European Hydrogen Bank Auction Awards $775 Million for Green Hydrogen Projects in Europe

The European Commission granted nearly USD 775 million (EUR 720 million) to seven green hydrogen projects in Europe, selected through the first competitive bidding process under the European Hydrogen Bank. The funds for this auction come from the EU Emissions Trading System's revenues. The winning bidders will produce green hydrogen in Europe and receive a subsidy to offset the price gap between their production costs and the market price for hydrogen, currently dominated by non-renewable producers.

The green hydrogen produced will be used by steel, chemicals, maritime transport, and the fertilizer industry. Maroš Šefčovič, Executive Vice-President for European Green Deal, said, "The European Hydrogen Bank will provide valuable support to the decarbonisation of European industry. The high number of bids and the investments awarded today are a clear signal of confidence in the nascent renewable hydrogen market."

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The winning bidders plan to produce 1.58 million metric tons of green hydrogen over ten years, avoiding more than 10 million tons of CO2 emissions. Furthermore, the auction attracted over 132 bids in total. They submitted bids between USD 0.40  and USD 0.52 per kilogram of green hydrogen produced, and they also met the other qualification requirements. The seven projects will receive a subsidy ranging from USD 8.6 million to USD 263 million.

The selected projects are given below:

Project eNRG Lahti

Nordic Ren gas plans to construct a 90 MW green hydrogen electrolyser with synthetic methane and a district heating plant in Lahti, southern Finland. The plant is expected to produce 12,000 tons of hydrogen and 24,000 tons of methane per year. The company won the auction with the lowest bid of all, USD 0.40/kg, amounting to a USD 48 million subsidy over ten years.

Project El Alamillo H2

Benbros Energy's 60 MW El Alamillo green hydrogen project won USD 0.41/kg in subsidies to produce 65,000 metric tons of green hydrogen per year. The company is developing green hydrogen projects using solar PV. 

Project Grey2Green-11

Petrogal S.A. is developing a 200 MW green hydrogen project in Portugal. Petrogal is the refining subsidiary of Portuguese energy giant Galp and also has responsibility for its hydrogen business.

Project HYSENCIA

Spanish green hydrogen company  DH2 Energy will develop the 35 MW Hysencia green hydrogen project in Spain. Hysencia, situated in Aragon, northeast Spain, envisages using 49 MW of solar power to power the 35 MW electrolyser, with construction mooted to begin this year.

Project SKIGA

Fuella, a little-known Norwegian developer, is working on the Skipavika Green Ammonia (SkiGA) project. Fuella will develop a 130 MW electrolyser that will produce 100,000 metric tons of green ammonia per year.

Project Catalina

The largest project to be awarded subsidies is the first 500 MW phase of the Catalina green hydrogen project in Andorra. Renato PtX Consortium. The joint venture, which comprises gas transmission system operator Enagás, utility Naturgy, fertiliser producer Fertiberia, and  Danish fund manager Copenhagen Infrastructure Partners, will execute the project. Additionally, in its first phase, the project involves an investment of around USD 2.53 billion.

Project MP2X

MadoquaPower2X will develop the USD 1 billion MP2X green hydrogen and ammonia project, which will produce approximately 50,000 metric tons of green hydrogen per year, as well as 300,000 metric tons of green ammonia for use in maritime transport and fertiliser production. Phase 2 would expand the project to 1.2 GW of electrolyser capacity, producing 150,000 metric tons of green hydrogen and over one million metric tons of renewable ammonia a year.

For further details about upcoming green hydrogen projects in Europe, explore our database.

Whats Next?

The seven selected projects will now start preparing their individual grant agreements with the European Climate, Infrastructure and Environment Executive Agency (CINEA). These agreements are expected to be signed by November 2024.

Selected projects will have to start producing green hydrogen within a maximum of 5 years after signing the grant agreement. They will receive the awarded fixed premium subsidy for up to 10 years for certified and verified green hydrogen production.

Apart from this, the Commission plans to launch a second European Hydrogen Bank auction by the end of this year. It will draw on the lessons learned from this pilot auction and also further consult stakeholders before launching the next auction.

Read: Fortescue Launches its First Green Hydrogen Production Facility in USA

Background of the Auction

The Innovation Fund is the EU's largest funding programme for the deployment of innovative net-zero technologies, with an estimated budget of USD 43 billion from the revenues of auctioning  allowances under the EU Emissions Trading System between 2020 and 2030.

Previous Auctions

The first auction of the European Hydrogen Bank received 132 bids from 17 European countries, requesting over 15 times the available USD 861 million budget. The European Climate, Infrastructure, and Environment Executive Agency (CINEA) determined that 119 proposals were eligible and admissible and then ranked them according to their bid price and evaluated them. The bids submitted ranged from  USD 0.40 to  USD 4.85 per kilogram of green hydrogen produced.

Details About EU’s Innovation Fund

The EU's Innovation Fund is one of the world’s largest funding programmes for the demonstration of innovative low-carbon technologies. It aims to bring to the market solutions to decarbonise European industry and support its transition to climate neutrality while fostering its competitiveness.

The Innovation Fund provides around USD 43 billion of support over 2021–2030 for the commercial demonstration of innovative low-carbon technologies, aiming to bring to market industrial solutions to decarbonise Europe and support its transition to climate neutrality. The fund supports projects in the sectors covered under the EU Emissions Trading System.

Read: Tata Steel and Hygenco Forms Joint Venture to Establish Green Hydrogen Plant in Odisha

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