European Commission approves state aid scheme for green H2 production in Germany

The European Commission has recently approved under EU State aid rules a €350 million German scheme to support the production of renewable hydrogen through the European Hydrogen Bank's "Auctions-as-a-Service" tool. 

The scheme is in line with the objectives of the 'REPowerEU' and the 'European Green Deal Industrial Plan', further reducing imports of Russian fossil fuels and green energy transition, the commission has said.

It will support the construction of up to 90 MW of electrolysis capacity, and is expected to incentivize the production of up to 75,000 tonnes of renewable green hydrogen in Germany. 

The country claims that the scheme will help achieve its ambition to have at least 10 GW of domestic electrolysis capacity by 2030 and contribute to the EU target of a minimum of 42.5 percent renewable energy production by 2030, with the aim of reaching 45 percent.

Margrethe Vestager, Executive Vice-President in charge of competition policy at EC, commented, "This €350 million scheme is an important step in boosting renewable hydrogen development". 

"The scheme will support the most cost-effective projects in Germany, reducing costs for taxpayers and minimising possible distortions of competition. Germany is the first Member State to make use of this auction, which offers an accelerated solution for awarding public support in this important sector", she added. 

According to EV, the aid will be awarded through a competitive bidding process supervised by the European Climate, Infrastructure, and Environment Executive Agency (CINEA). The bidding, which closed on 8 February, is currently being assessed for projects in all Member States. 

The support provided under this German scheme is will be open to companies planning to construct new electrolyzers in Germany in the form of a direct grant per kilogram of green H2 produced for a maximum duration of ten years. 

It is to be noted that the beneficiaries will have to prove compliance with EU criteria for the production of renewable fuels of non-biological origin (RFNBOs). This includes contributing to the deployment or financing of the additional renewable electricity which is needed to produce the hydrogen supported under the scheme.