How hydrogen support auctions work: the guarantee comes before the money

Price decides the ranking; the money depends on what the project can show afterwards: first a bank’s guarantee, then certified output. On 20 May 2025 the European Commission invited 15 projects from the European Hydrogen Bank’s second auction, IF24 (the Innovation Fund 2024 Hydrogen Auction), to prepare grant agreements; between them they had requested EUR 992 million. Each invited project had two months to produce a signed completion guarantee, which takes effect when the grant agreement is signed. The Commission records that several of the 15, in light of that requirement, reassessed their bids and their projects’ maturity and decided not to sign. Ten more projects were then invited from the reserve list, in order of their bid price. On 20 January 2026, six projects signed grant agreements for EUR 270.6 million; the Commission’s results table lists the other 19 invited projects as withdrawn.^{1, 2, 8}

When the first results came out, the 12 projects selected in the general topic had bid from EUR 0.20 to EUR 0.60 per kg; the four general-topic projects that signed had bid EUR 0.33, EUR 0.44, EUR 0.84 and EUR 0.85. Two of those four, then, came from the reserve list, at prices above anything first invited in that topic. For a bid ranked outside the budget, the reserve list was a real route to a signed grant agreement.¹ The Commission’s questions and answers on the auction say that, as projects dropped out, the auction’s reference clearing price was being increased from the results first communicated in May 2025. The Commission’s later draft terms for the fourth auction give the second auction’s clearing price as EUR 0.85 per kg in the general topic, the highest of the four signed general-topic bids, and EUR 1.88 per kg in the maritime topic. The second auction was pay-as-bid, so each project that signed is paid its own bid, not a common price.^{1, 3, 4, 6}

Applicants may be established in any country, but their projects must be in an EU member state or an EEA country. IF25, the third auction, also required at least 75% of a project’s electrolysers, measured by capacity, to originate outside China; for those electrolysers, the stacks had to come from outside China and no more than two main specific components from China.⁵

In IF25, proposals were ranked by bid price from the lowest; only the proposals whose grant fitted the topic budget (with any national funding) and those needed for a reserve list went on to a pass-or-fail check of relevance and quality, and the rest were rejected. Each winner is paid its own bid, within a ceiling: the second auction was pay-as-bid with a ceiling of EUR 4 per kg, and in the third each payment is the bid price times certified output, with a ceiling of EUR 4.00 per kg in every topic.^{1, 5, 6, 8}

The second and third auctions award a fixed premium per kilogram of certified hydrogen produced, for at most 10 years. The third supported renewable hydrogen and, for the first time, electrolytic low-carbon hydrogen. Renewable has a legal meaning here: under the EU renewable energy directive, renewable fuels of non-biological origin (RFNBOs) are liquid and gaseous fuels whose energy comes from renewable sources other than biomass, and they count only with greenhouse gas emission savings of at least 70%.^{1, 8, 9}

The bid also fixes the most a project can receive: in IF25 the grant requested was the bid price times the expected average yearly volume times 10 years, and the grant awarded could be lower. The terms of the first two auctions state that the support is not indexed. So the premium a bidder names cannot rise with costs, through up to five years before operation and up to 10 years of production; the bid has to allow for them from the start.^{5, 6, 7} Australia’s Hydrogen Headstart Round 2 shaped its support similarly, as a credit per kilogram of hydrogen, or per unit of derivative, named by the applicant, paid for up to 10 years and not increased for inflation (see our field note on that round).¹⁰

In IF25, an invitation to prepare a grant agreement was expressly not a formal commitment for funding: checks on the legal entity, its financial capacity and exclusion still had to be made before the grant was awarded. The step with a cost attached is the completion guarantee. In IF25 it was 8% of the requested maximum grant, in euro, issued by an approved bank or financial institution in the EU or EEA with a minimum credit rating; cash blocked in an account was not accepted, and the consortium paid for it. A letter of intent to issue it went in with the proposal, and the guarantee itself was due within two months of the invitation; without it, the application could be treated as withdrawn. The first two auctions’ terms also required that letter with the proposal.^{5, 6, 7} It runs until six months after the five-year deadline for entering operation, and it is called if the plant misses that deadline, enters operation without its planned capacity, or loses its grant before then, for example by missing financial close within 2.5 years of signing.⁵

In the first auction, IF23, the guarantee was 4% of the maximum grant and could be called if the project did not reach approved entry into operation within five years of signing. The second auction’s terms raised it from 4% to 8% and added a deadline of 2.5 years from signature to financial close, so that missing either deadline made the guarantee callable.^{6, 7} In the first auction, six of the seven projects selected signed grant agreements; the seventh chose not to continue, to avoid missing its entry-into-operation deadline.^{7, 11, 12, 13}

