Production

Green hydrogen subsidies on the way as EU’s maiden €800m auction receives over 100 bids

Bidding on the first tranche of the €3bn European Hydrogen Bank programme for domestic producers concluded last week

Maroš Šefčovič, European Commissioner in charge of the EHB.
Maroš Šefčovič, European Commissioner in charge of the EHB.Photo: European Commission

The EU’s first ever bloc-wide green hydrogen subsidy auction — with a total budget of €800m ($856m) — had attracted a total of 132 bids before it closed last week, the European Commission has confirmed.

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Bidding on the €800m pilot of the so-called European Hydrogen Bank (EHB) for domestic producers concluded on 8 February, with the winners of expected to be announced in early April and the first grant contracts signed within nine months.

This means that green hydrogen developers who have successfully bid for EHB subsidies could potentially begin to sign off financing and reach final investment decisions (FID) on their projects as soon as early November.

And the participation of companies willing to submit 132 different bids suggests that interest in the programme is sufficient to spark significant first-mover development in the bloc, and crucially, provide a basis for further subsidy auctions.

In fact, the pilot of the EHB, which launched in November, is just the first tranche of a €3bn subsidy programme for domestic producers, with a €2.2bn auction expected this spring.
The EHB programme offers fixed-price premiums for each kilo of green H2 produced, with the aim of bridging the cost gap between renewable H2 (and its derivatives such as green ammonia and methanol) and polluting equivalents made with fossil fuels.

This should give domestic green hydrogen developers the revenue certainty they need to secure project financing.

Producers bid for a fixed-price premium on their product per kg, in a closed auction up to a ceiling of €4.50/kg, with the lowest eligible bids (weighted against a range of other criteria such as sustainability) picked first, continuing until the €800m budget is exhausted.

The fixed price, formalised with a grant contract, would last for ten years, on the condition that the scheme is commissioned within five years, meaning that the first green — ie, those that sign their contracts in November 2024 would need to commission their projects by November 2029.

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Green H2EuropeEuropean Hydrogen BankEUEuropean Commission
Published 14 February 2024, 12:25Updated 14 February 2024, 12:26