In the framework of the future European Hydrogen Bank, the European Commission has given some elements to anticipate the upcoming auctions this autumn.
Brussels is announcing a new tool for financing innovative low-carbon technologies under the Innovation Fund (one of the world’s largest funding programmes of its kind). Competitive bidding (also known as auctioning) is presented as a new way to support projects.
The Commission is currently considering the following types of support to be awarded by tender to hydrogen producers or buyers:
Contract for Difference (CD): a contract that provides the producer with support from the Innovation Fund by covering the difference between the auction’s winning price (the strike price) on the one hand, and a reference price, as derived from the price of the produced low-carbon product, the market price of a close substitute or a combination of those two on the other hand.
Carbon Contract for Difference (CCD): a contract that provides the producer with support from the Innovation Fund by covering the difference between the winning price (the strike price) on the one hand and a reference price, as derived from an average price of the EU ETS allowances on the other hand.
Fixed-premium contract: a contract that provides the producer with support in the form of a fixed amount per unit of product produced.
With a budget of €3 billion (about $3.27 billion), the European Hydrogen Bank will release €800 million this autumn for the first auctions (about $873 million), which will concern production facilities. The selected projects will receive a subsidy in the form of a fixed premium per kilogram of hydrogen produced, over a maximum period of ten years.
Article written by Laurent Meillaud and translated by Logan King