The European Commission has announced the preliminary budget for the second European Hydrogen Bank auction round foreseen at the end of the year. The European Hydrogen Bank is an initiative of the European Commission established in 2023 with the aim to support among other things the EU domestic renewable hydrogen production. The Commission has also published the draft terms and conditions for the second round. EGEN’s experts list them for you.
European Hydrogen Bank: results of the first auction
Out of 132 received bids, seven were the winning ones that will receive a grant between 8 million and 245 million euros for the installation and operation of overall 1,500 MWe new electrolyser capacity. The winning projects are located in Spain, Portugal, Finland, and Norway and submitted bids vary between €0.37/kg. and €0.48/kg. The results of the 350 million euros national funding window of Germany are still pending.
New (draft) rules for the second auction round
The European Commission has published the draft terms and conditions for the second European Hydrogen Bank auction round – officially known as the “Innovation Fund IF24 Auction”-, which is expected to open before the end of 2024. The budget has not been fixed yet, but early announcements target 1.2 billion euros of which 200 million will be dedicated to projects with maritime off-takers.
The main proposed changes that have been discussed during the stakeholder consultation event are:
- lowering the ceiling price from 4.5 to 3.5 €/kg
- introducing a new budget basket dedicated to projects with maritime off-takers to support the sector that recently has been subject to carbon pricing under the EU ETS. To concur within this basket, at least 60% of the planned hydrogen production has to be allocated via pre-contractual agreements to off-takers in the maritime sector.
- lowering the entry into operation from five years to three years (from grant agreement signature)
- introducing a budget flexibility rule for additional 20% of the total available budget
- increasing the required completion guarantee – issued by a bank or financial institution – from 4% to 10% of the grant
- specifying more in detail the cumulation rules, i.e. making a distinction for integrated and not-integrated projects
- introducing new resilience requirements, i.e. the contribution to EEA industrial leadership and safety, environmental and performance standards for electrolysers
- introducing measures to favour electrolyser manufacturers in EEA/OECD countries.
Stakeholder have particularly debated two changes, on the one hand the entry into operation time and on the other hand the completion guarantee. The Commission will take into consideration the feedback received and the final terms and conditions are expected to be published end of August/beginning of September 2024.
What else to expect for the second round: national auction windows
Following the example of Germany that opened a 350 million euros national funding window under the first pilot round, Austria aims at topping up the EHB budget in 2024 using the Auction-as-a-Service concept, too. The Austrian climate ministry (BMK) and the finance ministry are planning a new draft law to allocate around 400 million euros for green hydrogen production in Austria. Austria’s national H2 strategy is targeting 1 GW renewable energy production by 2030.
The Auction-as-a-Service concept allows Member States to allocate a pre-defined amount of national funding to renewable hydrogen production projects in their country. These projects are assessed and ranked under the European Hydrogen Bank auction and if the budget is insufficient, they can become eligible for the national funding window. The Commission is considering the possibility of increasing the rule for the exogenous ceiling price (currently three times the last IF-awarded bid) or introducing other multiplication factors taking into account the different national price structures.
What can EGEN do for you?
EGEN’s consultants can support you in performing the required calculations, structuring, and writing convincing documents, as well as managing the application process. Furthermore, they can assist you in strategically scoping and positioning your project in accordance with relevant market trends and EU policy objectives. Most importantly, EGEN can provide an intelligence report with insights into an optimal bidding strategy for a successful application.
