(Aug 27): The European Union is struggling to find takers for subsidies to jumpstart a green hydrogen market following a number of dropouts by potential recipients, potentially stalling the rollout of the clean energy source.
Projects from Germany to Spain have rejected funding awarded to them in recent EU auctions, often citing rigid timelines and conditions that don’t align with developers’ practical needs.
One of the latest withdrawals comes from French asset management group Meridiam SAS, which will no longer make use of the €159 million (RM781.12 million) awarded by the European Hydrogen Bank in May to build two electrolysers in Germany, according to people familiar with the matter.
With another German developer having pulled out of the funding earlier this month, that means none of the hydrogen projects in Europe’s largest economy are currently making use of these EU subsidies. The European Hydrogen Bank was meant to invest as much as €3 billion in what the EU considers a key technology to decarbonise some of the biggest emitting sectors and act as a crucial enabler to reaching the bloc’s climate goals.
A spokesperson for Meridiam did not comment on the EU funding but said the company was still moving ahead with the 368MW electrolyser project, known as Kaskade, which is “progressing well on technical aspects”.
Europe’s green hydrogen ambitions are faltering as projects struggle to secure buyers and funding. While some developers signal they’re proceeding without Brussels’ support, the uncertainty surrounding the early-stage projects leaves the bloc’s 2030 targets for the green fuel at risk as the gap between lofty plans and market reality widens.
The first round of auctions came under heavy criticism from countries in the centre and east of the 27-member bloc for favouring projects based in nations with abundant renewables, like those in Scandinavia and the Iberian Peninsula, which were better placed to bid more aggressively.
Yet even in Spain, a 500MW project known as Catalina waived its grant from a first EU auction round last year and is moving ahead with national funding. Earlier this month, Vattenfall AB also pulled out of subsidies for its Zeevonk green hydrogen project in the Netherlands because it wouldn’t have been able to meet the Hydrogen Bank’s timeline due to the delayed construction of a necessary pipeline, a spokesperson said.
In total, projects with about 1.6GW of capacity have withdrawn from the EU subsidy scheme, compared to about 3.8GW of auctioned capacity. A spokesperson for the European Commission declined to comment on individual projects and said grant agreement procedures are still ongoing.
