Why so many winning projects pulled out of the recent European Hydrogen Bank auction
Source：hydrogeninsight
Completion guarantee payments, weak demand and regulatory uncertainty contributed to the small number of awards at the recent European Hydrogen Bank (EHB) auction, according to analysis from trade body Hydrogen Europe.
Bringing the second EHB tender to a close earlier this month, the European Commission announced that six winners had signed grant agreements worth €270.6m ($317.8m) for projects totalling a capacity of 355MW.
More than half of the 15 second round winners dropped out before grant agreements could be signed, however, and Hydrogen Europe says this was down to several reasons, including the EU’s new requirement for completion guarantees.
These guarantees, worth 8% of the total grant request,issued by a bank or financial institution, amounts to a “de facto upfront payment and increased liability for the project developer,” Hydrogen Europe said.
Some of the initial second-round winners said they dropped out because they would be unable to pay this guarantee within two months of the announcement, as required.
Hydrogen Europe also noted the issue of uncertain demand for green hydrogen, “largely due to regulatory uncertainty and the incomplete and slow implementation of the REDIII regulation [by member states], as well as the negative news from the International Maritime Organisation at the end of 2025 (the bids were submitted several months earlier, with the aim of producing ammonia)”.
These uncertainties, “combined with the completion guarantee pressure has increased the risk perception, overcoming the possible financial benefit of the grant”, the association explained.
Winning grants at this recent auction have largely secured “fixed premium” subsidies of less than €1/kg, with none over €2/kg, meaning the financial benefit of grants is unlikely in many cases to make the production of green hydrogen commercially competitive with grey H2.
The trade body did find some successes in the recent auction, however, particularly in the maritime sector.
“Notably, two of the three maritime sector projects moved forward to sign their grant agreements, showing that the auction was successful in the maritime pot,” Hydrogen Europe said.
It attributed this success to “reduced competition” in the ring-fenced maritime sector pot, which allowed firms with higher-priced bids to succeed.
Hydrogen Europe also pointed to the success of the auction-as-service scheme, which allows member states to fund projects that were not given awards by the European Commission, but were the next-best bids in their respective countries.
“In this sense, four projects respectively in Spain and Austria have either signed their grant agreement or are invited to do so, demonstrating that initiatives bidding above the European auction’s price threshold can develop successfully,” Hydrogen Europe said.