European green hydrogen suppliers can apply for official fixed price support

European green hydrogen suppliers can apply for official fixed price support

December 4, 2023 0 By Bert Watson

The European Hydrogen Bank is supporting the first auction of its kind for renewable H2 producers.

The European Union has announced the launch of the first green hydrogen auction for the bloc, capping the price of renewable H2 at about $4.91 per kilogram (€4.50).

Applicants whose projects are approved will receive ten years of subsidies through this program.

The subsidies green hydrogen producers receive are in addition to the revenue they earn from the sales of their H2. That said, they must be ready to begin production within half that time to be eligible.

The auction was launched by the European Commission and is supported by the European Hydrogen Bank. The support it provides to eligible and approved producers is as a fixed premium per kilogram of the H2 they make.

The idea behind this strategy is to eliminate the gap between what consumers will currently pay for green hydrogen and the production price. The current market offers at a much lower cost the H2 produced using methods that generate greenhouse emissions. As a result, consumers will primarily choose the cheaper yet more polluting option. By providing subsidies to the green hydrogen produced using renewable energy, producers can sell their product at a competitive price.

Green hydrogen producers have until February 8, 2024, to submit their proposals in the auction.

Proposals are submitted through the EU tenders and financing portal and must be based on a proposed clean H2 price per kilogram that is no higher than the €4.50 cap.

Green hydrogen - Bid button

All bids meeting the eligibility requirements will be ranked from lowest to highest. The support they receive will be in that order until the exhaustion of the budget. Projects selected will continue to receive the subsidy on top of market revenue for as much as ten years. H2 production must begin within five years of the date of securing the subsidy agreement.

The only aid permitted

hydrogen news ebookProjects receiving the subsidy must agree not to receive any other form of aid from participating EU member states. That said, member states are allowed to provide financing to projects that participated in the auction but were not selected to receive subsidies.

To maintain an equitable environment for all projects, cumulation with other forms of aid from participating member states is not allowed. Member states can, however, finance projects that participated in the auction but weren’t chosen for support from the Innovation Fund, using the Hydrogen Bank’s “auctions as a service” mechanism, particularly in cases of budgetary constraints.

The pilot auction will contribute to the REPowerEU plan to decarbonize the European economy’s goal of domestically producing 10 million tons of hydrogen by 2030. The commission will launch a second round in the spring.

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