European Hydrogen Bank launches first hydrogen auction

The European Hydrogen Bank has launched a pilot auction to support the production of renewable hydrogen for European consumers. Successful projects can share support worth 800 million euros.

European Hydrogen Bank, under the Innovation Fund, launched its first hydrogen auction on Thursday, 23 November. It is expected to close on 8 February.

Key auction requirements include that supported plants must be located in the European Economic Area and have a minimum newly installed electrolyzer capacity of 5 MW.

Bidders able to produce renewable hydrogen have a budget of 800 million euros available. The funds will be provided as a fixed premium for each kilogram of renewable hydrogen produced and certified.

The maximum bid for the fixed premium is EUR 4.50/kg. This cap will be reviewed in subsequent auction rounds and may be adjusted if necessary. A single project can receive 1/3 of the total 800 million euro budget, or 266.7 million euros.

The contribution will be paid on top of the market revenues producers can earn and will be guaranteed for up to ten years of operation. Winning projects will sign a grant agreement with the European Climate, Infrastructure and Environment Executive Agency (CINEA), which implements the programme.

Danish auction offered clues about where bids might land

Where bids in the European auction might land in terms of price was indicated by the results of a recent Danish auction supporting hydrogen production. Projects in that auction also had the chance to receive a fixed premium for each kilogram of renewable hydrogen produced over a period of 10 years.

The results of the Danish auction showed that participants can bid well below the set caps, which is not usually the case, for example, in auctions supporting renewable electricity.

The highest successful bid was 1.05 euros/kg (roughly 26 EUR/MWh), while the lowest was just 0.16 euros/kg (roughly 4 EUR/MWh). The cap was set at 2 euros per kilogram.