EU's First Hydrogen Auction Winners Sign Grant Agreements Totalling €694mn

In a significant step toward advancing renewable hydrogen production in Europe, six projects selected under the EU’s Innovation Fund pilot hydrogen auction have signed their grant agreements. This marks the formal start of their journey to produce renewable hydrogen, a key component of Europe’s strategy to reduce carbon emissions across various sectors.

The projects, based in Spain, Portugal, Finland, and Norway, were awarded grants to help cover the difference between their production costs and the prices that industrial users are willing to pay. The funding comes from the European Hydrogen Bank (EHB), launched in 2023, and uses revenues from the EU Emissions Trading System to promote the production of renewable hydrogen, categorized as Renewable Fuel of Non-Biological Origin (RFNBO).

With this financial backing, the selected projects will play a crucial role in scaling up hydrogen production in Europe, serving industries like maritime, heavy-duty transport, agriculture, and the production of e-methane and e-methanol. These projects are expected to produce up to 1.52 million tonnes of renewable hydrogen within the first ten years of their operation, reducing more than 10 million tonnes of CO2 emissions in the process.

The Selected Projects:

The six projects receiving support are located in Spain, Portugal, Finland, and Norway:

• Hysencia (Spain): With a bid volume of 17 kilotonnes (kt) of hydrogen over 10 years and a capacity of 35 megawatts electric (MWe), Hysencia is expected to avoid 115 ktCO2 emissions and will receive EUR 8.1 million in funding.
• Catalina (Spain): One of the largest projects, Catalina will produce 480 kt of hydrogen over 10 years, with a capacity of 500 MWe. It will receive EUR 230.5 million in funding, and is expected to abate 3,284 ktCO2 emissions.
• Grey2Green II (Portugal): This project will generate 216 kt of hydrogen and has a capacity of 200 MWe. It is set to receive EUR 84.2 million and will reduce emissions by 1,477 ktCO2.
• MP2X (Portugal): Another large-scale project, MP2X will produce 511 kt of hydrogen with a 500 MWe capacity and receive EUR 245.2 million in grants, potentially cutting 3,494 ktCO2 emissions.
• eNRG Lahti (Finland): This project will deliver 122 kt of hydrogen with a 90 MWe capacity, earning EUR 45.2 million in funding, and reducing emissions by 836 ktCO2.
• Skiga (Norway): The Skiga project will produce 169 kt of hydrogen, with a capacity of 117 MWe, receiving EUR 81.3 million and abating 1,159 ktCO2.

In total, these projects will receive EUR 694.5 million in financial support, spread over ten years, with individual grants ranging from EUR 8 million to EUR 245 million. This funding will be disbursed based on the production of certified and verified renewable hydrogen.

Expanding Renewable Hydrogen Production

The auction process, organized under the European Commission's Innovation Fund, is seen as a cornerstone for scaling up Europe’s hydrogen economy. The Commission is already planning a second hydrogen auction by the end of 2024, with an increased budget of EUR 1.2 billion. The aim is to attract more projects and continue boosting Europe’s hydrogen production capacity.

From the signing of these grant agreements, the projects have up to five years to begin producing renewable hydrogen, ensuring that they meet the EU’s sustainability goals. The hydrogen produced will serve a broad range of sectors, including heavy-duty transport, maritime, agriculture, and fuel production for e-methane and e-methanol, crucial for decarbonizing industries that are difficult to electrify.