Hydrogen is indispensable to ‘decarbonise’ European industry and to reach the EU’s climate targets. In order to give a major boost to our H2 production and use, the EU is now putting the finishing touches to two initiatives: a brand-new European Hydrogen Bank and the start of ‘renewable hydrogen auctions’, with grants for hydrogen producers.
Why do we need a European Hydrogen Bank?
By scaling up hydrogen production, we can reduce the use of fossil fuels in European industries and serve the needs of hard-to-electrify sectors. The REPowerEU plan targets 20 million tonnes of renewable hydrogen in the EU by 2023 (half of which produced in Europe, the other half imported).
The benefits of hydrogen for Europe seem obvious, as our demand for clean (non-fossil) energy is substantial. Yet, there is a strong need for a specialised body, dedicated to matching supply and demand, and optimising existing financial instruments and facilities. In March 2023, the plans for the European Hydrogen Bank were presented.
Purpose of the Hydrogen Bank
The European Hydrogen Bank, that is currently being set up by the European Commission, will support the uptake of renewable hydrogen within the EU, as well as imports from international partners.
The main goals of the Hydrogen Bank include:
- Boost European Hydrogen production and facilitate blending with the existing financial instruments at EU and national level.
- Cover and lower the cost gap between renewable hydrogen and fossil fuels for early projects.
- De-risk hydrogen projects, maximise leverage of private capital and increase confidence of investors, financing institutions and industry.
- Connect renewable energy supply to demand, and address the initial investment challenges.
- Increase transparency on hydrogen flows, transactions and prices, gather demand and supply information, price information and benchmarks.
- Support infrastructure planning (including visibility on hydrogen infrastructure needs) and cooperation and trade with third countries.
What else to expect: hydrogen auctions
At this moment, the European Commission is also preparing a series of auctions on renewable hydrogen production. These auctions will award a grant to hydrogen producers (in the form of a fixed premium per kg of hydrogen produced for a maximum of 10 years of operation) in order to reduce the cost gap in the EU between renewable and fossil hydrogen and to bring capital costs down. The first pilot auction will be launched under the Innovation Fund (expected soon, autumn 2023), with a dedicated budget of 800 million Euros.
After the conclusion of the above article, it was announced that the European Commission has published the final Terms & Conditions for the first European hydrogen auction. These terms and conditions give potential bidders advance information about the final economic design of the auction and helps them start preparing their bids. EGEN drafted this factsheet, that you can download here. The auction, funded by the Innovation Fund, under the umbrella of the EU Hydrogen Bank, is intended to open on 23 November 2023.
What can EGEN do for you?
EGEN’s experts are involved in hydrogen, clean energy and CO2 reduction projects on a daily basis. We are happy to assist you! Do you have plans for investments or innovations, and want to know which grant schemes best fit your plans? Please fill in the contact form below and we will contact you ASAP.