The European Commission has launched the much-anticipated European Hydrogen Bank pilot auction. With an initial €800m budget, sourced from the Emissions Trading Scheme (ETS) through the Innovation Fund, renewable hydrogen producers will be able to bid for a fixed-price premium of up to €4.5 per kilogram of hydrogen produced during 10 years to support their projects.
The bank, with its production support mechanism, will enable a faster take off of hydrogen in hard to decarbonise industry and transport sectors. Just over a year since the bank was first announced by Commission president Ursula von der Leyen during her 2022 State of the Union address, the auctions will provide a route to market for multiple first-mover projects that will set the tone for the future European hydrogen market.
“We are delighted to hear that the auction is being launched on time and we are certain it will be fruitful. The Hydrogen Bank auctions are crucial to the success of the European hydrogen industry, and we will learn a lot from it in the next months,” said Jorgo Chatzimarkakis, CEO of Hydrogen Europe.
Winning projects will receive the premium for a ten-year period and must commission their projects within five years. Project will have to be above 5MW size but can not take more than one third of the total auction budget, ensuring a distribution of funds across various projects.
The lessons learnt from this pilot auction will be used to improve future hydrogen auctions, including a second, €2.2bn competition expected in Spring 2024 – as announced by President von der Leyen earlier this week at the European Hydrogen Week event.
Bidders have until 8 February 2024 (17:00 CET) to apply via the EU Funding and Tenders Portal, while an information session is scheduled for 30 November. Applicants will be notified as early as April 2024 and will have to sign the grant agreements within nine months after the call closure.
Meanwhile, the next Innovation Fund Call has been launched, with an increased budget of €1.4 billion. This call for projects is divided into five different categories: large (CAPEX above €100 million), medium (CAPEX between €20 million and €100 million) and small (CAPEX between €2.5 million and €20 million) decarbonisation projects; cleantech manufacturing; and pilot projects. Hydrogen is set to feature heavily.
