Austria advances hydrogen subsidy law

Austria's government has agreed on a law for subsidising renewable hydrogen production.

The law foresees €400mn being allocated to projects through a competitive bidding system this year as fixed-premium subsidies over a 10-year period, with another €420mn to be made available in 2025-26.

Funds could be made available by utilising the European hydrogen bank's "auction-as-a-service" scheme, which allows EU member states to use the mechanism to allocate funds to projects on their territory. A second European hydrogen bank auction is due to launch towards the end of this year. Austria could use this to allocate funds, but the law also leaves the option open of conducting auctions outside of the hydrogen bank mechanism.

In a supplementary text, the government said that the projects supported through the law could start operations between 2027 and 2030. The government estimates that the €820mn budget could support some 18,000-40,000 t/yr of renewable hydrogen production, assuming subsidies come in at an average €2-4.50/kg. Under the hydrogen bank auction mechanism, funds are allocated to the projects requesting the least amount of support.

In the hydrogen pilot auction, for which results were announced in late April, five Austrian projects participated, but they were all unsuccessful. Subsidies went to plants in Spain, Portugal, Norway and Finland instead. The Austrian projects represented a combined 278MW of electrolyser capacity with anticipated production of around 33,200 t/yr. A single project made up well over half of this and with a bid of around €0.60/kg was not far off the clearing price. Meanwhile, bids for the other, much smaller projects were close to the auction's ceiling price of €4.50/kg.

Germany was the only country to use the "auction-as-a-service" mechanism for the pilot auction, but other countries, such as Belgium, are also considering using it in the future.

Austria's hydrogen subsidy law has now been passed to parliament for review.

By Stefan Krumpelmann