Hydrogen offensive brings new subsidies and investment opportunities

The hydrogen offensive is rounded off by an import strategy to secure supply and a roadmap for the Hydrogen Southern Corridor as a major infrastructure project. 

EAG Investment Grants Regulation for Hydrogen: a funding impulse for the development of electrolysis capacities

Developers of plants that convert renewable electricity into renewable hydrogen or synthetic gas will be able to apply for investment grants. Eligible costs include buildings, plant and equipment, as well as related services such as construction and expert reports. The grant rate depends on company size and can cover up to 65 % of eligible costs, capped at EUR 1,974 per kW. The first funding call will provide EUR 20m. The Renewable Energy Expansion Act (EAG) provides EUR 40m in annual subsidies.

Funding applicants who have already received investment grants under other schemes, such as the KLI. EN-FondsG, are excluded from further support. This means that it is generally possible to make use of OPEX funding. In this context, however, the prohibition of inadmissible double or multiple subsidies, the prohibition of cumulation under state aid law and maximum funding limits must be observed. The incentive effect under state aid law ("start of work") must also be taken into account. Subsidies under the EAG Investment Grants Regulation for Hydrogen fall under the General Block Exemption Regulation (GBER) and therefore do not require approval by the European Commission. An individual notification is necessary if the investment grant exceeds EUR 30m per company and project.

The EAG Investment Grants Regulation for Hydrogen includes specific funding requirements. A plant's electrolysis capacity must not exceed the total capacity of the renewable electricity generation plants connected to it behind a grid connection point. Applicants must also demonstrate that offtake by third parties is secured for at least five years from the commissioning of the electrolysis plant. This is proven by letters of intent from third parties indicating that 30 % of the technical capacity of the electrolysis plant is expected to be accepted. Purchase through self-consumption is also permitted.

Hydrogen Regulation (WstVO): clear rules for green hydrogen

The central focus of the WstVO is to define the conditions under which subsidies under the EAG are granted for the production of renewable hydrogen, as well as how this production can be counted towards the national renewable energy targets. The regulation thereby sets out the specific requirements for implementing the Renewable Energy Directive.

Renewable hydrogen is only eligible for funding if it saves at least 70 % greenhouse gas emissions over its entire life cycle compared to a fossil reference fuel. For the calculation of this savings, the regulation refers to an EU delegated regulation that has not yet entered into force, but whose draft already contains detailed requirements. Operators must keep the underlying calculation documents for seven years.

The WstVO also regulates the criteria for when the electricity used for electrolysis is considered renewable. It refers to Delegated Regulation (EU) 2023/1184, which deems electricity renewable if: (i) the electrolyser is directly connected to a renewable electricity generation plant (e.g. wind or PV park) commissioned no more than 36 months before the hydrogen plant; (ii) electricity is purchased from the grid with a renewable share above 90 % in the previous year or an emission intensity below 18 g CO₂ eq./MJ, provided appropriate PPAs with renewable energy producers are in place; or (iii) in all other cases, where the requirements of "additionality" as well as temporal (monthly until 2029, hourly from 2030) and geographical correlation with the electrolyser's location are fulfilled.

To ensure traceability, the draft also prescribes a mass balance system along the entire supply chain. In addition, producers must use a certification system recognised by the EU Commission. The certificates are issued and compliance with the requirements are checked by certification bodies.

Conclusion

Austria will promote the construction of electrolysis plants with investment grants in the future. When claiming these subsidies, special features of funding law and state aid requirements must be observed. Plant operators are also obliged to comply with origin and accounting requirements and to ensure strict certification and verification management.

authors: Bernd Rajal, Patrick Barabas, Michael Raab