EU raises European Hydrogen Bank bid ceiling to €4.5/kg — but most green H2 projects will have to settle for less
Auction will prioritise bigger, cheaper schemes that will accept the lowest fixed premium subsidy
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On paper, this makes the EU subsidies on offer far more ample than the maximum $3/kg green hydrogen production tax credit available in the US — but in reality most projects are unlikely to ever receive that much.
Bidders will be required to provide a guarantee, issued by a bank or other financial institution, for 4% of the maximum grant amount, to be called on in the event the project fails to enter into operation by this cut off point.
Draft terms previously stipulated that successful bidders must bring their projects to maximum capacity within 3.5 years of signing the grant contract.
Originally scheduled for December, bidding will now begin on 23 November.
The first EHB auction will be structured as a “pay-as-bid” static auction, with applicants submitting a single bid during the qualification phase for a ten-year fixed premium (in €/kg), which is then ranked compared to other bids on price.
Successful applicants will be awarded the fixed premium they specified in their bid, up to €4.5/kg, in order of ranking until the €800m budget is exhausted.
In practice, this means that those bids approaching the €4.5/kg ceiling risk not getting onto the final list at all.
And, unlike the production tax credit, which has no nominal budget, the first EHB auctions are limited to €800m, meaning that the lowest priced bids have the best chance of success.
Further terms have also been confirmed, restricting the total grant money for any bid to €266.7m, meaning that no single project can gobble up more than a third of the total budget.
Projects with electrolyser capacity of less than 5MW are excluded from the scheme, with no pooling of capacity among schemes in disparate locations allowed.