IF24 Auction
The IF24 Auction opened on 3 December 2024 with a budget of EUR 1.2 billion.
Interested bidders will find all relevant documents in the EU Funding and Tenders Portal, including a description of the final application requirements. You can also consult the dedicated Q&As for more information and follow the dedicated Info Day on 10 December 2024.
European Economic Area (EEA) countries (EU27, Iceland, Liechtenstein, and Norway) will again have the option to allocate additional national funds to support projects using Auctions-as-a-Service (AaaS).
For the IF24 Auction, Spain, Lithuania, and Austria have already announced their participation in the AaaS scheme.
| Key events | Expected timeline |
| Call opening | 3 December 2024 |
| Deadline to submit applications | 20 February 2025 |
| Evaluation results | May-June 2025 |
| Grants award | September-November 2025 |
Overview
The Innovation Fund is one of the world’s largest funding programmes for the deployment and commercialisation of innovative low-carbon technologies.
Currently, the Fund awards project support through regular grants, auctions, project development assistance, and financial instruments such as Invest EU.
In 2023, the Commission developed a new competitive bidding support mechanism (‘auctions’) to complement its grants programme. Auctions expanded the portfolio of support mechanisms available under the Fund, fostering faster and more cost-efficient support for the roll-out of low-carbon technologies needed for the green transition.
Auctions are market-based instruments through which the Commission can allocate Innovation Fund support to accelerate innovative, low-carbon projects in Europe.
An auction is a process in which goods or services are offered for bidding. In the case of a subsidy scheme, what is auctioned is a subsidy for a specific activity or product. Typically, bidders requiring the lowest public subsidy for a decarbonisation activity or product will win the subsidy.
The Innovation Fund has begun allocating funds through a fixed-premium pilot auction directed at producing Renewable Fuels of Non-Biological Origin (RFNBO) hydrogen. During the auction, project developers could participate and submit a fixed-premium bid (€/kg of produced renewable hydrogen) to receive support on their production.
After some basic eligibility and quality checks, bids are ranked from lowest to highest and awarded support, in that order, until the auction budget is exhausted. Fixed-premium support is paid for up to 10 years.
The Innovation Fund only allocates a limited budget per auction to incentivise competition (€800 million for the first auction).
Following the revised European Union Emissions Trading System (EU ETS) Directive, the Innovation Fund can support projects through different types of competitive bidding mechanisms, specifically:
- fixed-premium contracts
- Contracts for Difference (CfDs) or
- Carbon Contracts for Difference (CCfDs).
This support must enable decarbonisation technologies, for which the European carbon price and regulatory framework might not be sufficient incentives.
The Innovation Fund offers a fixed premium to support renewable hydrogen production in the pilot auction.
Many EEA countries have introduced auctions to fund renewable power projects. These auctions have helped lower the price of renewable energy and favoured the uptake of more efficient and climate-friendly technologies like wind and solar.
By definition, a well-designed auction mechanism allows an efficient allocation of support at a competitively determined level. This minimises the costs to the public and, if designed well, sufficiently de-risks projects so that they attract more private capital.
Compared to regular grants, auctions will provide payments based only on certified and verified production (i.e. no pre-financing or payments before entry into operation) and tackle projects with a different risk profile than those addressed by the existing regular grant programmes.
They are well suited for projects that have moved closer to commercial deployment, with lower technology and construction risks, but still face profitability issues. Auctions also ensure that no public money is spent on covering project development risks that are best handled by the private sector.
Another advantage is that auctions create competition between producers, which may lead to lower consumer prices.
In addition, competitive bidding can reduce the risk of providing more public support than necessary, thereby ensuring taxpayers’ best value for money. Competitive bidding is considered proportionate support under the Guidelines on State Aid for Climate, Environmental Protection, and Energy (CEEAG). It has been a significant success story in the renewable power sector in many EEA countries, considerably reducing the funding needs for renewable power.
Competitive bidding can also be used to discover the prices of goods with unknown market prices. Currently, there is no liquid market for renewable hydrogen and its derivatives. The Fund will publish key price points to help foster the renewable hydrogen market.
As part of the ‘Fit for 55’ package, the Commission proposed setting up a competitive bidding instrument in the proposal to revise the EU Emissions Trading System (EU ETS) Directive. This proposal and several others aim to make the EU’s climate, energy, land use, transport, and taxation policies suitable for reducing net greenhouse gas (GHG) emissions by at least 55% by 2030 compared to 1990 levels.