The Commission describes the guarantee as a maturity check. Its questions and answers on IF24 say that after selection projects may reassess their bid and maturity, given market conditions, changes to planned off-takers or the availability of infrastructure; some then cannot provide the guarantee in time, and some that could provide it still decide not to sign, because it takes effect only on signature. For a bidder, the two months after an invitation are where the bid is really tested: the price has already been ranked, and what remains is whether the project passes the legal checks, is mature enough for a bank to guarantee its deadlines, and still wants to sign once that guarantee takes effect.³

In IF25, signature starts two clocks: 2.5 years to reach financial close and 5 years to enter operation with a nameplate capacity equal to the bid. There is no pre-financing, and the first payment follows the first six months of operation. After that, payments come every six months, each the bid price times the verified and certified kilograms produced in the period, up to 140% of half the expected yearly volume. If certified output averages below 30% of the expected yearly volume for three consecutive years, measured over a rolling three-year period, the grant may be terminated and reduced.⁵

The premium therefore pays for hydrogen produced and certified, not for capacity built: a plant that runs below its bid volume is paid only for what it certifies, and a long shortfall can cost it the grant. Because the grant is sized on 10 years of expected output, a guarantee of 8% of it equals, by our calculation, 0.8 of one year’s expected payments, posted before the plant has produced anything.⁵

IF25 offered EUR 1.3 billion in three topics: RFNBO hydrogen, EUR 600 million; RFNBO or electrolytic low-carbon hydrogen, EUR 400 million; and hydrogen for maritime or aviation off-takers, EUR 300 million. It received 58 bids, one of them inadmissible because the project was outside the EEA, and on 7 May 2026 the Commission selected nine projects in seven countries, almost 1.1 GW, for around EUR 1.09 billion. In June 2026 it invited four more from the reserve list, for EUR 147.73 million and 77 MW, bringing the total to 13 and covering more than 95% of the budget.^{5, 8, 14}

Member states can add money of their own through auctions-as-a-service: national budgets support projects on their territory that applied to the EU auction, and reserve-list projects within those budgets, taken in the overall ranking order, may be passed to national authorities to prepare their grant agreements. The Commission’s release on the results said that, for IF25, Germany would support RFNBO projects with up to EUR 1.3 billion and Spain would contribute up to EUR 440 million. A project in a participating member state that ranks below the EU budget can therefore still be passed to its national authorities to prepare a grant agreement, in ranking order and within the national budget.¹⁴

As of 22 October 2026, the Commission’s IF25 page, last updated on 19 June 2026, listed all 13 projects as invited to grant agreement preparation, with signature expected from September to November 2026.⁸ Its European Hydrogen Bank page said, as of 22 October 2026, that the grant agreements are expected to be signed with the European Climate, Infrastructure and Environment Executive Agency (CINEA) in the last quarter of 2026. Until those agreements are signed, the IF25 results are a ranking with invitations attached, not a funding total.¹⁵

As of 22 October 2026, the Commission’s IF26 page said the fourth European Hydrogen Bank auction is planned to open in December 2026 and close in February 2027, with a planned budget of EUR 500 million in two topics, RFNBO hydrogen and RFNBO or electrolytic low-carbon hydrogen. Its draft terms and conditions of 9 July 2026 propose keeping the third auction’s main obligations: payment only on verified and certified production, for at most 10 years and without indexation; 2.5 years to financial close and 5 years to entry into operation; and a ceiling of EUR 4 per kg. They also propose the same completion guarantee, 8% of the maximum grant, with the guarantee itself due within two months of an invitation. They are a draft: only the call documents will bind the Commission, and the final terms are to be published when the call opens. As in every auction so far, the draft puts the bank in the bid itself: a letter of intent from a bank or financial institution to issue the guarantee goes in with the proposal, before any price is ranked.^{4, 16}

Source: the European Commission’s auction pages, terms, call document and press releases, cited below.^{1, 2, 5, 6, 7, 8, 11, 12, 13, 14}

Each auction’s page on the European Commission’s climate action website carries its terms, timeline and results, and the call documents sit on the EU’s funding and tenders portal.

ListingMinds, “How hydrogen support auctions work: the guarantee comes before the money”, 3 October 2026, updated 22 October 2026. https://www.listingminds.com/energy/guides/hydrogen