EU awards €720m to green H2 projects in first European Hydrogen Bank auction

In its first-ever subsidy auction called the European Hydrogen Bank (EHB), the European Union (EU) awarded a total of €720 million ($772 million) to seven green hydrogen projects. These projects aim to produce renewable hydrogen as an alternative to hydrogen made from fossil fuels. The prices offered by the winning bidders were remarkably low, with the lowest bid being just €0.37 per kilogram of hydrogen.

Among the winners, three projects are based in Spain, two in Portugal, and one each in Finland and Norway. The subsidy amount granted to each project ranges from €8 million to €245 million, depending on factors such as the capacity of electrolysis and the bid price per kilogram of hydrogen.

For instance, the Catalina project in Spain, with a capacity of 500MW, will receive €230 million for producing 480,000 tonnes of hydrogen over ten years at a price of €0.48 per kilogram. On the other hand, the El Alamillo project in Spain, with a capacity of 60MW, is set to receive €24 million for producing 65,000 tonnes of hydrogen at a price of €0.38 per kilogram.

These projects are of varying sizes, with the largest ones having an industrial scale of 500MW of electrolyser capacity and the smallest one at 35MW. In total, the winning projects are expected to produce 1.58 million tonnes of green hydrogen over ten years, catering to industries such as steel, fertilizer, chemicals, and maritime transport.

The goal of the EHB is to close the price gap between green hydrogen and hydrogen produced from fossil fuels. However, with bid prices ranging from €0.38 to €4.50 per kilogram, the EU acknowledges that it may not fully bridge this gap for all projects. Therefore, it plans to lower the bid ceiling to €3.50 per kilogram in the next auction.

Despite not awarding the full allocated amount of €800 million due to budget constraints, the EHB aims to support the scale-up of cleaner fuels, contributing to the decarbonization of European industries.