The REPowerEU Plan also highlighted competitive bidding as a support mechanism for hydrogen production and uptake, 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 as a new possible mechanism for allocating support under the Innovation Fund.
Auctions for renewable hydrogen are 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. By helping Europe decarbonise its industry and transition away from fossil fuels, hydrogen will play a crucial role in achieving the EU’s climate neutrality goals.
To learn more about the European Hydrogen Bank, watch the recording of our most recent public webinar on the topic.
Auctions operationalise the domestic pillar of the European Hydrogen Bank, as detailed in the figure below.
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.
IF23 Auction for renewable hydrogen production
The IF23 Auction was the first EU-wide auction for the production of renewable or RFNBO hydrogen (renewable fuel of non-biological origin) and the first competitive bidding mechanism to be implemented under the Innovation Fund. It was launched on 23 November 2023. Please visit our dedicated page to discover its results.
These were the objectives of the 2023 pilot auction:
Bidders (project developers) had access to a budget of €800 million from the Innovation Fund. The funding was awarded as a fixed premium in €/kg of verified and certified RFNBO hydrogen produced, on top of the market revenues developers could expect to achieve. Funding will be guaranteed for up to 10 years of operation.
To learn more about the IF23 Auction, please consult its Terms and Conditions and have a look at the FAQs below.
An auction is a process in which goods or services are offered for bidding. In the case of a subsidy scheme, the product is not auctioned but rather a subsidy for a specific activity or product. Typically, bidders who require the lowest public subsidy for an auctioned activity or product will win the subsidy.
With today’s results, the Innovation Fund has begun the process of allocating funds through a fixed-premium pilot auction for the production of renewable hydrogen (“RFNBO Hydrogen” or “Renewable Fuel of Non-Biological Origin Hydrogen”). During the auction, project developers could participate and submit a fixed-premium bid (payment in €/kg of produced RFNBO hydrogen) to receive support for their production.
On 23 November 2023, the Commission launched the first auction under the European Hydrogen Bank to support the production of RFNBO hydrogen. The auction can support RFNBO hydrogen producers located in any EEA country. The complete auction design can be found in the call text of the pilot auction here.
Auctions allow funding to be allocated to technologies in an economically efficient way, enabling projects to move from first or second-of-a-kind demonstration projects to broader commercial rollout.
Therefore, the auction contributes to the revised ETS Directive 2003/874 objectives, supporting the scaling up of innovative technologies. The revised ETS Directive enables the use of competitive bidding to award support from the Innovation Fund and cover up to 100% of relevant costs (as opposed to 60% under the regular Innovation Fund grants).
The key advantages of using an auction as a financing instrument for technologies like renewable hydrogen production that are moving towards market roll-out are:
- It provides cost-efficient support allocated through a market-based instrument.
- The project promoter, who is best placed to address technology and project development risks, is responsible for them. Payments are based only on delivered volumes of the supported good; therefore, no payments are made before a project enters operation.
- Auctions allow for price discovery and market formation in Europe. Competitive auctions with a simple and transparent set-up reveal private costs and create valuable and comparable price points, which can help kick-start a European hydrogen market.
- Auctions have a lower administrative burden for applicants than other grant processes. Less documentation is required, and the evaluation timeline is shorter.
Auctions-as-a-Service allow EEA countries to use the Innovation Fund hydrogen auction to allocate additional national funds to projects that could not be awarded under the Innovation Fund budget. They are an offer from the Commission to EEA countries to use the auction scheme designed to be compatible with the Climate, Energy, and Environmental Aid Guidelines (CEEAG) and to streamline the process of notifying State aid using Commission templates.
Auctions-as-a-Service can play a significant role in the nascent hydrogen market. For new markets, it is crucial to prevent market fragmentation with different national support schemes and the resulting divergent price signals. Project developers, too, would benefit from a single set of rules for winning a subsidy across Europe rather than applying to various funding schemes with different application procedures and timelines. The service can also save the administrative costs of developing several support schemes in other EEA countries and bring such subsidies to the market earlier when needed the most.
Germany was the first Member State to participate in Auctions-as-a-Service, making €350 million available from its national budget in addition to the €800 million Innovation Fund budget.
The next auction will be launched towards the end of 2024. The Commission will incorporate lessons learned from the pilot auction through a thorough stakeholder consultation process. The Commission revised the draft Terms & Conditions for the second auction round. It will be available on its website for written stakeholder consultation and culminate in a workshop in mid-June 2024. Data and analyses from this first pilot round will inform discussions.
