UK Research and Innovation (UKRI) has launched a £1.5 million funding competition for development studies that could move proposed underground hydrogen storage demonstrators towards investment decisions. The support is intended for site-specific engineering, cost, regulatory and commercial work, rather than paying for the construction of new storage facilities.
The demonstrator development expenditure competition opened on 23 October and closes at 11am on 13 January 2027. Individual applications must request between £200,000 and £750,000 in eligible grant funding. UK registered businesses of any size can lead proposals either alone or through collaborations, with universities, research organisations, charities and public bodies able to participate as partners.
Projects must last between six and 12 months, start by 1 April 2027 and end by 31 March 2028. The competition is part of UKRI’s Ultra Long Duration Energy Storage challenge, which is designed to support technologies able to address prolonged electricity supply and demand imbalances rather than short peaks lasting only a few hours.
The intended outcome is a site-specific project that can move from early front-end definition towards an investment-ready proposition. A developer may have a plausible underground storage concept but insufficient detail on the selected location, capital cost, permitting route, hydrogen supply or customers. The funded study must reduce those uncertainties with front end engineering design, cost and schedule estimates, commercial assessment and execution planning.
Applicants must identify a UK site and a credible route to land access, consents, permits and associated infrastructure. The site can be an existing test facility, a proposed greenfield installation or another location appropriate to the technology. It is not enough to describe an underground concept without establishing its spatial footprint, operating pressure, expected depth and the surface plant needed for injecting and withdrawing hydrogen.
Eligible technologies include engineered lined shafts, subsurface silos, vertical pipe arrays, engineered rock caverns, depleted oil and gas fields and innovative salt cavern proposals. Novel salt cavern concepts must demonstrate additional technical or system innovation rather than seeking support for an ordinary project that could proceed through existing commercial arrangements.
The physical challenge is to inject gas into a subsurface store, maintain containment and later withdraw it at a usable pressure and rate. The approach requires engineered surface facilities as well as a suitable underground formation or structure. Compressors, valves, pipelines, monitoring systems and the characteristics of the storage medium all influence whether a facility can achieve repeatable cycles without unacceptable leakage or degradation.
UKRI specifies demonstrators targeting between 10 and 100 megawatt hours of hydrogen working-gas capacity, with a credible route to initial deployment by the end of 2030. Applicants must also explain how the chosen technology could be expanded towards commercial gigawatt hour scale by 2035. These are development objectives, not capacities that have already been built or funded.
Projects must demonstrate at least 100 continuous hours of discharge availability. That measure depends on working gas inventory and a deliverable withdrawal rate, not simply the nominal size of the geological or engineered container. A development study therefore needs a defensible operating profile: injection and withdrawal periods, pressures, number of cycles and the equipment that will connect the storage site to its intended customers.
The competition prioritises projects with credible industrial offtake and related infrastructure. Power generation is a preferred application, but industrial hydrogen users or transmission and storage services may also provide an appropriate commercial route. A facility dependent on an unavailable pipeline, for example, would need to explain how interim supply arrangements and subsequent connection requirements will be managed.
The commercial work must go beyond a general expectation that hydrogen demand will rise. UKRI requires a viable route to market, evidence of supply and offtake arrangements, and a levelised cost of storage model using P10, P50 and P90 assessments. Equipment procurement, land agreements, environmental screening and the possible application of major accident hazard requirements must be considered alongside a financing strategy capable of taking the project beyond the study grant.
This call is separate from UKRI’s £5 million competition for collaborative testing of materials, compressors, metering and monitoring components. The demonstrator scheme seeks to advance defined projects at particular sites, while the component programme aims to establish broadly applicable technical performance and qualification evidence. One does not substitute for the other.
UKRI has earmarked the possibility of up to £10 million in later demonstrator support, but that funding would require further approval. An award in this development study competition neither guarantees a subsequent grant nor establishes that a construction project is commercially ready. Prospective developers must still provide their own evidence of investment readiness and an executable engineering plan.
Successful studies are expected to produce defined project designs, delivery schedules and risk assessments that can inform investment decisions. Applications close on 13 January 2027. The competition funds the development work needed to test whether a particular underground hydrogen storage proposal is buildable, safe and financially credible; it does not fund the store’s construction.
