This week, 6 projects selected in the second auction of the European Hydrogen Bank (EHB) have signed their grant agreements.

Out of the initial list, where 18 projects were invited to sign grant agreements following the first round of exits, these are the only to complete the process. The initial group included three projects within the maritime sector and fifteen in the general basket. 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.  

In the general basket, four projects successfully signed agreements, two from the original announcement and two among newly added projects.  

Altogether, these signed agreements will result in the construction of 380 MW of electrolysis capacity, supported by a total grant allocation of €270 million. 

The reasons behind this deserve further analysis:  looking at the final numbers and comparing subscriptions to results, the outcome is that in the first auction, six projects from a field of 132 bids signed grant agreements, while in the second auction, six projects completed agreements out of 61 bids. Hence, the success rate has objectively risen. However, it is true that the allocated funding has decreased, with quite a substantial amount of unused funding.  

The main challenges in the European Commission’s Hydrogen Bank second auction stem from the mix between the request of an 8% ‘completion guarantee’  issued by an approved bank/financial institution (unique in the EU funding landscape), as well as the the uncertainty of demand, which is the key requirement for the project to reach FID and move it into the operational phase. The completion guarantee requires de facto an upfront payment and increased liability for the project developer, as a ‘reassurance’ to be able to complete the project, along with strict conditions around financial close and entry into operation.   

On the other hand, demand is lagging behind, largely due to regulatory uncertainty and the incomplete and slow implementation of the REDIII regulation, 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).  

Evidently, despite the fact that the bid should have demonstrated to be close to an offtake agreement to be awarded, this regulatory gap, combined with the completion guarantee pressure has increased the risk perception, overcoming the possible financial benefit of the grant, which – it is important to remind – is only delivered once in operation.   

Despite these hurdles, the maritime sector performed relatively well. This success is attributed to reduced competition in the maritime pot (where only 8 projects applied), allowing higher-priced bids to succeed. Sectoral differentiation in offtakers appears effective in this context.  

To have a complete picture, we should also account for the leverage effect of the Auction-as-a-Service scheme, with which Member States are able to plug in into the scheme to fund projects in the reserve list (usually at a higher bid price). 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. The underlying issue remains the stringent development criteria set by the European Commission’s auction, simultaneously to the high competition. 

Contrary to the notion of a lack of interest, there was significant demand for funding from the EHB: as said before, in this second auction 61 projects applied to the general grants, collectively requesting over €4.8 billion, four times the €1.2 billion available. This highlights strong sector interest, but also that the competitive and regulatory barriers are too high for most projects to proceed. 

Hydrogen Europe has urged the European Commission to alleviate the timelines for entry into operation in the third auction, yet this recommendation was not adopted. 

On the other hand, the increased success in the maritime basket seems to show that a call dedicated to a specific offtake category has provided better conditions and probably helped producers and off takers to join earlier in the process. This is a good indication that reinforces our claim that the whole value chain should be funded. Mechanisms to fund the production like the EHB should build direct synergies with new offtake support, hopefully already in the incoming Industrial Decarbonisation Bank and in the next Multiannual Financial Framework. We hope the Commission shares this vision, which is also compliant with their newly launched  Hydrogen Mechanism, which seeks to connect supply and demand. These are all pieces of a same puzzle, and we need integration, continuity and improvement of funding streams. 

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