Innovation Fund hydrogen production auction
Competitive grants paying a fixed premium per kilogram of certified hydrogen produced in the EU/EEA. IF25 is closed; a further auction is planned for December 2026.
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The Innovation Fund hydrogen auction is the domestic production arm of the European Hydrogen Bank. Producers bid the fixed payment per kilogram they need on top of hydrogen revenue. Qualifying bids are ranked from lowest to highest price, within each topic’s budget. This supports the gap between expected sales revenue and production costs; sale, transport and storage costs can also be reflected in the bid. The detailed conditions below belong to the closed IF25 round.
IF25 offered three topics: €600 million for renewable hydrogen of non-biological origin (RFNBO); €400 million for RFNBO and/or electrolytic low-carbon hydrogen; and €300 million for those products supplying maritime or aviation customers. RFNBO means hydrogen made using renewable electricity under the EU’s sourcing and emissions rules. Electrolytic low-carbon hydrogen also uses electricity to split water but can use electricity that is not fully renewable, provided it meets the applicable emissions-saving test. This route does not cover all other forms of low-carbon hydrogen production.
The IF25 bid ceiling was €4 per kilogram, with support at the bidder’s own successful price for normally ten years of production. The requested maximum grant is the bid price multiplied by expected average annual production and ten years, and cannot exceed the relevant topic’s budget. The €1.3 billion total auction budget is not a per-project award. No fixed percentage of construction costs is promised.
There is no advance and no payment merely for securing financing or commissioning the plant. The first payment follows the first six months of operation; subsequent payments are normally half-yearly, for verified and certified qualifying output. Each half-year can claim up to 140% of half the bid’s expected annual volume, without increasing the total committed grant. Payments can finish earlier if the committed total volume is reached. EU debts can be offset against payments, and final settlement determines the actual grant.
The funded production capacity cannot also receive excluded public investment or operating support. This includes public compensation for indirect EU emissions-trading costs and State-aid reductions in electricity taxes or network charges. Annex 3 permits specific exceptions, including early research/feasibility/design support, previously supported capacity outside the bid, shared rather than project-dedicated energy infrastructure, and qualifying levies that finance energy/environmental policy under CEEAG point 403 or the corresponding block-exemption rule. The IF25 FAQ explains that a bidder may renounce an incompatible levy reduction if successful. These exceptions do not make every energy-tax exemption compatible.
Public support to equipment manufacturers is allowed. Renewable-electricity suppliers face separate RFNBO additionality rules: public support is generally excluded for the relevant new renewable capacity where hydrogen production starts from 1 January 2028. For hydrogen plants entering operation before that date, this additionality requirement does not apply. Annex 3 also allows public support where the grid’s emissions are below 18 grams CO₂ per megajoule or its renewable share exceeds 90%, and for renewable generation connected by a direct line rather than through the grid. The detailed renewable-fuel rules still govern the sourcing arrangement. Direct hydrogen consumers may receive investment support, but operating aid must not create overcompensation or impermissible aid combinations; the competent authority must rule out that risk by financial close. EU operating funding must not pay the same costs twice. For integrated projects, these consumer rules follow the directly supplied hydrogen-derived product. See the call’s Annex 3 before combining support.
Eligibility
Public and private legal entities may be established anywhere in the world, but the production project must be in an EU Member State, Norway, Iceland or Liechtenstein. There is no minimum consortium size. Individuals are excluded except self-employed sole traders without separate legal personality; international organisations qualify, and entities without legal personality may participate exceptionally with legally accountable representatives and equivalent financial safeguards. EU bodies are excluded except the Commission’s Joint Research Centre.
The bid must concern new, additional electrolyser capacity of at least 5 megawatts of electrical input at one location; pooling separate locations is not allowed. Construction or an irreversible equipment commitment must not already have started when applying. Buying land, obtaining permits, preliminary feasibility work and initiating grid-connection processes do not themselves count as starting works. Earlier contracts count only if they entail a significant financial commitment; the FAQ says contributions below 10% of investment costs can be treated as not significant, while other cases require justification and individual assessment. Work may start after application at the project’s own risk. RFNBO electricity must satisfy additionality and geographical/time-matching rules; electrolytic low-carbon output must meet its EU certification methodology. Across all output from the supported capacity, average lifecycle greenhouse-gas savings must reach at least 70% during the payment period.
