Hydrogen Bank

How It Works

At the heart of the hydrogen bank are auctions in which companies compete for subsidies. The mechanism is based on contracts for difference.

The European Hydrogen Bank relies on a competitive auction system: Interested producers submit their price bids at which they can supply green hydrogen. Once the auction period ends, all bids received are reviewed and sorted by price. Starting with the lowest bid, projects are then awarded funding contracts—until the available budget is exhausted.

These contracts guarantee producers a fixed purchase price. If the actual market price later falls below this agreed-upon price, the EU makes up the difference. If, on the other hand, the market price rises and exceeds the guaranteed price, the additional revenue goes back to the EU.

Requirements

In order to be eligible to apply for funding, projects must meet various criteria.

The price of hydrogen must not exceed a certain maximum. In the first round of the auction, this maximum was 4.50 euros per kilogram.

Operators receiving funding must commit to bringing their facilities online within five years of signing the 10-year financing agreement. In addition, they must then be able to demonstrate 100 percent of the capacity specified in the original bid.

The amount disbursed by the hydrogen bank may not exceed one-third of the total budget.

The newly installed capacity must be at least 5 MW per site.

Timeline

Results of the first auction round (© European Commission)

In September 2022, European Commission President Ursula von der Leyen announced the development of the hydrogen bank.

A month later, Energy Commissioner Frans Timmermans provided more details on the plans and cited a budget of 800 million euros.

On August 29, 2023 , the European Commission published the terms and conditions for the first auction.

The pilot auction began on November 23, 2023. Interested producers had until February 8, 2024, to apply for funding through the EU Funding and Tender Portal.

The first auction closed at the end of February 2024, after 132 bids had been received from 17 EU member states. The EU reported that the amount of support requested “far exceeded” the available budget.

On April 30, 2024, the European Commission announced the results of the first auction: Seven projects with a total capacity of 1.5 GW were awarded contracts. In total, the EU plans to distribute 720 million euros to the winning projects. The winning bids ranged from 0.37 to 0.48 euros per kilogram.

The second round of auctions began on December 3, 2024 . The terms and conditions were slightly modified for this round based on the experience gained from the first round .

The results of the second round of auctions were published in May 2025.

In the summer of 2025, the EU announced its intention to open the third round of auctions to low-carbon hydrogen as well—such as blue hydrogen. The planned start date is late 2025.

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