According to a joint press release from the European Commission, Austria, Spain and Lithuania will receive new aid to increase financing for clean investments especially those dealing with the hydrogen renewable. The European Commission, Spain, Lithuania and Austria today announced that they will promote new financial support hydrogen renewable through the Innovation Fund.
These three Member States will participate in the ‘auctions as a service’ system as part of the European Bank of the European Union’s second auction Hydrogen, which will be launched on December 3. In addition to the €1.2 billion in EU funding from the Innovation Fund, the three Member States will allocate more than €700 million in national funds to support innovation projects. production of renewable hydrogen on its territory. The total financing mobilized by the auction of the hydrogen renewable “IF24” will therefore amount to approximately 2 billion euros.
Hydrogen: country by country
Spain will allocate between 280 and 400 million euros as a service to the auction system, using funds from its Recovery and Resilience Plan (PRR). The total aid available will depend on the amount of resources used in the current state aid regime for valleys and business groups in the hydrogen sector, which is also financed from PRR resources. The exact amount of support will be confirmed in spring 2025.
Lithuania will allocate approximately EUR 36 million as a service to the auction system from its Modernization Fund budget. The country’s participation in that system will help the country achieve its national target of 1.3 gigawatts of electrolysis capacity and 129 kilotons of annual renewable hydrogen production by 2030.
Austria is investing 400 million euros from its national budget for the auction system as a service. The producers of hydrogen will be able to obtain a maximum subsidy of 200 million euros per project from this auction, with a maximum production capacity of 300 megawatts.
Through these new financial commitments, Spain, Lithuania and Austria demonstrate their willingness to achieve national and EU economic objectives using clean energy and decarbonization of European industry. Mobilizing this additional financing within the framework of a single European auction platform is an efficient system that increases opportunities and reduces costs for the industry, as participating companies from these countries can bid on two different sources of financing.
The scheme will allow Member States to finance more projects on their territory, even after the Innovation Fund budget has been fully allocated. The Commission encourages other Member States to participate in the auction-as-a-service scheme in the future, in support of the objectives of the REPowerEU plan, the Green Deal Industrial Plan and those of renewable hydrogen production as set out in the Sources Directive renewable energy.
In the case of hydrogen renewable energy produced in the European Economic Area, the selected projects receive a fixed premium (payment according to supply) for production for a period of up to ten years, with the aim of making up the difference between the production costs of renewable hydrogen and the price the market is willing to pay. The exact amount of this premium will be the result of a tender procedure whereby projects, after being assessed against a set of qualifying criteria for success or failure, are classified according to the tender submitted.
How did we get here?
The Innovation Fund, which has an estimated budget of €40 billion from the EU Emissions Trading System between 2020 and 2030, aims to create financial incentives for companies and governments to invest in advanced low-carbon technologies and support Europe’s transition to climate neutrality. The Innovation Fund has already awarded around €7.2 billion to innovative projects following previous calls for proposals.
Auctions (also called public tenders) are a support mechanism from the Fund to initially stimulate faster and more cost-efficient support for the deployment of the hydrogen renewable. The European Bank of Hydrogen is an initiative to facilitate the production and import of renewable hydrogen within the EU. Its aim is to close the investment gap and get the economy back on track future supply of renewable hydrogen to consumers. This will contribute to the REPowerEU objectives and the transition to climate neutrality. The Innovation Fund auctions implement the national part of the European Hydrogen Bank.
On 23 November 2023, the Commission launched the first EU-wide auction under the Innovation Fund for support sustainable hydrogen production in line with the objectives of the plan REPowerEUthe Industrial Plan of the Green Pact and its objectives hydrogen of the Renewable Energy Sources Directive. The results of the IF23 auction can be found here and the extensive public consultation on the terms of the IF24 auction can be found here.
The auction system as a service of the Banco del Hydrogen allows Member States to finance more projects participating in the auction after the Innovation Fund budget has been fully allocated. Through this instrument, Member States can find and support competing projects on their territory that have not obtained EU funding without the need for an independent national auction process or other selection procedure.
Member States participate in this initiative on a voluntary basis. To be eligible for the auction system as a service, project developers must indicate their interest in using it when submitting an application to the Innovation Fund. Any assistance provided by Member States through this service will take state aid into account.
Member States must notify their aid to the Commission and benefit from a simplified state aid approval process, as auctions at EU level are designed in accordance with EU guidelines. state aid in the areas of climate, energy and environmental protection and energy. Germany was the first EU Member State to participate in the system, with a budget of €350 million last year, in connection with the first EU-wide auction of hydrogen renewable in the context of the Innovation Fund and the European Bank Hydrogen.
Austria has set itself the goal of achieving climate neutrality by 2040. A fundamental element to achieve this is the National Climate Strategy. Hydrogen Austria, which aims to increase the capacity of national electrolyzers to 1 GW by 2030. Added to the national law on aid for the production of hydrogen, This strategy strengthens the production and use of hydrogen, provides investment security for economic actors and contributes to strengthening the national hydrogen market.
These initiatives focus on sectors in which: direct electrification is not a viable option of decarbonisation due to technical and economic constraints, or where there is a need for it hydrogen as raw material.
In its updated National Integrated Energy and Climate Plan and in its National Energy Independence Strategy, the Lithuanian Government aims make renewable hydrogen an important energy vector in the near future. While adopting important measures to intensify the use of clean energy, Lithuania has already allocated EUR 50 million from the proceeds of the Modernization Fund to the production of hydrogen renewable from 2023.
Participation in auctions as a service will continue to contribute to the decarbonization of Lithuanian industry and provide a margin of flexibility for sustainable energy. The Spanish government plans to increase the capacity of its national electrolyzers to 12 gigawatts by 2030 and increase the use of renewable hydrogen in decarbonizing difficult sectors such as high-temperature processes in industry, its report indicated. updated National Integrated Energy and Climate Plan.
On the other hand, by integrating the recovery and resilience plan and the roadmap for the Hydrogen Renewable, Spain actively promotes national value chains, both European and international. hydrogen, through the instruments of financing and establishing the necessary regulatory framework.