Winners of first EU-wide renewable hydrogen auction sign grant agreements, paving the way for new European production

On 30 April 2024, seven European projects were selected for EU financial support in the Innovation Fund’s pilot hydrogen auction (IF23 Auction).

Today, six out of those seven projects have signed their respective grant agreements. The awarded funding will help successful bidders to bridge the difference between their production costs and the price that industrial users are willing to pay for this emerging product.

This auction is one of the pillars of the European Hydrogen Bank (EHB) launched by the Commission in 2023, and uses revenues from the EU Emissions Trading System to support producers of hydrogen categorised as Renewable Fuel of Non-Biological Origin (RFNBO).

The selected projects are located in four European countries:

• Spain (Hysencia and Catalina);
• Portugal (Grey2green II and MP2X);
• Finland (eNRG Lahti);
• and Norway (Skiga).

The Innovation Fund will support these projects with a fixed premium payment per kilogram of certified and verified renewable hydrogen produced. This means that no payments will be made before projects start production. From the time of the grant agreement signature, the projects have up to five years to start producing renewable hydrogen.

The total amount of support comes to EUR 694 521 237 and will be disbursed over a timespan of ten years. The individual grants range from EUR 8 million to EUR 245 million for installations with a megawatt electric (MWe) capacity from 35 to 500 MWe.

Renewable hydrogen produced will serve many sectors, such as maritime, heavy duty transport, agriculture, or in the production of e-methane and e-methanol.

Altogether, the projects have the potential to produce up to 1.52 million tonnes of renewable hydrogen during the first ten years of their operations, avoiding more than 10 million tonnes of CO₂ emissions.

Meet the projects

One project out of the seven that were selected to receive support from the Innovation Fund pilot auction decided to withdraw from the grant agreement process.

Drawing from the experience of this pilot auction, the Commission plans to launch the second renewable hydrogen auction via the Innovation Fund by the end of 2024, with an increased budget of EUR 1.2 billion. Published on 27 September 2024, the Terms and Conditions (T&Cs) for the second auction set out the main elements and requirements to apply.

Background

The Innovation Fund is the EU's largest funding programme for the deployment of innovative net-zero technologies, with an estimated budget of EUR 40 billion from the revenues of auctioning allowances under the EU Emissions Trading System between 2020 and 2030.

The European Hydrogen Bank is an initiative to facilitate the EU's domestic production and imports of renewable hydrogen. It aims to unlock private investment in the EU and in third countries by addressing investment challenges, closing the funding gap, and connecting future renewable hydrogen supply to consumers. Its domestic pillar is implemented through the Innovation Fund.

The first renewable hydrogen auction received 132 bids from 17 European countries requesting over 15 times the available EUR 800 million budget. The 119 proposals admissible and eligible were evaluated and ranked according to their bid price by the European Climate, Infrastructure and Environment Executive Agency (CINEA).

More Information

• Innovation Fund
• European Hydrogen Bank
• European Hydrogen Bank auction provides EUR 720 million for renewable hydrogen production in Europe (press release, 30 April 2024)