The subsidy amount exceeded 6 billion yuan, and the EU officially opened the first green hydrogen auction
Interface News Reporter | Wang Yong
About eight months after the announcement, the European Hydrogen Bank officially began auctioning hydrogen.
On November 23, the European Commission (hereinafter referred to as the EU) officially launched the first round of hydrogen auctions of the European Hydrogen Bank, with a special budget of 800 million euros (about 6.2 billion yuan).
According to the previous information released by the European Union, the European Hydrogen Bank focuses on regional hydrogen subsidies, which were launched in October last year and aim to provide financial support for EU green hydrogen producers.
Under the terms of the auction, green hydrogen producers bid at a fixed premium for every 1kg of green hydrogen produced, with subsidies for the winning projects. As the current cost of green hydrogen production is still higher than that of non-green hydrogen, premium subsidies aim to bridge the gap between the price of production and what consumers are currently willing to pay.
Successful bidders in the green hydrogen auction will receive a fixed subsidy of up to 4.5 euros/kg (about 35 yuan/kg) from the EU for a period of 10 years, in addition to the sales revenue from self-produced hydrogen. Bids that meet the price range criteria and meet other eligibility requirements will be ranked from lowest to highest price and will receive subsidy support until the budget is exhausted.
In other words, the lower the cost of green hydrogen production, the lower the premium, and the easier it is to become a winning bidder.
According to the tender requirements, the successful bidder must start operating the established project within five years of signing the grant agreement, and the newly installed electrolyser capacity must reach at least 5 MW and meet other criteria.
According to official information, bidders must apply through the EU Funding and Tenders Portal by February 8, 2024 (17:00 CET). Applicants will be informed of the results of the assessment as early as April next year and will sign the funding agreement within nine months of the conclusion of the call.
The auction is funded by the Innovation Fund of the European Union Hydrogen Bank. According to the official information of the European Union, the Innovation Fund is one of the world's largest funding programs for innovative low-carbon technologies, aiming to commercialize and apply zero-emission and innovative technologies, and support innovation in low-carbon technologies and processes in all member states.
The Innovation Fund, which is financed by the EU Emissions Trading System (ETS) allowance auctions, is one of the key tools of the Green Trading Industry Scheme, with a budget of €40 billion between 2020 and 2030.
The EU has indicated that other types of aid from participating member states will not be cumulative, in order to ensure a level playing field for all projects.
Maroš Šefčovič, Executive Vice President of Interagency Relations and Foresight at the European Green Exchange, said: "Auctions are about the supply and demand of green hydrogen, will help create price transparency and help kick-start the European hydrogen market. ”
He further noted that this could also help accelerate the EU's clean energy transition while remaining competitive, "The European Hydrogen Bank is a great opportunity to support Europe's industrial net-zero transition." ”
The EU also noted that the pilot auction will help to collect reliable data on the EU's renewable hydrogen project pipeline, the degree of market competition, the cost of renewable hydrogen production and its market price, and that the lessons learned from the pilot program will be used to inform future auctions of other decarbonization technologies and product development.
On March 16 this year, the European Commission launched the European Hydrogen Bank scheme to stimulate and support the production and investment of sustainable hydrogen.
This plan comes with the Net Zero Industry Act, which aims to promote manufacturing and production in the EU's clean energy sector, with the goal of achieving at least 40% of the EU's overall strategic net-zero technology manufacturing capacity close to or at least 40% of the EU's deployment needs by 2030, involving photovoltaics and solar thermal, onshore wind and offshore renewables, batteries and energy storage, heat pumps and geothermal, electrolyzers and fuel cells, biomethane, etc.
The EU had previously doubled its 2030 hydrogen production target to 10 million tonnes and imported another 10 million tonnes per year.
Within the framework of the European Hydrogen Bank, the EU also offers a new "Auction-as-a-Service" mechanism. This mechanism will enable Member States to provide additional national funding for projects that have participated in auctions but have not been supported by the Innovation Fund due to budgetary concerns, without the need for separate auctions at the national level, thereby reducing the administrative burden and costs for all parties.
On November 20, EU President Ursula von der Leyen announced at the European Hydrogen Week that the European Commission will start the second round of hydrogen auctions in the spring of 2024, with a budget of 2.2 billion euros (about 17.2 billion yuan).
In terms of investment, von der Leyen noted that the EU is investing in hydrogen valleys, hydrogen trains and clean steel mills through the Next Generation EU and REPowerEU initiatives. Currently, more than €17 billion in state aid has been authorized for around 80 hydrogen projects in the EU.
In a joint letter to European finance ministers this week, the CEO of the Renewable Hydrogen Coalition said: "Europe has everything it needs to lead the green hydrogen revolution and must not miss this opportunity." ”
On November 23, the Innovation Fund also launched a call for proposals for 2023, providing a budget of 4 billion euros (about 31.2 billion yuan) for cutting-edge low-carbon technologies in various fields, including renewable energy, energy storage, heat pumps, etc.