The Innovation Fund’s legal basis was established in 2019, and the first call for proposals was launched in 2020. So far, more than 100 projects have signed grant agreements worth €6.5 billion from 3 large-scale (LSC) and 3 small-scale (SSC) calls for proposals. A 2023 combined call, including small, medium, and large-scale projects, pilot projects, and manufacturing of component topics, is ongoing.
Innovation Fund projects under regular grants have up to 4 years to reach financial close, followed by a construction period before entering operation.
Projects selected in the auction will have a maximum of 5 years to enter operation. The median indicated time to entry into operation across all bids was much lower, at 2.9 years. Innovation Fund support is provided for a maximum period of 10 years after entry into operation.
The Innovation Fund is allocated based on excellence through competitive calls for proposals (auctions or regular grants), following the application of award criteria described in the Delegated Regulation, Financing Decision, and respective call texts. The projects that score the highest in the evaluation process within the available topic budget are selected, regardless of their sector or location.
The Innovation Fund’s legal basis allows for a specific award criterion to ensure geographical balance. However, since Innovation Fund projects are now located in 24 EEA countries, a specific award criterion is not yet necessary. The overall balance improves with each call, notably with the most recent 3 LSC and 3 SSC results.
Currently, there are 2 major initiatives to support EEA countries under the Innovation Fund with the development of a national pipeline of high-quality, innovative projects and thus improve the geographical balance:
- The latest revision of the ETS Directive introduced ‘Technical Assistance for Member States with low effective participation’ – aiming to increase the overall quality of Innovation Fund applications from countries with lower participation levels.
- All EEA countries’ National Contact Points or Innovation Fund Expert Group representatives receive training sessions on award criteria, outreach, and communication, among other topics. The training started in Q2 2024 and is complemented by support for outreach and communication at the national level.
This pilot auction was launched under the umbrella of the European Hydrogen Bank. The EHB's objective is to close the investment gap and connect the future supply of renewable hydrogen with our goal of 20 million tonnes of renewable hydrogen deployed in Europe by 2030.
It will facilitate renewable hydrogen production within the EU and imports, contributing to the REPowerEU objectives and the transition to climate neutrality.
It further supports the goals of the Green Deal Industrial Plan and the Net Zero Industry Act. Scaling up electrolyser manufacturing for renewable hydrogen production will contribute to the competitiveness and resilience of European industry, including steel, fertiliser, and shipping.
Scaling up the European hydrogen market will also allow European companies to play a leading role in the emerging global hydrogen market, which offers new growth opportunities and quality job creation. The Hydrogen Bank Communication accompanied the legislative proposal for the Net-Zero Industrial Act.
We published the pilot auction’s Terms and Conditions (T&C) on 30 August 2023. We split them into 4 chapters:
- Background and auction objectives
- Overview of auction design elements
- Qualification requirements
- Rules for cumulation of support with other public support
Some critical aspects of the design entail the following:
- Admissibility, eligibility and quality criteria. To qualify for the auction’s price ranking stage, applicants must submit documents articulating the project relevance and aspects such as technical, financial and operational capacity (see section 3 of the T&C). This information will be checked and evaluated on a pass/fail basis before ranking the proposals according to their bid price. Applicants must submit the requested application forms, supporting documents, and templates before the due date, which will be announced on the Funding & Tenders portal. Some critical elements of the auction design are summarised below, but we encourage all prospective bidders to refer to the T&C:
- Bid proposals must relate to projects with a production located in the European Economic Area.
- The auctioned good is RFNBO hydrogen, which meets the definitions and requirements of the Renewable Energy Directive and its Delegated Acts.
- The ceiling price for the bids is €4.5/kg of hydrogen produced.
- The maximum budget restriction for each bid is 1/3 of the total budget for the auctioned topic (e.g., 1/3 of €800 million or €266.7 million).
- Maximum time to entry into operation: 5 years after grant agreement signature.
- A completion guarantee is required to enter the auction and avoid speculative bidding.
- Price ranking. Qualifying proposals will be ranked from lowest to highest bid price and awarded in that order until the available budget (€800 million) is exhausted.
- Payments are made only upon verified and certified RFNBO hydrogen production and are scheduled semi-annually upon entry into operation. Production flexibility rules are in place to accommodate the intermittent nature of renewable power supply.
