Joint press release by the Commission, Spain, Lithuania and Austria on the European Hydrogen Bank's ‘Auctions
European Hydrogen Bank's ‘Auctions-as-a-Service' scheme
Today, the European Commission, Spain, Lithuania and Austria are announcing new financial support for the development of renewable hydrogen via the Innovation Fund. The three Member States will participate in the ‘Auctions-as-a-Service' scheme as part of the second European Hydrogen Bank auction, which will be launched on 3 December. In addition to the €1.2 billion in EU funding from the Innovation Fund, the three EU Member States will deploy over €700 million in national funds to support renewable hydrogen production projects located in their countries. The total funding mobilised by the ‘IF24' renewable hydrogen auction will therefore be around €2 billion.
- Spain is allocating between €280 and €400 million for the Auctions-as-a-Service scheme, using funds from its Recovery and Resilience Plan (RRP). The total support available will depend on the amount of funds used in the country' existing State aid scheme for hydrogen clusters and valleys, which is also funded from RRP resources. The exact amount of support will be confirmed by spring 2025.
- Lithuania is dedicating around €36 million for the Auctions-as-a-Service scheme, from their Modernisation Fund budget. The country's participation in the Auctions-as-a-Service scheme will help reach its national target of 1.3 gigawatts of electrolysis capacity and 129 kilotonnes of renewable hydrogen production annually by 2030.
- Austria is committing €400 million from its national budget to the Auctions-as-a-Service scheme. Hydrogen producers will be eligible for a maximum grant of €200 million per project, with a maximum capacity of 300 megawatts of production to be supported in this auction.
With these new financial commitments, Spain, Lithuania and Austria are demonstrating their commitment to meeting national and EU targets for the uptake of clean energy and supporting the decarbonisation of European industry. The mobilisation of this additional funding under a single European auction platform is an efficient system that increases opportunities and reduces costs for industry. In effect, participating companies in these countries are making one bid for two different sources of funding. The scheme enables Member States to finance additional projects in their country, even after the Innovation Fund's budget has been fully allocated. The Commission encourages other Member States to also take part in the Auctions-as-a-Service scheme in the future, supporting 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 European Economic Area, selected projects will receive a fixed premium (pay-as-bid) on production for a maximum period of 10 years, with the intention to 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 results from a competitive bidding process, in which projects, after being evaluated on a series of pass-fail qualification criteria, will be ranked based on the bid placed.
Background
With an estimated total budget of €40 billion from 2020 to 2030 from EU Emissions Trading System revenues, 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 €7.2 billion for innovative projects through its previous calls for proposals. Auctions, (also referred to as competitive bidding), are a selection mechanism under the Fund to stimulate faster and more cost-efficient support for the roll-out of renewable hydrogen in the first instance. 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. This will contribute to the REPowerEU objectives and the transition to climate neutrality. The Innovation Fund auctions implement the domestic pillar of the European Hydrogen Bank.
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. The results of the IF23 Auction are accessible here, the extensive public consultation on the IF24 Auction Terms and Conditions is documented here.
The Auctions-as-a-Service scheme within the European Hydrogen Bank enables Member States to finance additional projects participating in the auction after the Innovation Fund's budget has been fully allocated. With this instrument, Member States can identify and support competitive projects located in their territory that have not secured EU funding without the need for a separate national auction, or other selection process. Member States participate on a voluntary basis. Project developers must express their interest in using the ‘Auctions-as-a-Service' in their application to the Innovation Fund 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 and 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. Germany was the first EU Member State to participate in the scheme with a budget of €350 million last year, in relation to the first EU-wide auction for renewable hydrogen under the Innovation Fund and the European Hydrogen Bank.
The Spanish government aims to increase domestic electrolyser capacity to 12 Gigawatts by 2030 and to increase renewable hydrogen use in the decarbonisation of hard to abate sectors, such as high-temperature processes in industry, as outlined in its updated National Energy and Climate Plan. In addition to its NECP and as part of its Renewable Hydrogen Roadmap and Recovery and Resilience Plan, Spain is actively supporting the development of national, European, and international value chains for hydrogen by adopting the necessary regulatory framework and funding instruments.
In its updated National Energy and Climate Plan (NECP) and National Energy Independence Strategy, the Lithuanian government aims to make renewable hydrogen an important energy carrier in the near future. Taking significant steps to scale up clean energy, Lithuania has already allocated €50 million from Modernisation Fund revenues towards renewable hydrogen production since 2023. Participating in Auctions-as-a-Service will continue to help decarbonise Lithuania's industry and provide a flexibility measure for renewable energy.
Austria has set the goal of achieving climate neutrality by 2040. A key component to achieving this is through Austria's national Hydrogen Strategy, which aims to increase domestic electrolyser capacity to 1 GW by 2030. The strategy, in addition to the national Hydrogen Production Support Act, bolsters hydrogen production and use, providing investment security for operators and supporting the national hydrogen market ramp-up. These initiatives focus on sectors where direct electrification is not a feasible decarbonisation option due to technical and economic limitations, or where hydrogen is needed as feedstock.
For more information
Competitive Bidding (Auctions) website of the EU Innovation Fund
Auctions-as-a-Service concept note
