Romania has been cleared to hold a national auction to fund at least 100MW of green hydrogen production, after the European Commission (EC) gave the Eastern European country the green light to provide up to €149m ($152m) of public finance for it.

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Under the Romanian scheme — which was unveiled in June 2022 and is likely to be the world's first — companies and research facilities will be able to bid for the lowest amount of aid per MW of installed electrolyser capacity.

If successful, projects will be eligible for direct grants of up to €50m per project.

A capacity of 100MW would see the country producing 10,000 tonnes of green H2 a year, around 5% of the country’s current hydrogen demand — which mainly comes from oil refining, ammonia and chemicals production and is met by grey hydrogen made from fossil gas.

Around €115m of the €149m state aid cleared by the EC will be provided as grants by EU’s bloc-level €723.8bn Recovery and Resilience Fund, with the remaining €34.5m from national funds.

Romania had set a 100MW target as part of its €2.9bn national Recovery and Resilience Plan (RRP), approved by the EC in September, which envisaged the development of green hydrogen infrastructure, including electrolysers and energy storage facilities.

Among the other reforms outlined in the energy component of the RRP are plans for a National Hydrogen Strategy, targets for hydrogen blending into the natural gas network, a proposal to make all new gas boilers and heating appliances hydrogen ready by 2026, as well as fiscal incentives for the production of “clean” hydrogen.

Recovery and resilience

Each EU country has submitted a national RRP to the EC, as part of the bloc’s overall recovery and resilience plan, first initiated in 2020 as a response to the economic strife caused by the Covid-19 pandemic and expanded to include the REPowerEU plan following Russia’s invasion of Ukraine.

“This €149 million scheme enables Romania to step up its renewable hydrogen production capacities, while limiting possible distortions of competition,” said EC executive vice-president and competition commissioner Margrethe Vestager. “It will also help Romania in replacing natural gas, coal and oil in hard-to-decarbonise industries and transport sectors, and in reducing its dependence on imported fossil fuels, in line with the REPowerEU Plan.”

Romania had already begun investigating the potential for hydrogen, introducing new regulations in 2020 requiring natural gas distributors to submit studies on hydrogen blending in the gas network.

And the country’s RRP included plans to spend €400m of public funds — not included in this tranche of the EC’s state aid approval — to make a 1,870km portion of its gas distribution network in southwest Romania ready to carry 20% hydrogen in natural gas flows by 2026, and 100% renewable hydrogen and/or other renewable gases by 2030.

Green hydrogen producers in Romania will likely be subject to the EU’s “additionality” rules, requiring electrolyser power to be sourced from dedicated renewables installations.

Romania has ample green-energy supply: it met its EU renewables target some years ago, partly due to its abundant hydropower resources, and is now jostling with Turkey and Bulgaria to become the first Black Sea littoral state to install offshore wind in the area.

According to consultant EY, Romania’s 2020 power mix comprised 27.6% hydropower as well as 12.4% wind power and 3.4% solar. However development has been hindered by poor regulation and investor unease in the past.