Hydrogen bank – first auctions next month. 800 million euros in EU support

We are now at the threshold of major changes related to growing climate awareness. The European Commission is introducing a series of regulations and programs aimed at reducing carbon emissions and developing new technologies to move away from fossil fuels. One of the courses of action is the hydrogen bank. Next month, the first auction will take place, with €800 million in European funds.

Hydrogen bank – first auction

The hydrogen bank operates under an auction system. The pilot auction will take place on November 23, 2023. and will last until February. It will be allocated €800 million from the EU’s Innovation Fund. The campaign will award grants to the most innovative and competitive ideas for producing green hydrogen efficiently and as cheaply as possible. Distinguished producers will be rewarded with a subsidy in the form of a ten-year fixed premium per kilogram of product. This will make its production cheaper and allow it to be more widely distributed, revitalizing the hydrogen European market.

Projects involving new electrolyzers with a capacity of at least 5 MWe will be eligible for the auction. They must be put into operation within the next five years. The second condition is that they must be located in the European Economic Area. The assumed cost of producing a kilogram of hydrogen should not exceed 4.5 euros.

European hydrogen bank

The European hydrogen bank is a March 2023 EC initiative. The project’s budget is 3 billion euros, of which 800 million will be allocated for participation in the first auction, which will be held as early as November. The goal not only of this initiative, but of the entire hydrogen bank’s activities, is to support hydrogen producers in Europe and reduce the risks arising from the implementation of their projects.

By financially supporting innovation and bridging the price gap between renewable and fossil hydrogen production, they aim to strengthen and stabilize the European hydrogen market, as well as accelerate the development of already deployed technologies. They are also to support the import of green hydrogen. According to REPowerEU’s plan, the goal for the coming years is to produce 10 million tons of renewable hydrogen and import a similar amount. In addition, the hydrogen bank aims to create a hydrogen market in Europe that is strong compared to the world.

Hydrogen and its role in the European Green Deal

The European Green Deal is a set of initiatives presented in 2019. By the EC. They are to initiate and implement the transformation and modernization of the European economy to achieve climate neutrality by 2050. One of the programs included in the venture is the “Fit for 55” package, whose main task is to bring about a reduction in CO2 emissions by at least 55 percent. By 2030.

The EC’s priority is to develop cleaner energy sources. The main role is played by renewable green hydrogen extracted by electrolyzing water using energy from renewable sources. Currently, its production is not strongly widespread due to the cost of production, which is higher compared to fossil hydrogen. The hydrogen bank is designed to offset these prices.

The state of the hydrogen market in Poland and Europe

Since the launch of the European Green Deal program, 38 clean steel factories have been established on the Old Continent, with production based on hydrogen and zero carbon emissions. 17 billion euros have been allocated for the development of 80 hydrogen projects. The current capacity of electrolyzers is 67 GW. The number has significantly exceeded the 40 GW threshold, a target to be reached by 2030.

Work is underway to build hydrogen valleys, infrastructure that connects producers and consumers through corridors for its transportation (similar to gas pipelines). Increasingly, we are seeing hydrogen-powered trains and public transportation vehicles. Poland has a Hydrogen Cluster, 8 hydrogen valleys have been created, and gas production using energy from Baltic wind farms is planned. A storage facility for this fuel is also being built in Damaslawek. It is to become the center of the national hydrogen backbone.