The European Commission (EC) has released the final terms and conditions for its forthcoming EUR 1.2 billion (USD 1.34 billion) renewable hydrogen auction, scheduled to commence on December 3, 2024. This initiative aims to enhance the security of supply for essential goods and bolster Europe's industrial competitiveness.
The auction, which is part of the Innovation Fund and a cornerstone of the European Hydrogen Bank (EHB), will provide financial assistance to hydrogen producers classified as Renewable Fuel of Non-Biological Origin (RFNBO).
Key highlights of the new resilience-related requirements include a sub-criterion that mandates projects to contribute to a diversified supply chain to prevent dependency on a single third country that could jeopardize the supply of electrolysers. Notably, the auction will restrict equipment sourced from China to no more than 25% of the total installed capacity in megawatts electrical (MWe).
Safety compliance is another critical component, with projects required to adhere to the ISO22734:2019 standard for hydrogen generators utilizing water electrolysis, or any approved version that supersedes it.
To address market distortions stemming from foreign subsidies or incompatible state aid, the EC plans to initiate investigations under the EU's Foreign Subsidies Regulation, as well as EU trade defense policy, aimed at counteracting unfair subsidization or dumping of imports in the EU market.
Furthermore, there are specific limits on grant amounts per bid, with EUR 250 million allocated for general topics and EUR 200 million designated for maritime projects. A new mandatory condition stipulates that projects must achieve financial closure within 2.5 years following the grant agreement and must commence operations within five years.
Revised terms also include higher maturity level requirements for applicants, a lower price ceiling of EUR 4 per kilogram (down from EUR 4.5/kg in the pilot auction), and a dedicated budget of EUR 200 million for projects supplying hydrogen to maritime off-takers.
The minimum project size requirement remains unchanged, mandating a minimum of 5 MWe of newly installed electrolyser capacity, which must be located at a single site as virtual pooling is not allowed.
The EU's pilot tender previously allocated EUR 720 million to seven projects, representing 1.5 GW of capacity and targeting the production of 1.58 million tonnes of hydrogen over a decade.
