BAKU, Azerbaijan, May 31. Given the economic pressure on hydrogen projects, the hydrogen industry needs targeted programs to ensure a reasonable return on investment for initial commercial projects, especially during the early stages of the hydrogen market’s development, Trend reports with reference to the European Investment Bank (EIB).
EIB says in its report that ideally, mechanisms should evolve as the market develops and ultimately be phased out as market conditions improve.
“Early projects will provide the market with experience and help accelerate learning curves and cost reductions, which over time would reduce the need for market support mechanisms. In the medium term, a transparent, pan-European market would require more ambitious tools that target new sectors and innovations. Potential support mechanisms discussed with investors include the following: Carbon contracts for difference; guaranteed offtake (potentially combined with a price floor at the end of commercial contracts); feed-in tariffs; a European clearing house or market-making mechanism; auctions; green public procurement,” reads the report.
EIB notes that among the various initiatives or support measures proposed, the concept of market-making platforms stands out in particular for its potential to create supportive market conditions for both producers and users of hydrogen.
“For example, the H2 Global funding instrument launched in Germany received positive feedback from many participants. Through it, producers of hydrogen may be able to obtain more visibility on offtake over time and in terms of volume and price. Users requiring price visibility and stability in supply would also benefit from the platform. Such market-making or “switchboard” mechanisms could also be considered on a European scale to provide support for the emergence of producers and users of green hydrogen across the continent,” says the bank.
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