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Climate Action

Competitive bidding

A new tool for funding innovative low-carbon technologies under the Innovation Fund

The first EU-wide auction (IF23 Auction) for the production of renewable hydrogen is now open! You may apply via the EU Funding and Tenders Portal.

Register here to join the webinar The European Hydrogen Bank, from announcement to implementation” on Tuesday, 12 December at 15:45 CET


The Innovation Fund is one of the world’s largest funding programmes for low-carbon energy technologies commercialisation and deployment. It provides support through grants, project development assistance and financial instruments such as Invest EU.

In addition to the existing grants programme, the European Commission is developing a new support mechanism of competitive bidding (‘auctions’). Auctions will expand the portfolio of support mechanisms, fostering faster and more cost-efficient support for the roll-out of low-carbon technologies needed for the green transition.

If you have questions about the ongoing IF23 Auction for RFNBO Hydrogen, please refer to the documents published in the EU Funding and Tenders Portal or contact the HelpDesk. For any other general questions, get in touch with clima-auctionsatec [dot] europa [dot] eu (clima-auctions[at]ec[dot]europa[dot]eu)


2023 pilot auction to produce renewable hydrogen

The pilot auction under the Innovation Fund will be opened in November 2023. The objectives of this pilot auction are as follows:

Objectives of the Innovation Fund pilot auction

As part of the ‘Fit for 55’ package, the Commission proposed to set up a competitive bidding instrument in the proposal to revise the EU ETS directive, along with several other proposals to make the EU’s climate, energy, land use, transport and taxation policies fit for reducing net GHG emissions by at least 55% by 2030, compared to 1990 levels.

Competitive bidding was also highlighted as a support mechanism for hydrogen production and uptake in the REPowerEU Plan, specifically as a central measure to reduce fossil-fuel consumption in hard-to-decarbonise industrial sectors and diversify energy imports away from Russian fossil fuels.

Further, the revised EU ETS Directive introduced competitive bidding procedures as a new possible mechanism for allocating support provided by the Innovation Fund.

The Innovation Fund pilot auction for hydrogen production is a key element of the European Hydrogen Bank (EHB), which establishes EU financing instruments and a coordination platform to cost-effectively secure domestic and international renewable hydrogen volumes in the EU.

This pilot auction operationalises the domestic pillar of the EHB, as detailed in the figure below:

European Hydrogen Bank

Why hydrogen? The goal of the Innovation Fund is to support the demonstration and commercialisation of innovative low-carbon technologies and processes. While many decarbonisation technologies are already mature, climate-neutral options are not yet available or scalable for hard-to-decarbonise sectors of the EU economy, such as heavy-duty transport and energy-intensive industrial processes. Hydrogen produced using renewable electricity, ‘RFNBO hydrogen’, is a climate-neutral option for these sectors and fully aligned with the REPowerEU Plan political priorities. The Commission has defined RFNBO hydrogen by adopting two Delegated Acts as required under the Renewable Energy Directive. The first Delegated Act defines under which conditions hydrogen, hydrogen-based fuels or other energy carriers can be considered RFNBOs. The second Delegated Act provides a methodology for calculating life-cycle GHG emissions for RFNBOs. Compliance with the two Acts is also necessary for hydrogen production to be counted towards Member States’ renewable energy targets.

The first competitive bidding mechanism under the Innovation Fund will be operationalised through a pilot auction to support renewable hydrogen production. We published the Terms and Conditions for the pilot auction on 30 August 2023. We intend to open the pilot auction on 23 November 2023 (estimated auction closure: 8 February 2024).

A €800 million budget will be available for bidders (project developers). Funding will be awarded as a fixed premium in €/kg of verified and certified RFNBO hydrogen produced, on top of market revenues that developers can achieve, and guaranteed for up to ten years of operation. Awarded projects will enter into a grant agreement with the European Climate, Infrastructure and Environment Executive Agency (CINEA), the implementing authority for the scheme.


Innovation Fund auction process step-by-step
Innovation Fund auction process step-by-step

Auctions as a Service (AaaS)

To avoid fragmentation at the early stage of hydrogen market formation in Europe and to save administrative costs of developing different hydrogen support schemes by the EEA, the Commission will also extend the Innovation Fund pilot auctions as a platform to interested countries of the EEA. This mechanism, called Auctions-as-a-Service (AaaS), will enable countries of the EEA to use their national budget resources to award support to projects located on their territory while relying on an EU-wide auction mechanism to identify the most competitive projects.

To participate in the AaaS, interested countries must have a national budget allocated and follow the State aid notification process before the opening of the Innovation Fund pilot auction. If the auction T&C are still the same, State aid clearance can be provided as early as the opening of the pilot auction at the end of the year. The Commission will assist countries with pre-filled notification templates reflecting the auction T&C.

In practice, the concept of AaaS consists of:

  • EEA countries using the State Aid compliant, EU-wide Innovation Fund pilot auction as an auction mechanism
  • the Commission facilitating the notification of country schemes
  • CINEA informing countries about the results of the pilot auction with a ranking of potential vetted and cost-competitive projects to be implemented in participating countries
  • the Commission providing guidance for minimum requirements for contracts to be signed at the national level between project developers and national authorities.

The AaaS will work accordingly:

  • EEA countries commit national budget to the AaaS and communicate their intention to participate to the Commission.
  • CINEA opens the pilot auction.
  • Projects across EEA submit bids, which will be assessed, ranked, and cleared in line with the auction T&C.
  • The lowest bids are cleared under the auction budget until it is exhausted, following the ranking of projects.
  • The ranking of the remaining unawarded projects is cleared under the national budget(s) and information about the successful bids is passed to the respective country.
  • An additional ceiling price applies to projects supported under AaaS to ensure competition in the presence of additional national funds. This additional, country-specific ceiling price will be calculated as follows:
    • [The price of the last project cleared under the Innovation Fund budget, that is not from the same country] * [a factor X (to be decided)]. The formula will be established at the EU level.
  • CINEA is responsible for awarding, contracting, and monitoring support for projects under the Innovation Fund budget.
  • Participating countries are responsible for awarding, contracting, and monitoring project support under national budgets.

The European Hydrogen Bank Communication, published in March of 2023, first detailed the AaaS concept. For more information, you can review our AaaS concept note.

For questions on the AaaS, please email CLIMA-AUCTIONSatec [dot] europa [dot] eu (clima-auctions[at]ec[dot]europa[dot]eu)