Germany secures EU approval for €1.3bn hydrogen subsidy auction

The European Commission has authorised Germany to allocate €1.3bn ($1.5bn) in subsidies to green hydrogen projects via the European Hydrogen Bank’s (EHB) Auctions as a Service (AaaS) platform.

Confirmed under EU State aid rules, subsidies will be delivered as grants per kilogram of hydrogen across a ten-year period for projects which missed out on the EHB’s earlier this month.

Eligible projects must be located in Denmark, delivering to German buyers using the Danish Hydrogen Backbone, a recognised EU Project of Common Interest.

Originally announced during the EHB third round, the commission says the auction – overseen by the European Climate, Infrastructure, and Environment Executive Agency (CINEA) – could support up to 1GW of German green hydrogen production while supporting the cross-border infrastructure project with Denmark.

The announcement comes shortly after a Spanish – which used the AaaS mechanism and centred projects missing out on EHB funding – allocated €440m ($509m) across three projects with a combined capacity of 250MW.

Recently, Danish transmission system operator Energinet to deliver the Danish pipeline’s first phase after it was pushed back in 2024 due to project maturity concerns.

Germany continues to bolster its hydrogen production capacity and transportation infrastructure despite a recent warning from think tank, the Institute for Energy Economics and Financial Analysis, that the country’s approach to hydrogen risks a €45bn gap in public finances if demand does not materialise.

The country recently  additional hydrogen transport mandates aimed at incentivising production of green hydrogen and penalising non-compliance, which proponents say could drive significant demand by 2040.