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European Hydrogen Bank pilot auction has received 132 bids from 17 European countries

GO HYDROGEN

European Hydrogen Bank pilot auction has received 132 bids from 17 European countries

The total support requested far exceeds the currently available budget of €800 million, provided by the Innovation Fund. All bids taken together provide for a total planned electrolyser capacity of 8.5 gigawatts (GWe). Over the span of ten years, this would lead to a total production volume of 8.8 million tonnes of renewable hydrogen. On a yearly basis, this would cover close to 10% of the EU’s REPowerEU ambition for domestic renewable hydrogen production in 2030.

Source: European Commission

I am delighted with the strong interest from project promoters that resulted in a large number of bids for this first pilot Innovation Fund Auction for renewable Hydrogen. This shows that industry is keen to take on the challenge of spearheading the transition from fossil to clean fuels. The successful projects will expand CINEA’s portfolio of net-zero investments that shape the emerging markets for decarbonised products.

Paloma Aba Garrote, Director of the European Climate, Infrastructure and Environment Executive Agency (CINEA)

The applications are in and the enthusiastic market response to the pilot auction shows the European hydrogen industry is ready to scale up! Renewable hydrogen is an important solution in Europe’s endeavour to reach climate neutrality by 2050. The success of this pilot auction is the result of thorough engagement and consultation with relevant stakeholders and a solid regulatory framework which provides certainty to investors. We now have a scheme that provides efficient and targeted public support in full alignment with market needs.

Kurt Vandenberghe, Director-General for Climate Action

Producers of renewable hydrogen,  as defined in the Renewable Energy Directive and its Delegated Acts, have made their bids to receive support in the form of a fixed premium per kilogram of renewable hydrogen produced. This premium bridges the gap between the cost of production and the price buyers are currently willing to pay for renewable hydrogen rather than fossil hydrogen. The Commission is also offering a new “Auctions-as-a-service” mechanism to enable Member States to benefit from the EU-level platform and award national funding to additional projects, in full respect of State aid rules. Germany is the first EU country to make use of the  “Auctions-as-a-service” feature, putting up €350 million from its national budget for renewable hydrogen production projects located in Germany in case eligible bids for German projects cannot receive Innovation Fund support due to budget limitations.

Next Steps

The European Executive Agency for Climate, Infrastructure and Environment (CINEA) is currently checking the admissibility and eligibility of the bids and will then evaluate them. The bids will be ranked according to their price. Applicants will be informed about the evaluation results in April/May 2024 and successful applicants will be invited to prepare and sign the Grant Agreements.

The Grant Agreements will be signed by November 2024 at the latest. The selected projects will have to start producing renewable hydrogen within five years of signing the grant agreement. They will receive the awarded fixed premium subsidy for up to 10 years and only upon certified and verified renewable hydrogen production.

In parallel to finalising the evaluation, the Commission will draw the lessons learned from this pilot and consult industry stakeholders on the draft Terms & Conditions for the second round of the hydrogen auction, which it aims to launch before the end of the year.  

Background

With an estimated budget of €40 billion from the revenues from the auctioning of allowances under the EU Emissions Trading System between 2020 and 2030 (based on a carbon price of €70/ton CO2), the Innovation Fund is the EU's largest funding programme for the deployment of innovative net-zero technologies.

The European Hydrogen Bank is an initiative to facilitate the EU's domestic production and imports of renewable hydrogen. It aims to unlock private investment in the EU and in third countries by addressing investment challenges, closing the funding gap and connecting future renewable hydrogen supply to consumers, helping to meet the objective of 20 million tonnes of hydrogen in the EU energy mix by 2030. It will also allow the Commission to collect reliable data about the EU's renewable hydrogen project pipeline, the level of competition for this kind of support, the costs of renewable hydrogen production and its market price.

In addition to the auction, the Innovation Fund’s 2023 call for proposals is still open for applications until 9 April 2024, making €4 billion available for innovative low-carbon technologies in various sectors.

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