With up to €1.1 billion available, the new round will support renewable and low-carbon hydrogen projects, including a maritime-specific segment and incentives to avoid dependency on Chinese electrolyzers.
The third auction of the European Hydrogen Bank under the Innovation Fund represents a strategic step in the EU’s push for decarbonization of hard-to-abate sectors, reinforcing energy security and industrial competitiveness. The €1.1 billion budget will be distributed among three thematic areas: €400 million for renewable and low-carbon hydrogen, €400 million exclusively for renewable hydrogen (RFNBO), and €200 million for maritime-related hydrogen use. The latter topic may be increased by up to €100 million through voluntary contributions by EEA countries under the Auction-as-a-Service model.
The European Commission affirms that this funding mechanism will offer fixed premium payments for up to ten years, based on verified and certified hydrogen production. Projects will compete through a price-only ranking system, submitting their bid price in euros per kilogram of hydrogen, with a maximum ceiling of €4/kg.
The auction aims to support the production of renewable fuels of non-biological origin (RFNBO) and electrolytic low-carbon hydrogen that complies with the 70% GHG savings threshold defined under EU climate law. All supported hydrogen must be produced by new capacity, with works not having started before the application date, ensuring the subsidy creates a real incentive.
According to the Commission, auctions serve as an efficient funding allocation tool, enable price discovery, attract private capital, and reduce administrative burden for developers. The pilot and second auctions held between 2023 and 2025 awarded support to 21 projects across Europe. The second round reached a clearing price of €0.60/kg for general use and €1.88/kg for maritime applications, reflecting market maturity differences. The upcoming third auction builds on lessons from these rounds, maintaining pay-as-bid rules and the one-stage, static auction format.
A notable element of the IF25 auction is the Auction-as-a-Service scheme. This allows EEA Member States to piggyback their national subsidies onto the EU auction process, reducing fragmentation and ensuring alignment with State aid regulations. Countries like Germany, Spain, Austria, and Lithuania have already used this mechanism, contributing over €1.18 billion cumulatively in previous rounds.
To prevent over-subsidization, the Commission will apply mechanisms such as budget constraints, competition thresholds, and production ceilings. Each bid must declare an expected average yearly hydrogen production, which will be used to calculate the maximum grant amount, capped at €200 million per project.
Projects must also demonstrate technical and financial readiness. They are required to submit a completion guarantee worth 8% of the maximum grant. Furthermore, they must comply with strict cybersecurity protocols, ensuring operational control and data remain within the EEA.
An additional requirement reflects Europe’s push for industrial sovereignty: at least 75% of the electrolyzers used in each project must originate outside the People’s Republic of China. Electrolyzer stacks must also meet this requirement, with no more than two additional components coming from China. The planned origin of components will be publicly disclosed for winning projects.
Environmental criteria are equally central. Projects must comply with the Do No Significant Harm (DNSH) principle and demonstrate this during evaluation, financial close, and final reporting. Additionally, all hydrogen produced must achieve minimum 70% GHG savings, certified by third-party audits at the end of the support period.
The grant will be disbursed semi-annually over a maximum of ten years, but may end earlier if the planned hydrogen volume is reached. Overperformance is allowed up to 140% per half-year, but total support cannot exceed the bid’s maximum grant. Underperformance below 30% for three consecutive years may lead to penalties or termination.
The European Commission highlights that this auction framework is aligned with broader goals set out in the REPowerEU Plan and Clean Industrial Deal, recognizing hydrogen as a pillar for Europe’s climate neutrality and industrial competitiveness.
The final terms and conditions will be published at the opening of the call in Q4 2025, after stakeholder feedback on the current draft. The Commission emphasizes that no project already funded by previous Innovation Fund calls will be eligible to participate in this round.
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