European Hydrogen Bank: How will competitive bidding work?

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.

If you want to know more about the European Commission and hydrogen, you can read our latest 2 articles about the subject here and there.

Article written by Laurent Meillaud and translated by Logan King

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About the author

Marina Leite

Marina Leite

As a Brazilian passionate about languages, human rights and environmental issues, I hold a Bachelor's degree in Applied Foreign Languages with a major in International Economic Development. Drawing on my experience as a content creator on social networks, I joined Seiya Consulting and H2 Today in June 2022, first as an intern, then as Marketing & Communications Manager and designer.

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