Minister Matos Fernandes guarantees that producing green hydrogen today is cheaper than using natural gas, at current prices on European markets.
It was even scheduled for April 2021 but never went ahead. Now, the Minister of Environment and Climate Action, João Pedro Matos Fernandes, guarantees in an interview with ECO that the hydrogen auction is scheduled for January 2022.
“We are configuring what could be a hydrogen auction for next year. Give us one or two months to see how this develops, we are working towards that and in early January when the Environmental Fund notice is made public, the value of the hydrogen auction will be known,” said the minister, explaining “Even because the 60% of the funds from the ETS auctions (carbon emission allowances) to be put into the national electricity system, would be based on the assumption that there is over cost, but since there is over gain (in renewables), we have a large gap for hydrogen auctions.”
The minister states that producing green hydrogen today is cheaper than using natural gas. And that given the price (above €100 per MWh that natural gas has been in Europe), green hydrogen does not need support to be produced.
“Will this scenario extend throughout a year? I don’t think so. That’s why it still makes perfect sense to hold a hydrogen auction. I remember the bill: it was €500 million to be divided over ten years. But will it be necessary? Only if the quantity is greater, because if we think of the unit price, it’s even too much money,” added Matos Fernandes.
In April, the Secretary of State for Energy, João Galamba, had already said that future hydrogen auctions will target potential consumers of green hydrogen, i.e. any company that still depends on fossil and polluting energies (such as diesel, for example), especially in the industrial and transport sectors. It is an “auction mechanism to support consumption.”
A certain amount of hydrogen will be at the auction, which is not yet defined (it can be Kgs or MWh). According to the National Strategy for Hydrogen, for this first auction, the amount of green hydrogen to be tendered will be half a kiloton, for incorporation in the natural gas network of approximately 0.1%.