Ontario’s Hydrogen Innovation Fund: what you need to know

On November 4, Ontario’s Independent Electricity System Operator (IESO) launched a new call for applications under its Hydrogen Innovation Fund (HIF), releasing application guidelines and a standard-form HIF Contribution Agreement. The HIF provides funding for projects that help increase the integration of low-carbon hydrogen technologies into Ontario's electricity grid, or enable the broader application of low-carbon hydrogen into sectors including heavy industry, manufacturing and transportation. With increased funding available, interested project proponents should consider whether their hydrogen-related project aligns with the HIF’s scope and how best to leverage this funding opportunity.

What you need to know

• The fund: The $30M HIF call for applications builds off of Ontario’s first Integrated Energy Plan, which highlighted hydrogen as a “strategic resource”. The HIF is split between two $15M streams, with Stream 1 supporting projects that focus on increasing the integration of low-carbon hydrogen into Ontario’s electricity grid (including increasing supply, capacity and storage) and Stream 2 focusing on projects that enable the broader application of hydrogen, including in the new industrial and transportation sectors.
• Eligibility and budget: Projects must be (i) located in Ontario; (ii) at the stage of the “pre-commercialization gap for innovations”; and (iii) last no longer than three years. Applicants must also secure project partner(s), as well as submit a budget, audited or reviewed financial statements, and letters of support from each financial contributor. For the budget, the IESO can contribute $1M to $4.5M and up to 50% of the total project value.
• Evaluation: The first evaluation stage is largely identical for both streams, with applications evaluated on project team and engagement, project design, and project impact and innovation. Applicants must achieve a minimum score of 70 out of 100 to proceed to the second evaluation stage. For Stream 1, the second evaluation stage is conducted by the IESO, where it determines applications for funding by ranking the order on points until all $15M is accounted for. For Stream 2, the second evaluation stage is conducted by the Ministry of Energy and Mines (Ministry) based on seven public policy objectives.
• Canadian Status applicant: Consistent with recent Ontario policy and procurements, the HIF accounts for whether the applicant is Canadian-owned in its evaluation. For Stream 1, applicants meeting the “Canadian Status” definition receive additional points in their application; for Stream 2, Canadian Status is one of seven policy objectives assessed by the Ministry. Applicants must maintain Canadian Status for at least six months following the execution of the HIF Contribution Agreement.
• Important dates and application timeline: The IESO is accepting applications for the HIF’s two streams until February 11, 2026; however, interested applicants are encouraged to contact the IESO’s HIF team with questions before January 27, 2026. Applicants will be notified of the funding decisions in May 2026, with successful projects set to commence in August 2026.

Overview of the HIF

Context and its two streams

On July 31, the Minister of Energy and Mines directed the IESO to launch the $30M HIF call for applications to support hydrogen innovation and build out the province’s hydrogen economy. The Minister’s Directive builds off Ontario’s first Integrated Energy Plan, which highlighted hydrogen’s potential as a “strategic resource”¹. The Directive also aligns with proposed Bill 40, Protect Ontario by Securing Affordable Energy for Generations Act, 2025, which adds a new purpose to the Electricity Act, 1998 “to facilitate the development of a hydrogen market and economy in Ontario…”².

The 2025 HIF call doubles the funding of the previous 2023 $15M HIF call and is split into two $15M streams:

• Stream 1 – Electricity System Integration: Stream 1 supports projects that focus on the integration of low-carbon hydrogen into Ontario’s electricity grid to increase electricity supply, capacity or storage. Stream 1 is similar in scope to the previous 2023 HIF call for applications. This could include peak demand management, and/or long-term/seasonal storage of renewable energy.
• Stream 2 – Broader Sector Applications: Stream 2 supports projects that directly or indirectly enable the broader application of low-carbon hydrogen, such as new industrial and transportation sector applications, advancing the hydrogen economy and providing benefits to communities. This includes developing hydrogen fueling infrastructure and creating “hydrogen hubs” that connect producers with end users.

The IESO has stated that while a project may provide benefits that align with the objectives of both streams, an applicant may only apply to one stream per project. Applicants should review each stream’s objectives and chose the stream which aligns most closely with their project’s outcomes and benefits.

Eligibility

To be eligible for funding, the project must be located in Ontario and last no longer than three years. Projects must also be at a “Technology Readiness Level” of seven or higher, meaning that the project is at “the pre-commercialization gap for innovations”, with at least a prototype ready for demonstration in an appropriate operational environment. Applicants must secure a project partner that provides either cash or in-kind contributions. Stream 1 applicants require at least one project partner, while Stream 2 applicants require at least two project partners.

