The European Commission has published this week the draft terms and conditions of the 4th hydrogen auction.
According to the document, the European Hydrogen Bank will launch the auction by the end of this year, with a proposed budget of €500 million ($571.6 million). Around €350 million will be allocated to support the production of renewable fuels of non-biological origin (RFNBO) hydrogen, while the remaining €150 million will be devoted to the production of RFNBO hydrogen and/or electrolytic low-carbon hydrogen.
The scheme will use output-based support in the form of a fixed premium, with payments based on verified hydrogen production over a ten-year period. Projects will be ranked according to their bid price, with the subsidy calculated based on the requested premium, production volumes, and installed electrolyzer capacity.
As in the second and third auctions, eligibility requirements include compliance with renewable energy and low-carbon hydrogen regulations, as well as resilience criteria for electrolyzer supply chains. At least 75% of electrolyzers must originate from countries other than China, with restrictions applying to the origin of key components. Applicants must also demonstrate compliance with cybersecurity requirements, state aid and trade rules, and the EU “Do No Significant Harm” principle.
The latter consists of demonstrating that projects comply with the EU Taxonomy’s Do No Significant Harm (DNSH) Technical Screening Criteria for hydrogen production throughout the implementation period. Applicants must provide a self-declaration of compliance at the evaluation stage, supported by an explanation of how the project will meet the relevant environmental requirements, and submit a DNSH compliance report at the end of implementation.
The draft terms and conditions will now undergo stakeholder consultation before the final auction design is published.
The European Hydrogen Bank’s first auction launched in November 2023 with a ceiling price of €4.50/kg of renewable hydrogen produced. It attracted 132 bids for 8.5 GW of electrolyzer capacity, surpassing the available budget. The EC awarded nearly €720 million to seven projects across Finland, Norway, Portugal and Spain. They submitted bids between €0.37/kg and €0.48/kg and plan to produce 1.58 million tons of renewable hydrogen over 10 years.
The second auction was launched in December 2024. It then selected 15 renewable hydrogen production projects for public funding across the European Economic Area (EEA) and awarding €992 million in subsidies. The selected projects secured feed-in premium tariffs ranging from €0.20/kg to €1.88/kg – levels some observers judged as very low, raising doubts about the viability of the projects.
The third procurement exercise was finalized in May. It allocated €1.09 billion in support, selecting nine projects across seven countries. The auction was significantly oversubscribed with 58 bids from 11 countries. It awarded fixed hydrogen production premiums ranging from €0.44/kg to €3.49/kg.