The Commission offers AaaS as a platform for EEA countries to allocate additional national funds. For more information, please refer to the section below on Auctions as a Service. Germany contributed to the pilot auction with a €350 million Auctions-as-a-Service window.
- Read our Frequently asked questions (FAQ)
- Watch our webinar
- Completion guarantee letter of intent
- Completion guarantee
For questions on the Innovation Fund pilot auction, please get in touch with CLIMA-AUCTIONS
ec [dot] europa [dot] eu (clima-auctions[at]ec[dot]europa[dot]eu)
A thorough lessons-learned process from the pilot auction is planned for spring 2024. During a 6-week written consultation process and a stakeholder event planned for spring/summer 2024, stakeholders will have the opportunity to comment on the draft terms and conditions for the second auction round.
Documentation from previous stakeholder consultations and support contracts:
- 16/05/2023 - Follow-up stakeholder workshop on the draft economic T&C for the 2023 Innovation Fund pilot auction
- Slides, including a summary of the survey preceding the stakeholder workshop
- 21/11/2022 - Stakeholder workshop on designing a competitive bidding tool to fund hydrogen innovation
- 28/10/2022 - Workshop with academia, think tanks and Member States
- Support Contract - Assistance in the Analysis and Set-up of a Competitive Bidding Mechanism for Contracts for Difference, Carbon Contracts for Difference or Other Comparable Schemes under the Innovation Fund
Auctions as a Service (AaaS)
To avoid fragmentation at the early stage of the European hydrogen market’s formation and to save administrative costs associated with developing different hydrogen support schemes by the EEA, the Commission extends the Innovation Fund auctions as a platform to interested EEA countries. This mechanism, called Auctions-as-a-Service (AaaS), enables countries of the EEA to use their national budget resources to award support to projects located on their territory while relying on the EU-wide auction mechanism to identify the most competitive projects.
To participate in AAAS, interested countries must have a national budget allocated and follow the State aid notification process before the Innovation Fund auction opens. The Commission will assist countries with pre-filled notification templates reflecting the auction T&C.
In practice, here are the services included in AaaS:
- EEA countries can use the State Aid compliant, EU-wide Innovation Fund auction as a funding mechanism
- the Commission facilitating and speeding up the notification of national schemes
- CINEA informs countries about the auction results with a ranking of potential vetted and cost-competitive projects to be implemented in participating countries (upon agreement of the projects)
- the Commission provides guidance on 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 their national budget to the AaaS and communicate their intention to participate to the Commission
- CINEA opens the auction
- Projects across EEA submit bids, which will be assessed, ranked, and cleared in line with the conditions established in the auction documents published in the EU Funding and Tenders Portal
- 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
- additional features may apply for each participating country to ensure required levels of competition. CINEA is responsible for evaluating, 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 2023, first detailed the AaaS concept. For more information, you can review our AaaS Concept Note.
If a country wants to allocate support to hydrogen production using the AaaS system, it should consider the following steps:
- The participating country must have an existing support scheme or adopt a new one for AaaS.
- National support must be cleared through the State Aid procedure with the Commission and shall comply with CEEAG rules. The IF Auction rules are by design CEEAG compatible, so if no changes to the auction design are made, State aid clearance can be quasi-automatic.
- The participating country must ensure certain elements are present in its support scheme (e.g., provisions on monitoring, transparency, reporting, and payment arrangements, as well as an indication of the budget it intends to allocate for the national compartment of the auction). Once this is ensured, they send the complete notification (pre-filled by Commission services) for using the AaaS. Countries seriously interested in participating in the auction and an available budget must inform the Commission within 2 or more months before the launch of the auction round to which they want to contribute. Upon reviewing the notification, the Commission’s Directorate-General for Competition will issue a decision on the national schemes before closing the auction round.
When bidders apply to the auction, they can indicate their interest in being considered for AaaS. Projects can only be considered for AaaS if they are in a country that has decided to offer a national scheme through AaaS.
Projects will first be considered under the Innovation Fund budget. If not awarded within this budget, they will be considered for AaaS. Applicants will be given the following choice: the project can remain on the Innovation Fund reserve list or be passed on to national funding.
Countries that sign up for the AaaS will receive the ranked list of projects in their territory. Countries must follow the Innovation Fund’s ranking of projects and cannot add additional award criteria.
Projects awarded through AaaS will sign corresponding national grant agreements and documentation with the respective awarding country.