The European Hydrogen Bank takes centre stage
(sustainabilityenvironment.com) – The green hydrogen pilot auction was a success. The European Hydrogen Bank has collected 132 offers from as many projects located in 17 EU countries, which together would activate an electrolysis capacity of 8.5 GW. “Requests have arrived and the enthusiastic response from the market at the pilot auction shows that the European hydrogen industry is ready to grow,” commented Kurt Vandenberghe, Managing Director of Climate Action, satisfied at the end of the race.
Not that we expected a different outcome. The European Commission has created the new bank with the precise aim of supporting the production of the carrier, bridging the existing cost gap between renewable and fossil hydrogen. An attractive incentive at a time like this.
Green hydrogen pilot rod, how does it work?
The institute has a budget through the Innovation Fund, with which it awards a fixed prize per kilogram of hydrogen produced for 10 years. But only to the bidders, who were asked to submit bids based on a surcharge for their production, up to a ceiling of 4.5 €/kg.
The enthusiasm generated by this first tender meant that the total support requested by the H2 producers exceeded by far the budget currently available, namely EUR 800 million. Suffice it to say that all the offers taken cumulatively would lead over ten years to a total production volume of 8.8 million tons of renewable hydrogen. In other words, the projects proposed in this first round would cover almost 10% of REPowerEU’s ambition for the 2030 Green H2.
Auctions as a service
Not all projects, of course, will get support. The Hydrogen Bank will select the winners based on several qualification requirements. Ranking bids from the lowest to the highest price. And those excluded from the first renewable hydrogen pilot auction? They can count on a new mechanism, called “Auctions-as-a-service”.
Created by the Commission within the Bank, the facility will allow Member States to finance projects on their territory that have participated in the tender but have not been selected due to budgetary constraints. In this way, they will be able to support initiatives with national resources without the need to organise a separate auction and thus reduce the administrative burden and costs for all parties. Germany is the first EU country to use this function by providing EUR 350 million from its budget. These incentives will not be considered State aid.
“The success of this pilot auction – added Vandenberghe – is the result of an in-depth commitment and consultation with stakeholders and a solid regulatory framework that provides certainty to investors. We now have a programme that provides efficient and targeted public support, fully in line with market needs”.