(Montel) Subsidies allocated in the EU’s auctions for green hydrogen production were “useless” as they failed to cover the cost gap versus fossil fuel-based (grey) hydrogen, a Spanish project developer said on Friday.
“Nobody is going to financially close a project thanks to EUR 0.38-0.40/kg” of subsidies, Luis Torres, senior director of regulatory and government affairs at developer Phynix, told Montel on the sidelines of an industry conference in Madrid.
The cost of producing green hydrogen currently stood at EUR 4.5/kg, compared to EUR 1.5/kg for grey hydrogen, he added.
In April, the European Commission’s European Hydrogen Bank awarded subsidies of EUR 0.37-0.48/kg to seven green hydrogen projects, as the EC aimed to reduce the gap between the production costs of green and grey hydrogen.
Three Spanish projects were successful in the first auction.
Such subsidy levels are unlikely to spur final investment decisions for new green hydrogen plants, Torres said.
CFDs
Additionally, Spain should introduce contracts for difference (CFDs) to spur green hydrogen demand, Irene Lores, director of hydrogen business development for Spain at BP, said during the same event.
“CFDs would be great,” agreed Torres, who also urged the deployment of feed-in tariffs for hydrogen plants.
