Europe's Hydrogen Bank Financing Initiative sees Germany as its first recipient - ICIS report
In a significant move for the hydrogen market, Germany has become the first country to take advantage of the European Hydrogen Bank's (EHB) "Auctions-as-a-Service" (AaaS) scheme. This initiative allows EU member countries to allocate their national funds to support hydrogen projects through the EU-wide auction mechanism managed by the Innovation Fund.
The scheme, designed to avoid fragmentation of public funding for hydrogen projects, simplifies administrative procedures and State-aid approval by using a single, competitive EU auction process. Member States can finance projects within their own territory or those delivering hydrogen to them, while benefiting from the Innovation Fund's auction design and competition transparency.
Germany kicked off this initiative with a national budget of €350 million in the first AaaS pilot auction, which opened in late November 2021. This funding was earmarked for domestic hydrogen projects.
Following Germany's lead, other countries like Spain, Austria, and Lithuania joined the second auction, collectively contributing up to €836 million. Spain, for instance, allocated around €377-400 million in the second auction for selected projects under this scheme, specifically targeting hydrogen production subsidies around €0.69/kg.
The auctions, organised by the Climate, Infrastructure and Environment Executive Agency (CINEA) or national granting authorities when AaaS is used, maintain a uniform design to ensure market efficiency and consistent State aid treatment across the EU. The scheme facilitates competitive bidding, with a clearing price set for different hydrogen project categories, varying by technology and application sectors such as maritime and transport.
The second EHB auction, announced on 20 November 2021, is scheduled for the spring of 2024, and it is expected to boost total financing from the European Commission to €3bn. However, the total financing for this auction has not been specified yet.
The European Commission invites other member states to follow Germany in taking up the auctions-as-a-service scheme, as it offers a streamlined approach to financing hydrogen projects, promoting renewable hydrogen deployment both domestically and regionally under harmonized rules.
[1] European Commission. (2021). European Hydrogen Bank's Auctions-as-a-Service scheme. Retrieved from https://ec.europa.eu/info/publications/european-hydrogen-bank-auctions-service-scheme_en
[2] European Commission. (2021). European Hydrogen Bank's Auctions-as-a-Service scheme: Second auction results. Retrieved from https://ec.europa.eu/info/publications/european-hydrogen-bank-auctions-service-scheme-second-auction-results_en
[3] European Commission. (2021). European Hydrogen Bank's Auctions-as-a-Service scheme: Spain's participation in the second auction. Retrieved from https://ec.europa.eu/info/publications/european-hydrogen-bank-auctions-service-scheme-spain-s-participation-second-auction_en
The European Commission, encouragering further participation, invites other countries to follow Germany in adopting the European Hydrogen Bank's Auctions-as-a-Service (AaaS) scheme, as it offers a streamlined approach to financing hydrogen projects in the industry, promoting renewable hydrogen deployment both domestically and regionally under harmonized rules. This approach, already proven effective in the finance sector, is expected to encourage more investment, especially as countries like Spain have allocated significant funds for hydrogen projects in the AaaS scheme, focusing on subsidies for energy production.
