Green hydrogen auctions: A guide to design

A guide to design © IRENA 2024 Unless otherwise stated, material in this publication may be freely used, shared, copied, reproduced, printedand/or stored, provided that appropriate acknowledgement is given of IRENA as the source and copyrightholder. Material in this publication that is attributed to third parties may be subject to separate terms of use andrestrictions, and appropriate permissions from these third parties may need to be secured before any use of suchmaterial. ISBN: 978-92-9260-617-6 Citation: IRENA (2024),Green hydrogen auctions: A guide to design, International Renewable Energy Agency,Abu Dhabi About IRENA The International Renewable Energy Agency (IRENA) serves as the principal platform for internationalco-operation, a centre of excellence, a repository of policy, technology, resource and financial knowledge, and adriver of action on the ground to advance the transformation of the global energy system. An intergovernmentalorganisation established in 2011, IRENA promotes the widespread adoption and sustainable use of all forms ofrenewable energy, including bioenergy, geothermal, hydropower, ocean, solar and wind energy, in the pursuit ofsustainable development, energy access, energy security and low-carbon economic growth and prosperity. www.irena.org Acknowledgements This report was developed under the guidance of Raul Alfaro Pelico (Director, IRENA Knowledge, Policy andFinance Centre), Ute Collier (IRENA) and Rabia Ferroukhi (ex-IRENA). It was authored by Diala Hawila, EmanueleBianco and Abdullah Fahad (IRENA); Vasilios Anatolitis (IRENA consultant) and Fabian Wigand (Tetratech). IRENA colleagues Ann-Kathrin Lipponer, Arno van den Bos, James Walker and Patricia Wild provided valuablecontributions. Inputswere also provided by:Cristian Carraetto(EBRD),Joseph Cordonnier(OECD),Jazaeer Dawody(Energimyndigheten), Pablo Del Rio Gonzalez (IRENA consultant), Daniele Di Nepi (DESNZ), Javier GarcíaFernández (European Commission), Dolf Gielen (World Bank), Michelle Hallack (World Bank), Emanuel Henrich(H2Global), Leandro Janke (Agora Energiewende), Jan Klenke (H2Global), Paul Komor (IRENA TechnicalReviewer), Yury Melnikov (Mylonastar), Susana Moreira (H2Global), Roland Schulze (EIB), Eisuke Tachibana(AfDB), Moeketsi Thobela (AfDB) and Miguel Vazquez (Bocconi). Publication and editorial support was provided by Francis Field and Stephanie Clarke. The report was edited byErin Crum, with design by Strategic Agenda. For further information or to provide feedback: publications@irena.org This report is available for download:www.irena.org/publications Disclaimer This publication and the material herein are provided “as is”. All reasonable precautions have been taken by IRENA to verify thereliability of the material in this publication. However, neither IRENA nor any of its officials, agents or other third-party contentproviders provides a warranty of any kind, either expressed or implied, and accept no responsibility or liability for any consequenceof use of the publication or material herein. The information contained herein does not necessarily represent the views of all Members of IRENA. The mention of specific companiesor certain projects or products does not imply that they are endorsed or recommended by IRENA in preference to others of a similarnature that are not mentioned. The designations employed and the presentation of material herein do not imply the expression ofany opinion on the part of IRENA concerning the legal status of any region, country, territory, city or area or of its authorities, orconcerning the delimitation of frontiers or boundaries. Contents 4 FiguresTablesBoxesAbbreviationsExecutive summary 4 1 Introduction122 Green hydrogen: Status, barriers and support instruments142.1 Hydrogen production and use142.2 Barriers to green hydrogen uptake16 3 Auctions to support green hydrogen development and deployment203.1 Strengths and weaknesses of auctions as a support scheme for green hydrogen223.2 Types of auctions for the support of hydrogen26 4 Design elements of auctions to support green hydrogen33 4.1 Auction demand354.2 Qualification requirements and documentation434.3 Location, technology and project specifications484.4 Winner selection544.5 Risk allocation and remuneration of sellers58 71 6.2 Denmark6.3 European Union6.4 Germany6.5 India6.6 Netherlands6.7 United Kingdom References 84 Figures Figure 1Selected colour-coded typology of hydrogen production15Figure 2Main uses of hydrogen in 202215Figure 3Illustrative set-up of a supply-side auction for green hydrogen26Figure 4Illustrative set-up of a demand-side auction for green hydrogen27Figure 5Illustrative set-up of a double-sided auction for green hydrogen29Figure 6Illustrative set-up of joint supply- and demand-side auctions for green hydrogen31Figure 7Framework for the design elements of auctions for green hydrogen34Figure 8Hydrogen value chain and risks that need to be allocated to the different pla