European Commission (EC) president, Ursula von der Leyen, announced plans for the European Hydrogen Bank (EHB) in September 2022. The bank will invest up to €3 billion using resources from the Innovation Fund.
At a seminar last month organised by the Renewable Hydrogen Coalition, Johanna Schiele, policy officer at the EC’s DG CLIMA, said the EHB is not a new financial institution, but a project “to scale up the market from niche to scale by bringing together demand and supply”.
The first auction will be in the third quarter of 2023, according to Schiele. The auction will offer a fixed premium like the contracts for difference (CfD) model used in the renewable energy sector. Hydrogen producers will enter the auction on the supply side, while project developers will bid in €/t of hydrogen for a fixed premium over ten years.
The EHB also aims to bridge the cost gap between the higher cost of green hydrogen and the lower cost of grey hydrogen. The EU already consumes about 10Mt/y of grey hydrogen, which is produced from natural gas. The assumption is that green hydrogen will displace this or will have new applications in decarbonising sectors such as steel.
The EHB proposal aims to “open up investment in the entire value chain and leverage investment into the projects”, on the understanding that it is impossible to subsidise entire sectors. Its goal is to drive down the cost of the technology in the same way as wind and solar energy.
Rasmus Matthiessen, manager of regulatory affairs at Danish developer Ørsted, agreed that covering the cost-gap was the most important aim. “We want to get going, as a commercial company we are already investing,” he said. With the right design, he added, the EHB could be a key enabler – “the last piece in the puzzle” to enable companies to make final investment decisions on some large-scale green hydrogen facilities.
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