The European Commission has opened the 2023 Innovation Fund auction round with a €4 billion budget to support deployment of innovative decarbonization technologies. It includes €1.4 billion for cleantech manufacturing and increased supply chain resilience in Europe. 

Additionally, the commission has also launched the 1st European Hydrogen Bank Auction with €800 million subsidies available for renewable hydrogen production. It will also be funded through the Innovation Fund. 

Innovation Fund 

Under the €4 billion Innovation Fund, cleantech manufacturing category will support projects with a CapEx above €2.5 million focusing on manufacturing the components for renewable energy, energy storage, heat pumps and hydrogen production. 

The funding amount can cover up to 60% of a project’s relevant costs. The remaining budget is available as under: 

• €1.7 billion for large-scale projects under general decarbonization with CapEx of over €100 million 
• €500 million for medium-scale projects under general decarbonization with CapEx between €20 million and €100 million 
• €200 million for small-scale projects under general decarbonization with CapEx between €2.5 million and €20 million, and 
• €200 million for pilot projects with CapEx above €2.5 million focusing on deep decarbonization. 

The funding call will be open to submission till April 9, 2024. Details are available on the commission’s website.  

The EU Commissioner for Climate Action, Wopke Hoekstra said, “On the road to net zero, we need to combine climate imperatives with economic opportunities. With a larger budget and €1.4 billion dedicated to manufacturing clean technologies, this year’s call shows our determination to think big and move fast.” 

Previous Innovation Funding rounds 

In the previous 3 funding rounds of the Innovation Fund, the EU has awarded more than 100 innovative projects with a total of €6.5 billion. The overall budget of the fund from the EU Emissions Trading System between 2020 and 2030 is a total of €40 billion. 

The winner of the 1st Innovation Fund round Enel Green Power is going ahead with its planned 3 GW heterojunction (HJT) factory in Italy, while the winner of the 2nd round REC Group has put its 2 GW HJT fab in France on hold. 

The 3rd round had 41 winning projects including Meyer Burger’s HJT solar cell and module plant in Europe. Norway’s NorSun secured funds for its ingot and wafer manufacturing plant, but the company has shut down its Årdal plant blaming the lack of demand for European modules due to an influx of cheaper Chinese panels in the market (see European Solar Wafer Manufacturer In Trouble).  

Midsummer of Sweden was also one of the winners of the 3rd round for its 200 MW CIGS production plant. Recently, the management announced plans to cut down 50 full-time jobs under restructuring efforts (see Sweden’s Midsummer To Lay Off Employees). 

Hydrogen bank auction 

The €800 million being made available under European Hydrogen Bank will enable renewable hydrogen producers to bid for support in the form of a fixed premium/kg of hydrogen produced, capped at €4.5/kg. 

This premium, explained the commission, will bridge the gap between the price of production and the price consumers are willing to pay in a market where non-renewable hydrogen is cheaper to produce. 

Bids to be submitted will be ranked from lowest to highest and awarded in that order till the budget is exhausted. The winners will avail of the subsidy on top of the market revenues that they generate from hydrogen sales, for up to 10 years. Such projects will need to start producing renewable hydrogen within 5 years of signing grant agreements. Winning projects cannot avail any other state aid. 

Interested companies can submit their bids till February 8, 2024. The winners will be informed by April 2024 and sign grant agreements within 9 months after call closure.

“Hydrogen is going to be a key technology to decarbonize Europe’s industry and help deliver our 2030 and 2050 climate targets,” added Hoekstra. “Today’s first EU-wide auction for renewable hydrogen production sends a clear signal that Europe is the place to invest in renewable hydrogen production, and in hydrogen-based industries.” 

The commission plans to collect reliable data about the EU’s renewable hydrogen project pipeline through this pilot auction and use lessons to design future auctions including the one it plans to launch next year.