EU’s hydrogen bank bids amount to 8.5GW

Bids submitted in the European hydrogen bank's pilot auction have come from projects with a combined electrolyser capacity of 8.5GW, but probably only a small portion will be successful and a second larger round could be launched later than planned.

Bids were submitted for 132 projects in 17 different countries, meaning the average electrolyser capacity per project was 64.4MW. The projects could produce a combined 880,000 t/yr of renewable hydrogen, the European Commission said, noting that this would almost cover 10pc of the 10mn t/yr of domestic output that the bloc has set under its REPowerEU initiative.

But only a small portion of the bids will likely be successful, given that the auction's budget was limited to €800mn ($861mn). While the EU set a bid ceiling of €4.50/kg, the successful bids will probably be well below this, given that the developers requesting the least amount of support will be selected. Assuming successful bids are in line with the volume-weighted average of around €0.85/kg in Denmark's tender last year — which had similar parameters — the budget would suffice to subsidise just over 94,100 t/yr, less than 12pc of the 880,000 t/yr. For the budget to be enough to support just one-third of the 880,000 t/yr, successful bids would have to average around €0.27/kg.

That said, Germany made use of the commission auctions-as-a-service option by adding an extra €350mn from its national budget for German projects only. This means that German projects that miss out on the larger pot still stand a chance of bagging support.

The commission intends to inform successful applicants by April-May with the grant agreements to be signed by November. The selected projects will then have five years to begin production, meaning they would have to be commissioned by November 2029 at the latest. Support will be provided for up to 10 years.

Looking further ahead, the EU plans to launch the second round of the hydrogen bank auction "before the end of the year", the commission said today. This suggests that the auction may take place later than previously anticipated, given that commission president Ursula von der Leyen had said in November that the round would be launched in spring 2024 in November. With a total €3bn set aside for the hydrogen bank from the EU Innovation Fund, the second auction could have a budget of up to €2.2bn, unless member states top it up further.

By Roxana Lazar