Last week, the EU Commission announced the launch of the first auction under the European Hydrogen Bank with an initial €800 million to support green hydrogen production, channeled through the Innovation Fund.
The tender for bids will provide its winners with a “fixed premium” of up to €4.50 per kilogram of green hydrogen produced, in order to make the price attractive and competitive enough for off-takers to sign contracts. It aims to fill the gap between the price of production and the price consumers are willing to pay, as hydrogen produced from fossil fuel is currently cheaper than hydrogen produced with renewable energy.
The Commission also announced its plans to launch the second auction in Spring 2024 with a value of €2.2bn (~$2.4bn). That makes it €3bn (~$3.28bn) in total for green hydrogen development. The initiatives were announced by EC president Ursula von der Leyen in an address to the European Hydrogen Week on Nov 20th. The annual event took place from 20 to 24 November 2023 in Brussels. It is unclear, however, whether the second tender next year will follow this same subsidy model.
Mrs Von der Leyen explained in her speech that the EU aims to create a one-stop-shop under the European Hydrogen Bank for hydrogen producers and buyers.
“In our dialogue, we also discussed how to support producers and consumers to better find each other. Linking the demand and supply of clean hydrogen. We will do this by creating a public platform where consumers can indicate their demand. And producers can find their off-takers,” she added.
The pilot auction is open to bidders within the EU, however, Mrs Von der Leyen hinted that the EC is “working on the international leg of the European Hydrogen Bank”.
The selected projects will receive the awarded subsidy on top of the market revenues that they generate from hydrogen sales, for up to 10 years. Once projects have signed their grant agreements, they will have to start producing renewable hydrogen within five years.
The EU grants for green hydrogen development, along with a platform where buyers and sellers can find each other are a significant support for the ramp-up of the hydrogen economy that holds the possibility to truly decarbonize the energy sector and accelerate the fossil fuel phase down.