EU auctions hydrogen subsidies

09/01/2023

Source: Energy & Management Powernews

The EU Commission has published the tender conditions for green hydrogen production projects.

The first auction, in which interested companies can participate, is scheduled to open on November 23, 2023 and allocate 800 million euros. The conditions for participation and the design of the tender were determined after extensive consultation with interested industries. The auction will be organized by the EU's "Hydrogen Bank," with funds coming from the European Innovation Fund, which is fed by revenues from the European Emissions Trading Scheme(ETS).

Companies from all countries of the European Economic Area (EEA), i.e. the EU plus Iceland, Norway and Liechtenstein, can participate in the auction. The subsidies will be granted in the form of a fixed premium per kilogram of green hydrogen (from renewable energy) for ten years. The contract will be awarded to the projects with the lowest premiums. A project can receive a maximum of one-third of the available 800 million euros.

With the auction, the Commission wants to achieve four goals:

- The price difference between hydrogen from fossil and renewable energy should be reduced and as efficiently as possible.

- The auction is intended to bring about more transparency about the production costs of renewable hydrogen and thus contribute to the development of a market for green hydrogen.

- The subsidies are intended to reduce the risks and thus the capital costs of hydrogen production and to attract private capital.

- Ultimately, the Commission wants to streamline the process and ensure greater transparency so that companies have to spend less on red tape.

The fund will not only provide additional funding to the selected projects but also provide technical assistance in developing them. If the auction proves successful, Brussels is considering using this instrument to promote "other climate-friendly products" as well. This would allow innovative technologies to be brought to widespread use more quickly, according to a Commission statement.

The exact tender conditions can be found on the EU Commission's website.

Author: Tom Weingärtner