The European Commission has just published the final Terms & Conditions for the new pilot auction mechanism for renewable hydrogen, due to be launched in November 2023. It is designed to test the feasibility of using auctions to allocate public funding for renewable hydrogen production.
Under the pilot auction mechanism, up to €800 million will be awarded to renewable hydrogen producers. The funding will take the form of a fixed premium per kilogram of renewable hydrogen produced over a ten-year operational period.
The pilot auction mechanism is one of the four pillars of the European Hydrogen Bank (EHB),
which aims to make Europe a global leader in the production and use of hydrogen. Renewable hydrogen is produced using water and renewable energy, such as solar and wind power. It is a clean and emissions-free fuel that can be used to power vehicles, heat homes and businesses, and generate electricity.
The pilot auction is expected to attract a wide range of bids from renewable hydrogen producers across the EU. The projects must be located in the EU and must be operational within five years of the award of funding.
The launch of the pilot auction mechanism is a significant milestone in the implementation of the EU's Hydrogen Strategy and of the REPower EU plan. It is a sign that the EU is serious about supporting the production of renewable hydrogen and about making it a more affordable and accessible energy source.
The pilot auction mechanism caters to the domestic production pillar of the European Hydrogen Bank (EHB), whose aim is to unlock private investments (both in the EU and abroad) by connecting renewable hydrogen supply with the emerging European demand.
Read more in our Briefing on the European Hydrogen Bank.