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Renewable Hydrogen

Zabala Innovation supports two of the seven projects funded in the Innovation Fund – European Hydrogen Bank auction

European Hydrogen Bank Auction Results

Zabala Innovation has achieved notable success in the recent pilot auction for renewable hydrogen organised by the European Hydrogen Bank, under the European Commission’s Innovation Fund programme. These are our European Hydrogen Bank auction results: our consultancy supported two of the seven projects selected across Europe, securing a return of €314 million for its clients, which accounts for 44% of the total budget allocated in this call.

“The participation of Zabala Innovation in the auction highlights the importance of having an expert consultancy in the management and preparation of R&D&I projects,” said Juan Sanciñena, senior consultant in European Projects at the firm. “The success of the projects we supported underscores the added value we provide in terms of strategic, technical, and financial knowledge, and the overall coordination of proposal preparation,” he added.

The Hydrogen Auction is a pioneering initiative by the European Hydrogen Bank aimed at boosting the production of renewable hydrogen. In this first auction, the European Commission distributed approximately €720 million among seven prominent projects, selected through a rigorous process. The funds for this auction come from the European Union Emissions Trading Scheme, a mechanism that finances sustainable projects with the proceeds from the sale of CO2 emission allowances.

The European Commission plans to launch a second auction later this year, with nearly triple the budget, based on the lessons learned from the pilot auction and consultations with stakeholders to optimise the process. “We at Zabala Innovation are preparing for this,” assured Sanciñena.

Production of renewable hydrogen and emission reductions

The projects selected in the first Hydrogen Auction will receive grants to cover the gap between the production costs of renewable hydrogen and its market price, currently dominated by non-renewable producers. This financial support will enable the winners to produce renewable hydrogen for use in key industries such as steel, chemicals, maritime transport, and fertiliser production. Overall, the projects aim to produce 1.58 million tonnes of renewable hydrogen over 10 years, which translates to avoiding the emission of more than 10 million tonnes of CO2.

The auction attracted a total of 132 bids, of which only seven secured European funding. The winning projects come from Spain, Finland, Norway, and Portugal, with bid prices ranging from €0.37 to €0.48 per kilogram of renewable hydrogen produced. The grants awarded to these projects range from €8 million to €245 million per project, depending on their scale and ambition. Additionally, Germany decided to add a budget of €350 million in state aid, under the auctions-as-a-service mechanism, to subsidise the best projects to be implemented in Germany, once the European budget is exhausted and following the evaluation order established by the European Climate, Infrastructure, and Environment Executive Agency (CINEA).

European Hydrogen Bank auction results: selected projects

The selected projects are:

  • eNRG, coordinated by Nordic Ren-Gas Oy (Finland)
  • El Alamillo H2, by Benbros Energy SL. (Spain)
  • Grey2Green-II, by Petrogal S.A. (Portugal)
  • HYSENCIA, by Angus (Spain)
  • SKIGA, by Skiga (Norway)
  • Catalina, by Renato Ptx Holdco (Spain)
  • MP2X, by Madoquapo wer 2x (Portugal)

These projects have begun preparing their individual grant agreements with CINEA. The agreements are expected to be formalised before November 2024, after which the projects will have a maximum of five years to start producing renewable hydrogen.

The first auction by the European Hydrogen Bank not only marks a milestone in the financing of renewable hydrogen projects but also sets a precedent for future auctions.

“The transition to a clean energy economy is a global priority, and Europe is leading this effort through initiatives like the European Hydrogen Bank. Renewable hydrogen, considered a key energy vector, offers a viable solution for decarbonising industrial and transport sectors that are difficult to electrify directly,” explained Sanciñena.

The expert from Zabala Innovation is convinced that this auction and the achievements of the consultancy “demonstrate how collaboration between the public and private sectors can accelerate the development and implementation of sustainable technologies.” He concluded: “As the world faces growing climate challenges, these joint efforts will be essential to achieving emission reduction targets and promoting a cleaner and more sustainable future. The upcoming auction and ongoing projects will continue to be crucial on this path, laying the foundation for a robust and competitive renewable hydrogen market in Europe.”