On 5 October, Austria committed up to €200 million of national money to the next European Hydrogen Bank round, which opens in December 2026 with an EU budget of €500 million (Hydronews). Developers across Europe are now deciding what premium to bid.
The European Hydrogen Bank auction results so far give a clear answer to one question and a warning on another. The bids are low: most winners asked for less than €1/kg. But a winning bid is not a funded project. In the second auction, only six of the selected projects signed grant agreements, for €270.6 million out of €992 million first awarded (European Commission).
This article reads the numbers from all three auctions, then turns them into a practical method for pricing an IF26 bid you can actually deliver.
The third auction: low bids, heavy competition
The third auction (IF25) awarded €1.09 billion to nine projects in seven countries, adding nearly 1.1 GW of electrolyser capacity. It received 58 bids against €1.3 billion of EU funding (Hydrogen Europe). The results split sharply by basket.
| Basket | EU budget | Allocated | Bids | Winners | Winning premiums |
|---|---|---|---|---|---|
| 1. RFNBO hydrogen | €600m | €592m | 50 | 5 | €0.57–0.98/kg |
| 2. RFNBO or low-carbon electrolytic | €400m | €379m | 5 | 2 | €0.44 and €1.1/kg |
| 3. Maritime and aviation offtakers | €300m | €124m | 3 | 2 | €3.48 and €3.49/kg |
Source: Hydrogen Europe.
Three points stand out.
Basket 1 was a price war. Bidders requested about €7.3 billion for €600 million, roughly 12 times the budget. Winners came from Greece, Spain, Denmark (two projects) and Austria (Hydrogen Europe). They include MorGen's 300 MW NJK project and Hy2gen's 100 MW Alba project in Denmark, and a 5 MW electrolyser in Austria (pv magazine).
The lowest bid came from the new low-carbon basket. Cloudberry in Finland, a 500 MW project expecting more than 508,000 tonnes over ten years, bid €0.44/kg. Lotse in Germany added 120 MW at €1.1/kg (pv magazine). Multiply volume by premium and the two projects account for about €378 million, close to the €379 million allocated.
Maritime demand is thin, and expensive. Only three bids came in. The two Norwegian winners, Gen2-LH2 and RogalandH2, total about 24 MW and bid close to €3.5/kg. Basket 3 left more than half its budget unspent.
Hydrogen Europe links the strong winners to national demand rules. Finland, which hosts the largest winning bid, has transposed its RED III transport targets. Germany's transport rules support Danish projects that plan to export through the planned hydrogen interconnector (Hydrogen Europe).
A low premium is only credible when a regulated buyer pays the rest.
Winning is not signing: what happened after the second auction
The second auction (IF24) selected 15 projects in May 2025, requesting €992 million. By 20 January 2026, six had signed grant agreements worth €270.6 million: four in Spain and Finland in the general topic, two in Norway in the maritime topic (European Commission). Electrolysis capacity fell from 2.3 GW awarded to 380 MW secured (S&P Global).
The withdrawal list is the most useful data in the whole programme. It names 19 projects, and it includes the two lowest bids of the round: €0.20/kg and €0.25/kg (European Commission). One maritime project, Gen2-LH2, withdrew at €0.59/kg in that round. A project with the same name then won the third auction at €3.48/kg.
S&P Global reported the main reasons developers gave (S&P Global):
- Plant capacity cannot change after the grant is secured.
- The five-year deadline to start operation leaves little room for delay.
- Seven winners dropped out before the deadline to provide a bank completion guarantee.
- RED III was not yet clearly in national law, which weakened offtake.
- The delayed IMO Net-Zero Framework vote hurt some maritime business cases.
The pilot auction held up better. Six winners signed grant agreements worth €695 million in October 2024 (Clean Hydrogen Observatory). We covered the wider pattern in why green hydrogen projects get cancelled.
What changes in IF26
The Commission published draft terms for the fourth auction on 9 July 2026. They are non-binding until the call opens (IF26 draft Terms and Conditions). Opening is planned for December 2026 and closing for February 2027 (European Commission).
| Term (draft) | IF26 value |
|---|---|
| Budget | €350m for RFNBO (Topic 1), €150m for RFNBO or low-carbon electrolytic (Topic 2) |
| Ceiling price | €4/kg, all topics |
| Maximum grant per project | €175m (Topic 1), €150m (Topic 2) |
| Minimum size | 5 MWe of new electrolysis in one location |
| Completion guarantee | 8% of the maximum grant, from an EEA bank rated BBB- or better |
| Financial close | 2.5 years after grant signature |
| Entry into operation | 5 years after grant signature, at 100% of bid nameplate capacity |
| Support period | Ten years after entry into operation |
| Electrolyser origin | At least 75% of electrolysers, and their stacks, from outside China |
Source: IF26 draft Terms and Conditions.