At least 75% of electrolysers must originate outside China. Within that portion, stacks must also originate outside China and no more than two other listed main components may originate there. A project with one electrolyser cannot source it from China; artificially splitting equipment to evade the requirement is not allowed. The rules cover the hydrogen-production unit rather than the wider balance-of-plant equipment. Projects also need the required cybersecurity arrangements, including operational control by an entity operating in the EEA and storage/processing of project data, including backup servers, in the EEA.
General topics allow any hydrogen customer, internal use or storage. The maritime/aviation topic requires at least 60% of expected production to go to either maritime customers or aviation customers: the two sectors cannot be combined to reach that threshold. Qualifying customers supply or receive bunker fuel at EU/EEA ports or aviation fuel at EU/EEA airports. Fuel traders without bunkering, storage intermediaries and virtual agreements do not qualify for that sector commitment. Integrated projects producing derivatives such as ammonia or e-fuels must evidence the equivalent eligible customer demand for the derivative. At final reporting, the qualifying sector must have received at least 60% of actual produced volume or the grant may be reduced.
Applicants need sufficient finances and implementation skills. Normal financial-capacity checks exempt public bodies, international organisations and individual requested grants of no more than €60,000, but applicants still need resources to deliver. Bankruptcy-type proceedings, unpaid taxes/social contributions, serious misconduct and other EU exclusion grounds can bar participation. Sanctioned entities are excluded; Hungarian public-interest trusts covered by EU conditionality measures and their maintained entities cannot take funded roles. All partners must remain free of an outstanding recovery obligation for incompatible State aid. No onward grants to third parties are allowed.
The plant must meet the applicable “do no significant harm” criteria for hydrogen manufacture throughout the project, including climate resilience, water protection, pollution control and biodiversity. Applicants must explain and resource their compliance plan; non-compliance can prevent signature, reduce the grant or end it.
How to apply
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- IF25 is closed. The Commission plans a further hydrogen auction for December 2026.
IF25 opened on 4 December 2025 and closed on 19 February 2026 at 17:00 Brussels time. The Commission plans an IF26 hydrogen auction for December 2026; check its official auction page for the new call before preparing a bid under new-round conditions.
Applications use the EU Funding & Tenders Portal, with participant registration and the call’s forms. Provide the financial-information file containing the bid, a technical proposal of at most 50 pages, a feasibility study of at most 60 pages, implementation timetable and the required supporting documents. Relevance and project maturity are pass/fail tests before price ranking; passing them does not guarantee an award.
At application, signed preliminary agreements must substantiate at least 60% of required renewable electricity for RFNBO output and at least 60% of total hydrogen sales or internal use over the project. RFNBO supply evidence must explain additionality and time/location matching. For low-carbon volumes, the electricity strategy must credibly substantiate the emissions threshold for at least 60% of required non-fully-renewable electricity, with supporting market modelling. Internal electricity supply or hydrogen use can use a senior executive’s signed letter where the call allows it. Supply and customer term sheets must be no more than one year old.
Provide manufacturer commitments for all proposed electrolyser capacity, identifying origins and components; these commitments must be no more than one year old. Evidence of equity support must cover at least 60% of projected equity funding. Environmental-permit applications and any required grid-connection request must already have been submitted, with a credible approval timetable. These are evidence-of-readiness requirements, not promises that the grant finances 60% of investment.
A completion guarantee of 8% of the requested maximum grant is compulsory, at the consortium’s expense. Submit a letter of intent with the bid, then the guarantee within two months of receiving the invitation to grant preparation, as both a portal scan and posted original. It must be in euros from an approved EU/EEA bank or financial institution with at least BBB− from S&P/Fitch, Baa3 from Moody’s, BBB(low) from DBRS or A− from A.M. Best; a blocked bank balance is not enough. Its validity must extend to six months after the maximum commissioning deadline.
Reach financial close within 2.5 years of grant signature: the financing and essential project contracts must be secured so the investment can proceed. The maritime/aviation topic requires signed customer contracts covering at least 60% of expected total production at that point. Commission the full capacity promised in the bid within five years of signature. Missing the financing deadline may terminate the grant and trigger the guarantee; missing the commissioning deadline or reaching less than the promised capacity triggers the guarantee, as does termination before approved operation. Otherwise it is released after operation is formally approved.
After commissioning, maintain certified production. If average annual output over a rolling three-year period falls below 30% of the bid’s expected annual output, the grant may be reduced or terminated. Report production and compliance, keep supporting records and carry out the required knowledge sharing.
Applicants in countries offering a national “auctions as a service” window could consent to consideration there if their qualifying bid missed EU funding because of the budget. National award and agreement conditions then apply; leaving the EU reserve list for that route ends consideration for EU funding in that round.