The European Commission has awarded €720 million across a 10-year horizon to 7 renewable hydrogen projects through the inaugural auction of the European Hydrogen Bank, funded by EU Emissions Trading System revenues under the Innovation Fund.
The main takeaways from the results are:
- The auction was oversubscribed with a total of 132 bids requesting over 15 times the available €800 million budget
- The 7 successful projects will receive a fixed premium of €0.37 to €0.48 per kilogram of renewable hydrogen produced, well below the €4.50/kg ceiling
- Only 4 of the 17 European countries involved were awarded the subsidy, with Spain and Portugal coming away with over 80% of the total awarded volume
- Iberia’s ambitious 2030 RES targets and the recent surge in zero and negative prices in the region may be helping drive down bid prices
- Germany will use the Hydrogen Bank platform as a service to run a national auction on which €350 million will be allocated to fund eligible German hydrogen projects
- The EU Commission aims to initiate a second European Hydrogen Bank auction by the end of 2024.
After commissioning (expected by 2030), these projects will contribute to an annual estimated increase in power demand of around 6 TWh in Iberia and more than 1 TWh in the Nordics. Within the same period these projects will contribute to increasing demand-side flexibility of around 1.3 GW in Iberia and 0.2 GW in the Nordics.
These European Hydrogen Bank auctions are shaping up to have an important impact on flex asset price signals going forward.
