The French government will tender a total of €4bn ($4.3bn) from 2024 to 2026 in contracts-for-difference (CfDs) to support low-carbon hydrogen production, newspaper Le Figaro reported yesterday (Monday).
These CfDs will last 15 years, with the aim of covering the cost gap between clean and grey H2 produced from unabated fossil gas.
However, only 70% of the selection criteria will be weighted on price — calculating a pay-out per tonne of CO2 avoided — with 30% based on non-price elements.
A full list of criteria is due to be published for consultation in the coming weeks, but Le Figaro reports that bonuses will be paid to projects that can curtail production in order to redirect renewable electricity to the grid when demand is high.
Extra incentives will also be awarded to plants where 50% of the power input comes from newly built renewables — suggesting that the French criteria for “low-carbon” hydrogen may not map completely onto the EU’s delegated acts defining renewable H2.
The delegated acts require renewable fuels of non-biological origin (RFNBOs) — ie hydrogen and its derivatives — to be produced using electricity from renewables built in the same bidding zone within three years of the electrolyser.
H2 production must also be matched to the same calendar month as renewable electricity generation up to 2030, when the two processes must take place in the same one-hour period.
Any hydrogen produced outside of this definition — such as via nuclear electricity or through gas feedstock with carbon capture and storage — may, however, count as “low-carbon” if its lifecycle emissions are 70% lower than those of grey H2.
“Our energy transition plan aims to massively accelerate the production of low-carbon energies on the territory: nuclear, renewable energies and hydrogen. This is also true for the storage and use of carbon dioxide,” French minister for the energy transition, Agnès Pannier-Runacher, told Le Figaro.
The EU is progressing its recently agreed, updated Renewable Energy Directive, which sets targets for industrial hydrogen use to be 42.5% renewable by 2030, rising to 60% in 2035.
But France has successfully lobbied for a loophole that would allow a 20% discount on this target as long as if member states can prove that their national contribution to the overall EU renewables target meets their expected contribution, and if the share of hydrogen from fossil fuels consumed in the country is not more than 23% in 2030 and 20% in 2035.
This would allow France to produce some of the hydrogen for industrial use from its fleet of nuclear reactors.
The country’s nuclear-dominated power mix may allow it to bypass the requirement for additionality in the delegated acts when producing renewable H2.
The rules allow for electricity to be taken off the grid without new renewables being built as long as the bidding zone’s carbon intensity is less than 18 grams of CO2-equivalent per megajoule (64.8CO2e/kWh) — although a renewable PPA is required and time matching rules will still apply.
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