The European Hydrogen Bank (EHB) has successfully concluded its second renewable hydrogen auction, allocating €992 million in subsidies to 15 renewable hydrogen production projects. This tender, characterized by its competitive nature, saw feed-in premium tariffs ranging from €0.20/kg to €1.88/kg awarded to the selected projects. These tariffs will be added to the market price of hydrogen.
The auction - like the first pilot auction - was significantly oversubscribed, with 61 bids from 11 countries requesting a total of €4.88 billion. This high level of interest underscores the strong demand for public funding in the green hydrogen sector. The awarded bids were in line with expectations, reflecting the competitive environment and the strategic bidding by developers aiming to secure subsidies in the light of the EU politics.
The European Union's objectives for renewable hydrogen usage by 2030 might have influenced the bidding behavior. These quotas, established under Directive (EU) 2023/2413 (Renewable Energy Directive III) and the complementary Delegated Acts under Article 27(3), set legally binding targets for industrial consumers and transport sectors. The directive specifically mandates that 42% of hydrogen used in industry must be renewable by 2030, with intermediate targets of 35% by 2028.
The levelized cost of renewable hydrogen (LCOH) for the selected projects varies widely based on factors such as location, power sourcing strategies, and equipment optimization. While some bids reported highly competitive LCOH figures, the awarded subsidy levels may not guarantee cost parity with carbon hydrogen. Developers will need to secure off-takers willing to pay a premium for green hydrogen to ensure project viability.
The auction mechanism, legally established through Commission Implementing Decision C(2023)6730 as the primary instrument for the Hydrogen Bank, provides a transparent and competition-based allocation of subsidies in compliance with EU state aid rules. The second EU renewable hydrogen tender represents a significant step towards achieving the Union's renewable hydrogen goals as outlined in the European Hydrogen Strategy (COM/2020/301). However, the feasibility of the awarded projects remains uncertain. Continued efforts by the member states to implement ambitious national policies to incentivize buyers, alongside an increase of renewable energy policies to power the renewable hydrogen production, will be essential for the successful realization of these projects.