Danish auction to support hydrogen production hints at what to expect from the first EU auction

The results of Denmark’s first auction to support the production of renewable hydrogen and its derivatives have shown where bids could land in the first pan-European auction organised by the European Hydrogen Bank (EHB), due to take place at the end of November this year. A total of 6 projects with combined electrolyser capacity of 280 MW secured support in the Danish auction. The news was reported by international media outlet Argus.

International media outlet Argus noted that the terms of the Danish auction to support renewable hydrogen production were very similar to those presented by the European Commission at the end of August for the pilot pan-European auction.

Under the rules, successful projects will be entitled to a fixed premium for each kilogram of renewable hydrogen produced for 10 years.

The key difference between the two auctions is the maximum fixed premium that participants are bidding for. In Denmark, it is set at 2 euros per kilogram (roughly 50 EUR/MWh), while the cap for the upcoming pan-European auction has been set at 4,5 euros per kilogram (roughly 113 EUR/MWh).

Bids well below the cap

The results of the Danish auction nevertheless showed that participants may bid well below the set caps, unlike, for example, in auctions to support electricity from renewable sources.

According to Argus, the highest successful bid in Denmark was 1,05 euros/kg (roughly 26 EUR/MWh), while the lowest was just 0,16 euros/kg (roughly 4 EUR/MWh). It was submitted by US company Plug Power for its planned 100MW electrolyser.

According to published information, the successful projects will share a total of 165 million euros in support under the Danish auction. The total support available in the pilot pan-European auction has been set at 800 million euros.