via pipelines. Why could it not be trucked via road for example?

Details for contacting the IETF team with questions or feedback can be found on the IETF page.

7. With power stations towards end of life and the intermittent nature of wind - how will grid cope with the expansion required for large scale process electrification?

The focus of the IFS innovation competition is on developing fuel switching solutions, rather than the wider issues of the energy system. Evidence gathered through the IFS projects will be communicated to policy teams to aid with wider policy design.

8. How will UK electricity prices be kept stable and controlled to encourage more inward investment by UK companies?

The focus of the IFS innovation competition is on developing fuel switching solutions, rather than the wider issues of electricity pricing. Evidence gathered through the IFS projects will be communicated to policy teams to aid with wider policy design.

Further information on electricity pricing for industry and intentions for further work in this area are detailed in the Industrial Decarbonisation Strategy.