France is taking a bold step forward in the world of hydrogen with a groundbreaking plan to invest €4 billion (approximately $4.2 billion) in the development of 1 gigawatt (GW) of electrolysis capacity over the next three years. This significant move aims to bolster the country’s position in the global hydrogen market and drive the adoption of green hydrogen produced through zero-carbon electricity sources.
While France had previously indicated its support for both renewable and low-carbon hydrogen (H2) production, the recently released draft details make it clear that projects relying on carbon capture and storage (CCS) to produce low-carbon H2 will not be eligible for financial aid. This decision underscores France’s commitment to supporting H2 generated by electrolysers powered by zero-carbon electricity, such as nuclear or specific renewables that meet the stringent European Union (EU) criteria for renewable fuels of non-biological origin (RFNBO).
The government’s support will be provided in the form of operating grants, partially calculated based on the difference in carbon prices between grey (highly carbon-intensive) and green (zero-carbon) hydrogen production. This approach incentivizes the reduction of carbon emissions through the adoption of greener hydrogen technologies.
A significant portion of project selection, 70 out of 100 “points,” will be determined by the price per tonne of carbon dioxide (CO2) avoided. Bidders will compete on price, with each offer compared to the lowest submitted bid. This competitive approach aims to drive down the cost of subsidies.
The remaining 30% of points will consider various factors, including the optimization of electricity use, commitments to curtail electrolyser operation in response to grid demands, third-party guarantees of supply chain decarbonization, the pooling of multiple industrial users per project, and proof that at least 50% of the renewable H2 is produced from additional upstream renewable sources.
Additionally, the French government plans to provide a financial guarantee towards commissioning, amounting to up to €50,000 per megawatt (MW) of installed power. However, this financial support is limited to covering 50% of project investment costs.
The timeline for the tenders is as follows: The first auction for 150MW of electrolysers is scheduled for next year, with the possibility of extending the cap by 10-20%, depending on demand. Projects resulting from this tender should be commissioned by the end of 2026. The second auction, planned for 2025, aims to support 250MW, while the final auction in 2026 seeks to fund 600MW. Notably, the minimum capacity eligible for aid is 30MW.
France is also imposing strict limitations on the end-users of the supported hydrogen. The hydrogen produced under this initiative must be used within France, and any exports would result in the termination of the contract.
France’s ambitious plan underscores its commitment to green hydrogen and its determination to play a significant role in the global hydrogen economy. By focusing on zero-carbon electrolysis and competitive pricing, the country is positioning itself as a leader in the transition to a cleaner, hydrogen-powered future.