Winners of EU’s pilot hydrogen auction sign grant agreements

Six out of seven projects, selected for EU financial support in the Innovation Fund’s pilot hydrogen auction (IF23 Auction), have signed their respective grant agreements. One project withdrew from the process.

The funding is expected to help the winning bidders bridge the difference between their production costs and the price that industrial users are willing to pay for this emerging product.

According to the European Commission, the Innovation Fund will support these projects, which are located in Spain, Portugal, Finland and Norway, with a fixed premium payment per kilogram of certified and verified renewable hydrogen produced. This means that no payments will be made before projects start production. From the time of the grant agreement signature, the projects have up to five years to start producing renewable hydrogen.

The total amount of support comes to €694 521 237 and will be disbursed over a timespan of ten years, the Commission said, adding that the individual grants range from €8 million to €245 million for installations with a megawatt electric (MWe) capacity from 35 to 500 MWe.

Renewable hydrogen produced will serve many sectors, such as maritime, heavy-duty transport, agriculture or in the production of e-methane and e-methanol.

Altogether, the projects are said to have the potential to produce up to 1.52 million tonnes of renewable hydrogen during the first ten years of their operations, avoiding more than 10 million tonnes of CO2 emissions.

To note, the hydrogen auction is one of the pillars of the European Hydrogen Bank (EHB) and uses revenues from the EU Emissions Trading System to support producers of hydrogen categorized as renewable fuel of non-biological origin (RFNBO).

The first auction received 132 bids from 17 European countries. The 119 proposals admissible and eligible were evaluated and ranked according to their bid price by the European Climate, Infrastructure and Environment Executive Agency (CINEA). The winners were announced on April 30, 2024.

The Commission plans to launch the second renewable hydrogen auction via the Innovation Fund by the end of 2024, with an increased budget of €1.2 billion. Published on September 27, 2024, the terms and conditions (T&Cs) for the second auction set out the main elements and requirements to apply.