Commission approves €1.2 billion Spanish State aid scheme to support investments in the production of renewable hydrogen to foster the transition to a net-zero economy

The European Commission has approved a €1.2 billion Spanish scheme to support investments in the production of renewable hydrogen to foster the transition to a net-zero economy. The scheme was approved under the State aid Temporary Crisis and Transition Framework (‘TCTF’), adopted by the Commission on 9 March 2023 and amended on 20 November 2023 and on 2 May 2024.

The Spanish measure

Spain notified to the Commission, under the TCTF, a €1.2 billion scheme to support investments in the production of renewable hydrogen in hydrogen clusters or valleys to foster the transition towards a net-zero economy. The scheme will be fully funded through the Recovery and Resilience Facility (‘RRF’) following the Commission’s positive assessment of Spain’s Recovery and Resilience Plan and its adoption by the Council.

The scheme will support investments in the production of renewable hydrogen with an installed capacity of at least 100 MW. Investments supported may encompass (i) the production of renewable hydrogen-derived fuels, (ii) renewable hydrogen storage, and (iii) the production of renewable electricity. To be eligible under the measure, applicants should have secured agreements with off-takers to cover at least 60% of the renewable hydrogen or renewable hydrogen-derived fuel expected to be produced.

Under the scheme, the aid will take the form of direct grants covering the investment costs of the projects supported. The aid amount for each beneficiary will be determined on the basis of a competitive bidding process.

The Commission found that the Spanish scheme is in line with the conditions set out in the TCTF. In particular, (i) the aid will be granted on the basis of a scheme with an estimated volume and budget; (ii) the aid amount will be determined through an open, clear, transparent and non-discriminatory competitive bidding process; and (iii) the aid will be granted before 31 December 2025.

The Commission concluded that the Spanish scheme is necessary, appropriate and proportionate to accelerate the green transition and facilitate the development of certain economic activities, which are of importance for the implementation of the REPower EU Plan and the Green Deal Industrial Plan, in line with Article 107(3)(c) Treaty on the Functioning of the EU and the conditions set out in the TCTF.

On this basis, the Commission approved the aid measure under EU State aid rules.

Background

On 9 March 2023, the Commission adopted the TCTF to foster support measures in sectors which are key for the transition to a net-zero economy, in line with the Green Deal Industrial Plan.

The TCTF provides for the following types of aid, which can be granted by Member States until 31 December 2025 in order to accelerate the green transition:

• Measures accelerating the rollout of renewable energy (section 2.5). Member States can set up schemes for investments in all renewable energy sources, with simplified tender procedures.
• Measures facilitating the decarbonisation of industrial processes (section 2.6). Member States can support investments in the decarbonisation of industrial activities with a view to reduce dependency on imported fossil fuels, in particular through electrification, energy efficiency and the switch to the use of renewable and electricity-based hydrogen which complies with certain conditions, with expanded possibilities to support the decarbonisation of industrial processes switching to hydrogen-derived fuels.
• Measures to further accelerate investments in key sectors for the transition towards a net-zero economy (section 2.8). Member States can grant investment support for the manufacturing of strategic equipment (namely batteries, solar panels, wind turbines, heat-pumps, electrolysers and carbon capture usage and storage), as well as for production of key components and for production and recycling of related critical raw materials. Support is capped at a certain percentage of the investment costs up to specific amounts, depending on the location of the investment and the size of the beneficiary. Higher support is possible for small and medium-sized companies, as well as companies located in disadvantaged regions to ensure that cohesion objectives are duly taken into account. Furthermore, in exceptional cases, Member States may provide higher support to individual companies, where there is a real risk of investments being diverted away from Europe, subject to a number of safeguards.

More information: European Commission