Spain Gets European Commission Approval for $455MM Hydrogen Aid Scheme

The European Commission has granted state aid clearance for a EUR 400 million ($454.9 million) Spanish offer to renewable hydrogen production projects.

“The approved scheme will support construction of up to 345 megawatts of installed electrolyzer capacity, and the production of up to 221,000 tonnes of renewable hydrogen in Spain”, the Commission said in an online statement. “This is estimated to result in the avoidance of the equivalent of up to one million tonnes of CO2 [carbon dioxide].

“The scheme will help Spain achieve its national objective to install 12 gigawatts of electrolyzer capacity by 2030, as well as the targets for the share of renewable fuels of non-biological origin (RFNBOs) consumed in transport and in industry that are set in the [European Union’s] Renewable Energy Directive”.

The Spanish support package was part of the “auction as a service” mechanism under the second round of the European Hydrogen Bank, an EU Innovation Fund financing platform to scale up the renewable hydrogen value chain in the 27-nation bloc and partner countries. Auction as a service lets EU countries pick projects that participated in the auction but did not win EU funding. This mechanism allows member states to have a competitive selection of projects to fund using their internal budgets without holding their own auction.

On March 10 the Commission said it had approved Austria’s offer of EUR 400 million and Lithuania’s offer of EUR 36 million in the second-round auction as a service.

The second Hydrogen Bank auction was oversubscribed by over four times with about 6.3 gigawatts (GW) of project proposals asking for over EUR 4.8 billion ($5.23 billion). The second auction’s allotted budget was EUR 1.2 billion, excluding the offers from Austria, Lithuania and Spain.

“Over ten years, these projects would produce more than 7.3 million tonnes of renewable hydrogen”, the Commission said March 7. “On a yearly basis, this would cover 7 percent of the EU’s REPowerEU ambition for domestic renewable hydrogen production in 2030”.  

European Climate Commissioner Wopke Hoekstra said, “The amount of bids in this second auction under the European Hydrogen Bank again shows the attractiveness of the Innovation Fund as a tool for Europe’s industrial decarbonization and competitiveness”.

“As a key driver of our goal to achieve climate neutrality by 2050, hydrogen plays a crucial role in cutting emissions from hard-to-abate sectors”, Hoekstra added. “It will strengthen Europe’s industrial leadership in emerging clean technologies, ensuring long-term economic resilience and global competitiveness”.

Successful bidders receive a fixed premium per kilogram of renewable hydrogen produced for up to 10 years. The premium covers the gap between the cost of production and the price buyers are willing to pay for renewable hydrogen, according to the Commission.

The Commission said the European Climate, Infrastructure and Environment Executive Agency (CINEA) was evaluating the bids against the pass or fail qualification criteria. Passing bids will be ranked according to their bid price. CINEA plans to release evaluation results May 2025. Grant agreements are expected to be signed by November 2025.

Selected projects must reach financial close within 2.5 years and start production within five years of signing the grant agreement.

To contact the author, email jov.onsat@rigzone.com