EU launches first green hydrogen auction with ceiling price of €4.50/kg

The European Union has launched its first green hydrogen auction with a maximum price of €4.50 ($4.91)/kg. The approved projects will receive subsidies for a decade, alongside revenue from hydrogen sales, and must start production within the next five years.

Image: YHBae, Pixabay

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The European Commission has launched the first hydrogen auction supported by the European Hydrogen Bank.

Renewable hydrogen producers can apply for support in the form of a fixed premium per kilogram of hydrogen produced. This should close the gap between the production price and the price that consumers are currently willing to pay in a market where non-renewable hydrogen production is still cheaper.

Bidders have until Feb. 8, 2024, to submit their proposals through the EU tenders and financing portal. Bids must be based on a proposed price premium per kilogram of renewable hydrogen produced, up to a ceiling price of €4 .50/kg.

Bids up to this limit, and that also meet other qualification requirements, will be ranked from lowest to highest bid price and supported in that order, until the auction budget is exhausted.

The selected projects will receive the awarded subsidy in addition to the market revenue they generate from hydrogen sales, for a maximum of 10 years. Once the projects secure their subsidy agreements, they must begin producing renewable hydrogen within five years.

To maintain an equitable environment for all projects, cumulation with other forms of aid from participating member states is not allowed. Member states can, however, finance projects that participated in the auction but weren't chosen for support from the Innovation Fund, using the Hydrogen Bank's “auctions as a service” mechanism, particularly in cases of budgetary constraints.

The pilot auction will contribute to the REPowerEU plan to decarbonize the European economy's goal of domestically producing 10 million tons of hydrogen by 2030. The commission will launch a second round in the spring.

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