The upcoming European Hydrogen Bank auction, scheduled for December 3, will mobilize around 2 billion euros for renewable hydrogen projects.

This effort includes 1.2 billion euros from the European Union’s Innovation Fund and over 700 million euros in national contributions from countries like Spain, Austria, and Lithuania.

The Spanish government, in particular, will allocate between 280 and 400 million euros, making it a key player in the transition to cleaner energy sources.

According to Brais Armiño Franco, partner at AtlantHy success in this auction depends on developing mature and well-structured projects: “A good project is one that could be carried out even without subsidies, although they are essential for its profitability.”

This means that projects must align with European decarbonization goals and be supported by advanced engineering, permits in process, and preliminary agreements with consumers.

In an interview with Energía Estratégica España, Armiño mentioned that the most competitive projects meet three fundamental requirements:

1. A defined consumer: The key is identifying consumers committed to decarbonization, such as the chemical and maritime industries.
2. Access to critical resources: This includes connections to the electricity grid, water supply, and viable logistical solutions.
3. An attractive price: “The target price will be between 50 and 60 cents per kilogram of hydrogen,” he emphasizes.

He also warns that project maturity is a crucial criterion for attracting investments, as developers must act quickly and precisely to meet new requirements.

The maximum auction price has been reduced from €4.5/kg to €3.5/kg, which limits margins for projects, and the deadline for the selected projects has been shortened from five years to three, requiring more agile and effective processing.

For Armiño, the target price will hover around 50 to 60 cents per kilogram, mainly benefiting initiatives focused on the production of synthetic fuels and those targeting refineries and ammonia plants.

These not only meet European decarbonization objectives but also have defined consumers and solid business models.

Electrolyzers: Costs and Quality in Debate

The cost of electrolyzers, an essential component in renewable hydrogen production, has drastically decreased in recent years.

“What cost 1.5 million euros two years ago now costs around 500,000 euros,” explains Armiño. However, he clarifies that this reduction is evident in large-scale projects.

The entry of Chinese technology has revolutionized the market, offering electrolyzers between 100 and 300 euros per kilowatt, less than half the European price.

Although attractive for their low cost, the analyst and consultant expresses reservations about their quality: “I wouldn’t buy a Chinese electrolyzer today because they lack guarantees and proper services. In two years, they could be better, but for now, they’re unreliable.”

In contrast, he defends strengthening the European industry, suggesting that subsidies should focus on the development of local technologies and emphasizes: “Europe must support its industry, but not with protectionism. Local manufacturers need to be bold, invest, and focus on their competitiveness.”

Opportunities and Projections

The December 3 auction is just the beginning. The Innovation Fund, with an estimated budget of 40 billion euros between 2020 and 2030, will continue to drive renewable hydrogen projects. Additionally, increased revenues from the European Union’s Emissions Trading System (ETS) will ensure additional funds in the coming years.

Therefore, Armiño Franco believes that although the hydrogen “bubble has deflated this year” and projects, including H2MED, have been delayed by two to five years, the sector will continue to grow with a rebound in 2025.

With 12 gigawatts of electrolyzer capacity projected for 2030, Spain is positioning itself as a leader in renewable hydrogen in Europe. “We have the cheapest renewable energy, which puts us in a privileged position,” concludes the AtlantHy expert.