Germany is becoming the first Member State to participate in the EU's new “Auctions-as-a-Service” scheme under the European Hydrogen Bank. The Federal Government will make an additional €350 million available for electrolyser projects in Germany, in addition to the €800 million already foreseen for European projects from the EU Innovation Fund. This additional financial weight will help to attract and fund more renewable hydrogen projects. The European Commission invites other Member States to also take advantage of this service for future auctions.

Robert Habeck, Federal Minister for Economic Affairs and Climate Action : “Renewable hydrogen will play a key role in the process of global decarbonisation. We welcome the way the Commission is moving swiftly to support the market ramp-up for renewable hydrogen in the EU. Germany’s participation in this auction will help us deliver on our National Hydrogen Strategy and provide an additional incentive for projects in Germany. For policymakers and market participants in Germany and beyond, this auction represents a big step, increasing the availability of renewable hydrogen and supporting the nascent value chain for renewable hydrogen.”

Maros Šefčovič, European Commission Executive Vice-President for European Green Deal, Interinstitutional Relations and Foresight: “We will only achieve the transition to a climate-neutral EU and a decarbonised energy system if we join forces. I am very pleased to see Germany become the first Member State to use the Innovation Fund’s hydrogen pilot auction to support renewable hydrogen projects nationally. Germany is a front-runner, and I can only invite others to follow this example.”

Wopke Hoekstra, European Commissioner for Climate Action: “European industry is leading in renewable hydrogen development and has an impressive pipeline of projects ready to participate in the auction. The pilot auction under the Innovation Fund will help incentivise the necessary final investment decisions, which can bring these projects to fruition and the European renewable hydrogen market to scale. It’s great to have Germany on board for the first auction, and I invite more Member States to follow their lead.”

On 23 November 2023, the European Commission opened the first EU-wide auction under the Innovation Fund to support renewable hydrogen production. For renewable hydrogen produced in the EU, the Bank will cover the difference between the cost of producing renewable hydrogen and the price the market is willing to pay. The exact amount of this premium will result from a competitive bidding process. Renewable hydrogen producers who require the lowest amount of support in terms of euros per kilo of hydrogen produced will win the auction.

The “Auctions-as-a-Service” scheme within the Hydrogen Bank enables Member States to finance additional projects participating in the auction after the Innovation Fund's budget has been allocated. With this instrument, Member States can identify and support competitive projects on their territory that have not secured EU funding without the need for a separate national auction process. Member States participate on a voluntary basis. Project developers must also express their interest in using the “Auctions-as-a-Service” in their bid to be eligible for selection under this scheme. Any support offered by Member States through this service will be considered as State aid. Member States must notify their participation in the scheme to the Commission but will benefit from a streamlined State aid approval process, as the auctions are designed at EU level in line with the Guidelines on State aid for climate, environmental protection and energy.

Background

With an estimated revenue of €40 billion from the EU Emissions Trading System between 2020 and 2030, the Innovation Fund aims to create financial incentives for companies and public authorities to invest in cutting-edge low-carbon technologies and support Europe's transition to climate neutrality. The Innovation Fund has already awarded about €6.5 billion for innovative projects through its previous calls for proposals. Competitive auctions (in which funding is awarded to the projects that require the lowest amount of support in terms of euros per kilo of renewable hydrogen produced) are a new support mechanism under the Innovation Fund to stimulate fast and cost-efficient support for the roll-out of renewable hydrogen. The European Commission is also looking into the possibility to roll out auctioning to other low-carbon technologies in the future. The pilot auction is accessible on the European Commission’s Funding and Tenders portal.

The European Hydrogen Bank is an initiative to facilitate the EU's domestic production and imports of renewable hydrogen. It aims to close the investment gap and connect the future renewable hydrogen supply to consumers to meet the intended objective of 20 million tonnes of hydrogen in the EU energy mix by 2030. This will contribute to the REPowerEU objectives and the transition to climate neutrality. The Innovation Fund hydrogen auctions implement the EU’s domestic part of the European Hydrogen Bank.

In its National Hydrogen Strategy, the Federal Government aims to increase domestic electrolyser capacity to at least 10 GW in 2030 and to make hydrogen more available for use in the decarbonisation of industry, energy and the transport sector. Germany is actively supporting the development of national, European and international value chains for hydrogen by adopting the necessary regulatory framework and funding instruments to bridge the financing gap where necessary. The support that Germany provides under the Innovation Fund’s pilot auction is subject to State aid approval by the European Commission and complements existing funding instruments for hydrogen. The funding supports hydrogen producers who sell to consumers, in particular in industry, who do not fall under other instruments, such as binding quotas for hydrogen use.

Further information
Competitive Bidding (Auctions) website of the EU Innovation Fund
Auctions-as-a-Service concept note
Auction Terms and Conditions
EU Funding and Tenders Portal
Link https://bmwk.de/Redaktion/DE/Downloads/H/h2-pilotausschreibung-eu-innovationsfonds.html (PDF, 186 KB)