Two rules matter most for engineers. The non-China rule changes your equipment cost base; we compared prices in Chinese electrolyzer cost vs Western. The cumulation rules bar other public CAPEX or OPEX support for the producer, and from 2028 the additionality principle generally bars public support for the supplying renewable plant. Check how that sits with the RFNBO delegated act revision.
Note that Topic 2's maximum grant equals its whole budget. A single large project could take all of it.
How to price a bid you can deliver
The premium is paid per kilogram of verified output, for up to ten years. Your bid therefore needs to cover the gap between your cost and your buyer's price, at a volume you are confident of producing. Here is a simple method.
- Start from the gap, not the competition. Required premium = levelised cost of hydrogen minus the price your offtaker will sign for. If the offtake price depends on a national RED III quota, model the case where that law slips. Our guide to hydrogen offtake agreement structure covers the clauses that set this number.
- Use a capacity factor you can defend. Expected volume drives both the grant and the penalties. The draft terms reduce or end support if verified output averages below 30% of the expected yearly volume for three consecutive years. Output above 140% of the expected half-year volume earns no premium. Overstating volume to lower your per-kg bid creates risk on both sides. See electrolyzer capacity factor and LCOH and hybrid solar-wind coupling.
- Price the guarantee and the deadlines. The completion guarantee is 8% of the maximum grant and must run for at least 5 years and 11 months. Missing financial close or entry into operation means termination and a call on the guarantee.
- Plan for year eleven. The premium ends after ten years. Your financing case must work on offtake revenue alone after that, which is why discount rate and CAPEX assumptions deserve as much scrutiny as the bid.
A worked example (illustrative inputs only)
Take a hypothetical 50 MW project that expects 6,000 tonnes a year. Assume an LCOH of €6.50/kg and an offtake price of €5.20/kg. These are placeholders, not market data.
Required premium = LCOH − offtake price
Maximum grant = premium × expected annual volume × 10 years
Guarantee = 8% × maximum grant
| Item | Calculation | Result |
|---|---|---|
| Required premium | €6.50 – €5.20 | €1.30/kg |
| Maximum grant | €1.30 × 6,000 t × 10 years | €78m |
| Completion guarantee | 8% × €78m | €6.24m |
| Penalty floor | 30% × 6,000 t | 1,800 t/year average |
| Unsupported output | above 140% × 3,000 t | above 4,200 t per half-year |
At €1.30/kg this project would not have won Basket 1 of the third auction, where the highest winning bid was €0.98/kg. That is the real choice: cut the gap with a better site, a firmer offtake or a lower capital cost, or accept that the bid will lose. Bidding below your gap to win is how the second auction lost most of its awarded capacity.
Conclusion
The European Hydrogen Bank auction results show demand for support far above supply, and premiums that are falling below €1/kg. They also show that a low bid only survives when the project behind it is mature, financed and backed by a regulated buyer. With €500 million on the table in IF26, plus national top-ups such as Austria's, the winners will be the developers who bid their real gap at a volume they can prove.
That starts with engineering numbers you trust. Hyzen models renewable input, electrolyzer sizing, water treatment, gas conditioning, compression and storage, and checks RFNBO compliance. We are building the full LCOH and techno-economic engine next. Test your site today with the free Hyzen Site Screener.
Editorial Notes
- IF26 figures come from the Commission's non-binding draft Terms and Conditions (v1.0, 9 July 2026). Final terms are published with the call.
- The €378 million figure for Basket 2 is our own calculation from the reported "more than" volumes (508,000 t × €0.44/kg + 140,000 t × €1.1/kg).
- The Gen2-LH2 link between the second and third auctions is based on the same project name appearing in both sources.
- The worked example uses illustrative inputs, not market data.
References
[1] Hydronews. Austria allocates €200 million for the European Hydrogen Bank's next auction. Hydronews (2026).
[2] European Commission. IF24 Auction. DG Climate Action (2026).
[3] Hydrogen Europe. High levels of competition in 3rd EU Hydrogen Bank auction. Hydrogen Europe (2026).
[4] pv magazine. EU allocates 1.1 GW of electrolyzer capacity in third hydrogen auction, lowest bid comes in at €0.44/kg. pv magazine (2026).
[5] J. Burgess. European hydrogen industry digests failure of second EU auction. S&P Global Energy (2026).
[6] Clean Hydrogen Partnership. European Hydrogen Bank. European Clean Hydrogen Observatory (2026).
[7] European Commission. Innovation Fund IF26 Hydrogen Auction: Draft Terms and Conditions, v1.0. DG Climate Action (2026).
[8] European Commission. IF26 Hydrogen Auction. DG Climate Action (2026).