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New Energy World embraces the whole energy industry as it connects and converges to address the decarbonisation challenge. It covers progress being made across the industry, from the dynamics under way to reduce emissions in oil and gas, through improvements to the efficiency of energy conversion and use, to cutting-edge initiatives in renewable and low carbon technologies.
Enthusiastic response to European Hydrogen Bank pilot auction
28/2/2024
News
The pilot auction for renewable hydrogen production in Europe attracted 132 bids from projects located in 17 European countries, representing a total planned electrolyser capacity of 8.5 GWe. Meanwhile, the European Commission (EC) has approved a third Important Project of Common European Interest (IPCEI ) in the hydrogen value chain, which it says will ‘establish the first regional infrastructure clusters in several member states’.
The pilot auction proved so popular that the total support requested from the EC’s European Hydrogen Bank far exceeds the currently available budget of €800mn, provided by the EC Innovation Fund.
Noting what he called an ‘enthusiastic’ market response to the auction, Kurt Vandenberghe, the Commission’s Director-General for Climate Action, said: ‘Renewable hydrogen is an important solution in Europe’s endeavour to reach climate neutrality by 2050. The success of this pilot auction is the result of thorough engagement and consultation with relevant stakeholders and a solid regulatory framework which provides certainty to investors. We now have a scheme that provides efficient and targeted public support in full alignment with market needs.’
All auction bids taken together provide for a total planned electrolyser capacity of 8.5 GWe. Over the span of 10 years, this would lead to a total production volume of 8.8mn tonnes of renewable hydrogen, according to the EC. On a yearly basis, this would cover close to 10% of the European Union’s (EU) target for domestic renewable hydrogen production in 2030 under the REPowerEU Plan.
The bidders are competing to receive support in the form of a fixed premium per kilogramme of renewable hydrogen produced, with a subsidy cap of €4.5/kg.
The EC has also put in place a new ‘auctions-as-a-service’ mechanism to ‘enable member states to benefit from the EU-level platform and award national funding to additional projects, in full respect of state aid rules’. Germany is the first EU country to make use of this feature, putting up €350mn from its national budget for renewable hydrogen production projects located in Germany in case eligible bids for German projects cannot receive Innovation Fund support under the auction due to budget limitations.
The European Executive Agency for Climate, Infrastructure and Environment (CINEA) is currently checking the admissibility and eligibility of the pilot auction bids and will then evaluate them. Applicants will be informed about the evaluation results in April/May 2024 and successful bidders will be invited to prepare and sign grant agreements by November 2024 at the latest.
The selected projects will have to start producing renewable hydrogen within five years of signing the grant agreement. They will receive the awarded fixed premium subsidy for up to 10 years upon certified and verified renewable hydrogen production.
Learning from the European Hydrogen Bank pilot auction, the EC plans to launch a second round before the end of the year.
Getting connected
In related news, the EC has approved the IPCEI ‘Hy2Infra’ project, the third Important Project of Common European Interest in the hydrogen value chain, that it says will ‘establish the first regional infrastructure clusters in several member states and prepare the ground for future interconnections across Europe, in line with the European Hydrogen Strategy'.
Hy2Infra involves 33 projects by 32 companies from seven member states: France, Germany, Italy, the Netherlands, Poland, Portugal and Slovakia. Focused on hydrogen infrastructure development, it will include the deployment of 3.2 GW of large-scale electrolysers, around 2,700 km of new and repurposed hydrogen transmission and distribution pipelines, the development of large-scale hydrogen storage facilities with capacity of at least 370 GWh; as well as handling terminals and related port infrastructure for hydrogen carriers.
The participating countries will provide up to €6.9bn in public funding, so far the highest aid amount approved for IPCEIs in the field of hydrogen. This is expected to raise an additional €5.4bn in private investments, for a total of over €12bn, according to the EC.
Hy2Infra complements two previously approved IPCEIs in the hydrogen value chain: Hy2Tech, a research IPCEI and Hy2Use, which encompassed a mix of research and hydrogen production projects.
Italian green hydrogen project
Meanwhile, Swiss renewable energy producer Axpo and Australian renewable hydrogen company Infinite Green Energy have signed a joint development agreement (JDA) for the Valle Peligna hydrogen project in Abruzzo, which will be one of the largest hydrogen plants in Italy, it is claimed.
The project includes a 30 MW electrolyser powered by a 45 MWp solar plant to deliver up to 4,200 t/y of hydrogen to help decarbonise customers’ operations in hard-to-abate industrial and transportation sectors. The facility is also to provide green electricity to the local grid by the second half of 2025.
