The European Commission (EC) will open its second auction to cover the cost gap between green and grey hydrogen in spring next year, with a budget of €2.2bn ($2.4bn), announced EC president Ursula von der Leyen in an address to the European Hydrogen Week today (Monday).
The so-called European Hydrogen Bank, originally launched in October last year, is set to open an initial €800m pilot tender for bids this week.
However, while the pilot auction will provide its winners with a “fixed premium” of up to €4.50 per kilogram of hydrogen, in an effort to bring down the price of H2 far enough for offtakers to sign agreements, it is unclear whether the second tender in the spring will follow this same subsidy model.
Von der Leyen referred in her speech to “creating a one-stop-shop under the European Hydrogen Bank” and linking up H2 producers and consumers directly.
“We will do this by creating a public platform where consumers can indicate their demand, and producers can find their off-takers,” she said.
This could imply that the next stage of the European Hydrogen Bank may operate in a similar fashion to double-sided auction model used by the H2 Global import scheme in Germany.
There, green hydrogen is bought by a government-backed entity on long-term contracts for the cheapest price and then sold on to the highest bidder on one-year contracts — with the cost of difference covered with public funding.
While the pilot auction is only open to bidders within the EU, von der Leyen also hinted that the EC is “working on the international leg of the European Hydrogen Bank”.
However, this may refer to the promises of European finance for hydrogen projects via the Global Gateway fund offered in Brazil, Argentina, Chile, Kenya and Namibia, among others, rather than opening up the second auction to bids from outside the bloc.
UPDATE: This article was amended to clarify that the total amount available in the second auction will be €2.2bn, not €3bn as originally stated. The exact words used by von der Leyen in her speech were: “In Spring 2024, we will launch the second round of auctions, reaching a total value of €3bn.”
Hydrogen Insight initially understood this to mean that €3bn would be allocated in the second round, but we now understand that this figure includes the €800m due to be allocated in the first auction round, which makes the second round only €2.2bn.