Today, the Commission and Germany are announcing a new milestone in boosting sustainable and clean energy financing across Europe. Germany is becoming the first Member State to participate in the EU’s new “Auctions-as-a-Service” scheme under the European Hydrogen Bank.
Germany will make €350 million available from its national budget for hydrogen production in Germany, in addition to the €800 million already foreseen for European projects from the EU Innovation Fund. This additional financial weight will help to attract and fund more renewable hydrogen projects. The Commission invites other Member States to also take advantage of this service for future auctions.
On 23 November 2023, the Commission opened the first EU-wide auction under the Innovation Fund to support renewable hydrogen production in line with the objectives of the REPowerEU Plan, the Green Deal Industrial Plan and the renewable hydrogen targets established in the Renewable Energy Directive. For renewable hydrogen produced in the EU, the Bank will cover the difference between the cost of producing renewable hydrogen and the price the market is willing to pay. The exact amount of this premium will result from a competitive bidding process. Renewable hydrogen producers who require the lowest amount of support in terms of euros per kilo of hydrogen produced will win the auction.
The “Auctions-as-a-Service” scheme within the Hydrogen Bank enables Member States to finance additional projects participating in the auction after the Innovation Fund’s budget has been allocated. With this instrument, Member States can identify and support competitive projects on their territory that have not secured EU funding without the need for a separate national auction process. Member States participate on a voluntary basis. Project developers must also express their interest in using the “Auctions-as-a-Service” in their bid to be eligible for selection under this scheme. Any support offered by Member States through this service will be considered as State aid. Member States must notify their support to the Commission but will benefit from a streamlined State aid approval process, as the auctions are designed at EU level in line with the Guidelines on State aid for climate, environmental protection and energy.
Background
With an estimated revenue of €40 billion from the EU Emissions Trading System between 2020 and 2030, the Innovation Fund aims to create financial incentives for companies and public authorities to invest in cutting-edge low-carbon technologies and support Europe’s transition to climate neutrality. The Innovation Fund has already awarded about €6.5 billion for innovative projects through its previous calls for proposals. Auctions (also referred to as Competitive bidding) are a new support mechanism under the Fund to stimulate faster and more cost-efficient support for the roll-out of renewable hydrogen in the first instance. The possibility to roll out auctioning to other low-carbon technologies in the future is also under consideration. The pilot auction is accessible on the Funding and Tenders portal.
The European Hydrogen Bank is an initiative to facilitate the EU’s domestic production and imports of renewable hydrogen. It aims to close the investment gap and connect the future renewable hydrogen supply to consumers to meet the intended objective of 20 million tonnes of hydrogen in the EU energy mix by 2030. This will contribute to the REPowerEU objectives and the transition to climate neutrality. The Innovation Fund auctions implement the domestic part of the European Hydrogen Bank.
In its National Hydrogen Strategy, the German government aims to increase domestic electrolyser capacity to at least 10 GW in 2030 and to make hydrogen more available for use in the decarbonisation of industry, energy and the transport sector. Germany is actively supporting the development of national, European and international value chains for hydrogen by adopting the necessary regulatory framework and funding instruments to bridge the financing gap. The support that Germany provides under the pilot auction is subject to State aid approval by the Commission and complements existing government aid for hydrogen. It will support hydrogen producers who sell to consumers, in particular in industry, who do not fall under other instruments, such as binding quotas for hydrogen use.
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