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EC funding totalling nearly €17bn will support European energy transition projects
10/7/2024
The European Commission (EC) has approved state funding to support the construction of a long-distance pipeline transport network for hydrogen in Germany, the deployment of two bottom-fixed wind farms offshore France, and the roll-out of biogenic carbon capture and storage (CCS) projects in Sweden.
Germany to repurpose gas pipelines as part of core hydrogen transport network
The EC has approved €3bn in state aid to support the construction of a long-distance pipeline transport network for hydrogen in Germany. The planned Hydrogen Core Network (HCN) project will also connect to several European Union (EU) states and the continent-wide European Hydrogen Backbone.
The HCN initiative is part of the EU Hydrogen Strategy and the ‘Fit for 55’ package, aiming to foster renewable hydrogen use in industry and transport by 2030.
The HCN will focus on repurposing existing fossil gas pipelines to enable them to carry hydrogen, as well as the building of new hydrogen pipelines and compressor stations (see Fig 1). The total length of the proposed network is around 9,700 km, of which around 710 km will be ‘non-core’ pipelines to be developed and operated by up to 17 potential network participants, according to the Ammonia Energy Association. Approximately 60% of the network will be converted gas pipelines, which will make up the core infrastructure of the HCN.
Funding for the HCN will be provided through state guarantees, allowing hydrogen transmission system operators (TSOs) to secure favourable loans from the German national promotional bank Kreditanstalt für Wiederaufbau, to cover initial losses in the ramp-up phase of the HCN. These loans will be paid back by 2055. At first, Germany expects only a small number of consumers to be using the network, and the tariffs will be lower than otherwise needed to cover costs, to encourage this use and facilitate the uptake of hydrogen.
The first major pipeline in the HCN is expected to be operational from 2025, with full completion of the network expected by 2032.
In February a number of complementary pipeline development projects were awarded funding by the EU under the Important Project of Common European Interest (IPCEI) framework. Nine of the 11 pipeline projects included in the continent-wide ‘Hy2Infra’ scheme were led by German companies.
Click here to view a time-lapse video of network construction between 2025 and 2032.
France secures state funding for two bottom-fixed offshore wind farms
The EC has also endorsed €10.82bn of state funding to support the deployment of wind energy offshore France, including the construction and operation of two bottom-fixed offshore wind farms – one in the South Atlantic zone and the other in the Centre Manche 2 zone in Normandy.
The South Atlantic wind farm is expected to have a capacity of 1,000–1,200 MW and to generate at least 3.9 TWh/y of renewable electricity. The Normandy wind farm is expected to have a capacity of 1,400–1,600 MW and to generate at least 6,1 TWh/y of electricity.
The funding will be allocated through transparent bidding processes, with a monthly variable premium determined by a contract for difference (CfD) mechanism. This structure ensures that when market prices fall below the reference price, beneficiaries receive compensation, and when prices exceed the reference price, beneficiaries pay the difference to French authorities.
The state aid is projected to accelerate Europe’s green transition, facilitating critical economic activities aligned with the European Green Deal Industrial Plan.
Sweden to roll-out biogenic CCS projects
Meanwhile, Sweden has secured €3bn in state aid to support projects that will capture and store at least 50,000 t/y of CO2 released during the combustion or processing of biomass (biogenic CO2).
The scheme aims to demonstrate ‘CCS as a viable and effective tool to mitigate climate change’. This is expected to increase investor confidence in CCS technology, reduce costs for its future applications and thereby facilitate the development of a CCS value chain in the EU.
The state aid is to be awarded through a competitive bidding process, with the first auction expected in 2024.
Under 15-year long contracts, the winning projects will receive a grant per tonne of biogenic CO2 that is permanently stored. The funding will be adjusted to take into account possible revenues that might stem from the projects (for example, thanks to voluntary carbon removal certificates), as well as other public support received for the project.
The scheme will run until 2028, supporting Sweden’s goal of reducing its greenhouse gas (GHG) emissions by 85% by 2045 compared to the 1990 level, and the wider EU target of climate neutrality by 2050.
