EU's Inaugural Hydrogen Subsidy Auction: Key Takeaways
Key Ideas
- The winners of the EU's first hydrogen subsidy auction were announced, with winning bids ranging between €0.37 and €0.48 per kg.
- These bids were significantly lower than the €4 – €6 per kg cost gap between renewable and fossil hydrogen in Europe.
- Companies applied for fewer subsidies than required to bridge the cost gap, indicating confidence in the decreasing costs of renewable hydrogen.
- The auction results suggest a positive shift towards more affordable and sustainable hydrogen production in the EU.
In late April, the European Union concluded its first pilot auction to distribute subsidies for hydrogen production through the Hydrogen Bank. The winning bids, falling between €0.37 and €0.48 per kg, marked a substantial reduction compared to the €4 – €6 per kg price difference between renewable and fossil hydrogen in Europe known as the 'green premium.' The low bids indicate that companies did not require as many subsidies as anticipated to offset the green premium, signaling a growing confidence in the declining costs of producing renewable hydrogen. This trend reflects a positive development towards making hydrogen production more cost-effective and environmentally friendly in the EU.