The European Commission will launch a new Hydrogen Mechanism round to test market demand for hydrogen pipelines and storage, in a bid to reduce investment risk for infrastructure developers.
It follows the results of the Commission’s first Hydrogen Mechanism round, which closed with 87% of hydrogen producers receiving at least one expression of interest from a potential offtaker.
The new round will now aim to help transmission and hydrogen system operators assess market interest for pipelines and storage from gas producers and users.
Organisations will be able to express non-binding interest until 7 September.
Through the round, the Commission will collect data from interested parties and share it with infrastructure developers. Like the production and use round, it will be up to participants to progress arrangements outside of the scheme.
The Commission said the Mechanism addresses uncertainty around hydrogen supply and demand, limited infrastructure and funding challenges.
However, it has been met with a degree of scepticism. Trade body Hydrogen Europe called the producer-user round just a “small part” of the market building process, warning its impact would be limited without targeted offtake support.
Infrastructure players have argued that financing hydrogen transportation and storage faces major challenges due to the limited view on near-term demand required to justify investments.
“We need to make some investments today that are relevant for future needs. If we wait 10 years and then see that now supply and demand is rapidly growing, and then decide…to build the infrastructure, it’s a bit late,” Tobias Bühnen, Policy Manager at trade Body Gas Infrastructure Europe, previously said.
“What we as infrastructure operators currently observe as the highest bottleneck obstacle is the financing and de-risking question.”
