Germany has topped up the EU’s €800m ($876m) pilot auction for the European Hydrogen Bank with €350m in the first example of the initative’s “auctions as a service” model.

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While any renewable hydrogen producer in Europe will be able to apply for up to €4.50/kg in fixed payment from the €800m budget, the additional funding will only be open to companies with facilities in Germany.

This extra budget will also be treated as state aid, and therefore comes with an extra hurdle of approvals from the EU, although these are designed to be as streamlined as possible.

The auctions-as-a-service scheme is meant to encourage member states, particularly those without the resources to set up an entirely new tender, to subsidise H2 production within their borders by drawing on the existing system set up by the European Commission.

Under the terms of operation, the projects with the lowest bids from across the EU — including Germany — will be selected until the €800m budget is exhausted, and the remaining €350m will be allocated to the German projects with the next-lowest bids.

The European Commission’s vice-president for the European Green Deal, Maroš Šefčovič said: “We will only achieve the transition to a climate-neutral EU and a decarbonised energy system if we join forces. I am very pleased to see Germany become the first Member State to use the Innovation Fund's hydrogen pilot auction to support renewable hydrogen projects nationally.”

“Germany is a front runner, and I can only invite others to follow this example,” he added.

The pilot auction is due to close on 8 February, with the winners likely to be announced in April 2024.

However, a further €2.2bn auction is due to open in the spring of next year — which could see its budget, and therefore the scale of new capacity it can support, boosted even further if more member states choose to participate.

While Germany has less than 100MW of electrolyser capacity operational today, its government targets 10GW by 2030.

However, even these gigawatts of capacity are predicted to only meet 26-35% of demand by the start of next decade, leading to a concerted German effort to court potential exporters.

Germany is currently in the midst of evaluating bidders for its H2Global tender for hydrogen imports, although a decision could take place any time between January and June next year.

Berlin has also announced a joint H2Global auction next year with the Netherlands, although it is unclear how this will interact with the European Hydrogen Bank.

And as exclusively revealed by Hydrogen Insight earlier today, the German government has also provided €434m to the European Investment Bank’s (EIB) Green Hydrogen Fund, which will supply investment grants to green hydrogen producers and across the value chain in developing countries.