Applicants must also submit a budget detailing project financials and articulating the extent to which the IESO, the applicant and project partners will contribute to the project. For both streams, contribution requirements are as follows:

To show that the project team can meet financial obligations, applicants must provide audited or reviewed financial statements and letters of support from each financial contributor specifying the contribution amount and type. Sector participants should assess what steps are required to comply with the HIF’s eligibility requirements.

Evaluation by the IESO and Ministry

If the eligibility requirements are met, the application proceeds to the two-stage evaluation. While the first evaluation stage is largely the same for Stream 1 and Stream 2, the second evaluation stage differs.

First evaluation stage for both Stream 1 and Stream 2: The IESO’s Technical Review Committee evaluates projects on three categories:

1. Project team and engagement (30 points): Evaluates the applicant team’s expertise, their prior experience with innovative projects and the extent to which meaningful engagement with municipalities, communities and Indigenous groups is evident.
2. Project design (30 points): Assesses whether the proposal’s scope and schedule are clear and reasonable, risk is appropriately allocated amongst project partners, and the project’s approach includes measuring at least two KPIs per project objective.
3. Project impact and innovation (40 points): Evaluates the extent to which the project outlines novel technology and a plan for maturing the technology; and demonstrates the potential to reduce annual GHG emissions.

For both streams, applicants must achieve a minimum score of 70 out of 100 points to proceed to the next stage of the evaluation.

Canadian Status evaluation for both streams: This evaluation aligns with Ontario’s policy to prioritize Canadian-owned businesses as reflected in Bill 5, Protect Ontario by Unleashing our Economy Act, 2025, and Window 1 of the IESO’s Long-Term 2 Request for Proposals (LT2 RFP). Canadian Status is assessed the same for both streams. However, in Stream 1, applicants that satisfy the Canadian Status requirements receive an additional five points for their application from the IESO. In Stream 2, an applicant’s Canadian Status is considered by the Ministry as one of seven public policy objectives in the second evaluation stage.

The HIF defines “Canadian Status” as any applicant where the headquarters or main office is located in Canada; or, if the applicant is controlled by any other person, that person’s headquarters or main office is located in Canada. This definition is consistent with “Canadian Status” and “Control” definitions provided in the LT2 Window 1 RFP and contract documents. An authorized representative of the applicant must confirm that they satisfy the Canadian Status definition, and the applicant must retain this status for at least six months following the HIF contribution agreement’s execution (i.e., the company cannot change ownership for at least six months).

This criterion only needs to apply to the applicant and not the applicant’s project partners; the project partners will not be assessed for whether they satisfy the Canadian Status criteria.

Second evaluation stage for Streams 1 and 2: For Stream 1, the IESO combines scores from the first stage and the Canadian Status evaluation (for a total of 105 points), and then ranks applications by score and awards funding until the stream’s $15M is fully committed.

Conversely, Stream 2’s second evaluation stage is conducted by the Ministry. First, the IESO provides the Ministry with the applications that receive at least 70 points in the first evaluation stage. Next, the Ministry evaluates applications based on seven public policy objectives, including decarbonizing hard-to-abate industries, job creation/retention, hydrogen infrastructure development, supporting small and medium businesses, and Canadian Status.

For Stream 2, the final projects selected will be based on the Ministry’s evaluation and are subject to government approval. Details of the policy objectives are available, and applications are selected by ranking order until all the funding is accounted for. However, unlike the IESO’s evaluation with Stream 1, the Stream 2 second evaluation stage does not state the number of points allocated to each of the Ministry’s policy objectives. Proponents, when considering their application, should reflect on the likelihood of receiving funding under either stream.

HIF timeline and next steps

While the timeline may be subject to change, the IESO is accepting applications for the HIF until February 11, 2026. The applications will be evaluated from February to April 2026, with applicants notified of the funding decision in May 2026. This will be followed by the IESO and successful applicants entering into a HIF Contribution Agreement, with projects commencing in August 2026. Interested proponents are encouraged to contact the IESO’s HIF team with questions before January 27, 2026.

As Ontario advances its hydrogen economy, proponents should consider whether their hydrogen-related project aligns with the HIF’s scope—and if so, how best to leverage this funding opportunity.