The auction will distribute 800 million euros between projects focused on the production of renewable hydrogen.
The auction, organized by the European Hydrogen Bank will take place on November 23, with an expected end of February 8, 2024. This new form of support for hydrogen projects will distribute 800 million euros among the projects with the lowest bids. Successful applicants will receive support in the form of a fixed premium per kilogram of renewable hydrogen for a period of ten years. This amount should cover the difference between production costs and the market value of hydrogen and thus assist market deployment.
In general, this new mechanism aims to bridge the gap between renewable and fossil hydrogen, stabilize the market price of renewable hydrogen, contribute to the creation of a stable market and help mitigate the investment risk in European hydrogen projects. Compared to regular grants, auctions are focused on projects with a lower risk profile. Specifically, these are projects in the phase of initial deployment phase and at the same time with lower technological and construction risk that have problems with profitability. A general result of the renewable hydrogen initiative and investment is also a lower dependence on Russian fossil fuels as set out in the REPowerEU plan.
The conditions also set the maximum amount that project proposals can receive. This is set at a third of the total budget of the auction, i.e. 277 million euros. According to the conditions, the allowance per kilogram is capped at 4,50 euros per kg of hydrogen produced. Technical limitations also determine the minimum capacity of the electrolyzer at 5MWe.
You can find more information about the auction mechanism on the website of the European Commission, as well as the published terms and conditions of the auction.