EU pilot green hydrogen auction gets over expected response

The pilot EU auction for renewable hydrogen production has drawn 132 bids representing a total planned electrolyser capacity of 8.5 GWe, the European Executive Agency for Climate, Infrastructure and Environment (CINEA) said on Monday.

The projects submitted are located in 17 countries and are seeking support that far exceeds the auction’s budget of EUR 800 million (USD 862m), according to the announcement. The bidders are competing for support in the form of a fixed premium per kilogram of renewable hydrogen produced, with a subsidy cap of EUR 4.5 per kg. It will be received for up to 10 years.

CINEA is currently checking the eligibility of the bids and will then evaluate and rank them based on their price. The results will be known in April or May, with grant agreements to be signed with the successful projects by November. The projects will have to start production within five years of signing the agreement.

Learning from the European Hydrogen Bank pilot auction, the European Commission plans to launch a second round before the end of the year.

The funding for the hydrogen auction comes from the EU’s Innovation Fund. The Commission has also put in place an “Auctions-as-a-service” mechanism to allow member states to award national funding to additional projects. Germany, the first EU country to take advantage of this mechanism, has allocated EUR 350 million for green hydrogen projects at home in the event that eligible bids for domestic projects fail to secure Innovation Fund support.

Kurt Vandenberghe, Director-General for Climate Action, said that “the enthusiastic market response to the pilot auction shows the European hydrogen industry is ready to scale up.”

The inaugural auction was launched in November 2023 and the deadline for submissions was February 8, 2024.