Spain has strengthened its claim to be the EU’s leading green hydrogen production hub after securing just over half of the project awards in the second European Hydrogen Bank (EHB) auction of subsidies.

Eight of the 15 projects selected to receive subsidies are in Spain, highlighting the cost advantages offered by renewable power in southern Europe. The winning Spanish projects total just under 900MW of electrolyser capacity. The second auction results mean Spain accounts for half of the 22 winning projects across the first two auctions held by the EHB, which is funded via the EU emissions trading system.

In April, the European Commission approved a separate €400m ($455m) Spanish state aid programme to support renewable hydrogen production through the EHB’s ‘Auctions-as-a-Service’ tool. That scheme will fund the construction of up to 345MW of electrolyser capacity. Spain has set a target of installing 12GW electrolyser of capacity by 2030.

€0.20–0.60/kg – Subsidy range

In addition to the Spanish projects, the EHB’s second round winners included three projects in Norway, two in Germany, one in Finland and one in the Netherlands.

Despite Spain’s strong showing by number of projects, the largest individual projects by capacity were in Germany and the Netherlands: the 367.5MW Kaskade in Germany and the 560MW Zeevonk electrolyser in the Netherlands.

“The winning projects in Germany and the Netherlands, being the largest, are a positive market signal, demonstrating that economies of scale and being close to industrial demand favours project development,” said Daniel Fraile, chief policy & market officer at industry association Hydrogen Europe

A total of €992m of subsidies was awarded via the second round auction, with winning projects spanning five countries, with an expected total production of about 2.2mt over ten years. Subsidy agreements are expected to be signed by September/October 2025. Projects are required to reach financial close within a maximum of two-and-a-half years after signature  and to start producing renewable hydrogen within a period of five years.

Bridging the price gap?

The winning bidders in the second auction have secured subsidies with bids for fixed premiums ranging from €0.20–0.60/kg produced, an average of €0.40/kg, for up to ten years. The first auction, in May 2024, cleared at an average of €0.425/kg. The level of bids was lower than expected and looks well short of the level needed to bridge the gap between production costs and the price offtakers are willing to pay—even for Spain’s low-cost projects. The low bids partly reflect the intense competition for any level of subsidy. The second auction was four times oversubscribed, with 61 bids from projects in 11 countries in the European Economic Area.

The second auction provided a dedicated budget for hydrogen producers with offtakers in the maritime sector, a category that was dominated by Norwegian projects. Winning bids were higher than those in the general category, ranging from €0.45–1.88/kg, possibly reflecting greater visibility around the level of green premium maritime sector offtakers are realistically willing to pay.

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Author: Stuart Penson