The European Energy Exchange (EEX) has introduced a groundbreaking green hydrogen price index called Hydrix, aiming to enhance price transparency in the emerging green hydrogen market. Despite the absence of a traded renewable hydrogen market, EEX is taking steps to establish a benchmark for pricing in this sector.
Hydrix’s methodology relies on contributions from industry stakeholders, including producers and consumers, who submit their theoretical buy or sell prices in euros per megawatt-hour on a weekly basis. While there are existing price indications from bilateral supply contracts, the index’s goal is to provide a market-based reference point for the pricing of green hydrogen.
However, the effectiveness and accuracy of such an index in the short to medium term raises valid concerns. The prices derived from Hydrix may differ significantly from actual agreed offtake prices due to confidentiality agreements often surrounding long-term contracts. Nevertheless, EEX remains confident that the introduction of Hydrix will be a pivotal development in the journey towards achieving net-zero emissions.
According to Peter Reitz, CEO of EEX, “Hydrix closes a crucial pricing signal gap, which is foundational for a market ramp-up and further investment in the hydrogen economy. With a market-based index based on actual trade prices for hydrogen, we are providing a benchmark that can be used for investment decisions. We are thus paving the path for the energy industry’s zero-carbon future and demonstrate our leadership in enabling the energy transition.”
At its launch, Hydrix estimates the price of green hydrogen in Germany to be €228.16 ($245.52) per megawatt-hour, showing a slight increase from €222.84/MWh in the previous week. However, it is essential to note that the index currently covers only Germany.
Several factors complicate the accurate determination of green hydrogen prices. The Hydrix methodology defines green hydrogen as hydrogen produced through electrolysis powered by renewable energies. However, future regulations, such as those regarding additionality and temporal correlation, will significantly impact the pricing of green hydrogen. Additionality refers to the requirement of using newly developed renewable energy projects to power electrolysers, while temporal correlation addresses rules surrounding the use and supply of renewable power during periods of low wind or sunlight.
The launch of Hydrix represents a critical step in establishing a pricing framework for the green hydrogen market. As the European Union plans its first auction at the end of this year to incentivize renewable hydrogen production, the index will play a vital role in driving investment decisions and facilitating the energy industry’s transition to a zero-carbon future.
