European Commission Launches Region’s First Hydrogen Bank
The first European Hydrogen Bank auction has been launched to support renewable hydrogen production throughout the continent.
Worth €800 million, the auction will allow developers to bid for funding support from emissions trading revenues through the Innovation Fund to help deliver renewable hydrogen projects.
The funding will be delivered in the form of a fixed premium per kilogramme of hydrogen for up to a decade, with a fixed premium ceiling price of €4.50/kg.
Strict terms and conditions will ensure funding goes to appropriate projects
Bidders will have until 8 February 2024 to submit their proposals through the EU tenders and financing portal, and all bids must be based on a proposed price premium per kilogram of renewable hydrogen produced, up €4 .50/kg.
To qualify for funding, projects must come into operation and demonstrate 100% of their nameplate capacity within five years of signing the funding contract.
Furthermore, projects must comply with the Renewable Energy Directive’s (RED’s) delegated acts, which were formally adopted in June 2023.
These acts set hourly correlation, geographical correlation, and additionality criteria for renewable electricity powering electrolysers.
The successful projects will then receive the awarded subsidy in addition to the market revenue generated from hydrogen sales, for up to 10 years.
To ensure fairness, the successful bids will not be permitted to cumulate this finding with other forms of aid from participating member states.
However, member states will be able to finance projects that were not chosen to receive funding through the Innovation Fund, using the Hydrogen Bank’s “auctions as a service” mechanism, particularly in cases of budgetary constraints.
The European Hydrogen Bank aims to facilitate a renewable hydrogen market
Through the REPowerEU plan, the European Commission have set a target to reach 10 million tonnes of domestic renewable hydrogen by 2030.
In bridging the cost between production and consumer prices, the European Commission are hopeful that this auction will support the establishment of a renewable hydrogen market, attract and accelerate investment, and scale production.
According to the European Commission, hydrogen is slated to ‘make a major contribution to the EU’s ambitions to end imports of Russian fossil fuels in the next few years and to achieve climate-neutrality by 2050.’
Maroš Šefčovič, Executive Vice-President for European Green Deal, Interinstitutional Relations and Foresight , said: “Today’s launch is about connecting supply and demand for renewable hydrogen.
“It is about creating transparency about price points, which will help kickstart a European hydrogen market.”
Last week, European Commission President, Ursula von der Leyen, also announced plans for a second European Hydrogen Bank auction round, this time with a total value of €3bn.
She added that the European Commission is also working to develop an “international leg” of the European Hydrogen Bank to diversify imports of renewable hydrogen.
This comes after the EU have sought to develop hydrogen relationships with countries including Egypt, Kenya, Namibia, and South America.
The President commented on the “immense potential” these nations have to produce and export green hydrogen.