On December 3, 2024, the second auction for renewable hydrogen will open, aimed at allocating €1.2 billion in support to producers of this vector. A higher level of maturity is required for projects, and a budget has been included for hydrogen purchased by the maritime sector
Final Terms and Conditions Published for the Second Renewable Hydrogen Auction
Everything is ready for the second H2 auction by the European Hydrogen Bank. On September 27, the European Commission published the final terms and conditions for the new competitive procedure dedicated to entities in the European Economic Area. This procedure will allocate up to €1.2 billion in support to European producers of this vector.
The date to highlight on the calendar is December 3, 2024, with careful attention to the minor updates added for this second round. Compared to last year’s pilot auction (IF23), the second auction for renewable hydrogen has revised some conditions here and there. This includes a requirement for a higher level of project maturity and establishing a dedicated budget for hydrogen production for the maritime sector. Indeed, €200 million of the total resources have been allocated for these initiatives.
The goal remains the same: to contribute to creating a European market for renewable H2, reducing investment risks with public support.
The winners of the IF24 auction will receive a fixed premium for the renewable hydrogen produced, for a maximum of ten years of operation. The contribution, provided by the Innovation Fund, will bridge the gap between production costs and the price that buyers are willing to pay for the vector.
Requirements for Participation in the Second H2 Auction
A series of qualification requirements must be met to be eligible for the second “Renewable H2” auction.
To ensure that the application is considered (eligibility), applicants must:
- Strictly adhere to submission deadlines, use the forms provided via the Funding and Procurement Portal, and comply with the submission of all required documentation, along with mandatory documents and supporting documents.
Below are the requirements to ensure suitability:
- Proposals must pertain to projects located in the European Economic Area.
- Project size and budget must fall within specific limits. Specifically, the maximum grant amount for each bid cannot exceed €250 million, which becomes €200 million for hydrogen reserved for the maritime sector. Newly installed electrolyzers must have a minimum capacity of 5 MWe (which must be located at a single site; virtual pooling of capacity is not permitted).
- The bid amount cannot exceed the maximum cap of €4/kg of hydrogen produced.
- Proposals must comply with the checks of the legal entity (compliance with the EU exclusion situation limitations (default, proceedings, etc.). All beneficiaries must be validated.
- There are no geographical restrictions on the origin of consortium members.
- The project cannot have previously received aid from the Innovation Fund.
- Proposals must be accompanied by signed self-declarations attesting, among other things, that the purchased and installed electrolyzer will comply with the required safety standards (e.g., ISO 22734:2019) or that the project has a cybersecurity safety plan.
Relevance and Quality:
- Proposals will be evaluated based on a pass/fail criterion regarding relevance (including their contribution to securing the supply of essential goods and to Europe’s industrial leadership and competitiveness), as well as technical, financial, and operational maturity. After the evaluation and before the signing of the grant agreement, an additional check of financial capacity will be conducted to ensure that applicants have stable and sufficient resources to successfully implement the projects and contribute their share.
Second H2 Auction: What Are the Selection Criteria?
For proposals with the same bid price, a priority order will be determined according to the following approach. Proposals with the lowest overall grant amount will be preferred first. If this does not allow for determining priority, proposals located in countries with fewer resources previously allocated under the Innovation Fund will be preferred. If a tie remains, the project with the shortest commissioning timeline will be favored. As a last resort, the decision will be made by drawing lots, supervised by the evaluation committee.
Obligations for IF24 Auction Beneficiaries
Winning projects, invited to prepare a grant agreement, will be required to provide a completion guarantee equal to 8% of the maximum grant amount. “A letter of intent from a bank or financial institution will be required to issue a completion guarantee as part of the proposal.” Furthermore, beneficiaries must provide certification confirming that the total volume of hydrogen produced from the supported capacity achieves at least a 70% reduction in greenhouse gas emissions following the rules established in the delegated regulation (EU) 2023/1185 of the Commission.
