IF26 Hydrogen Auction: draft Terms and Conditions open for consultation

The European Commission has published the draft Terms and Conditions for the IF26 Hydrogen Auction, the fourth auction under the European Hydrogen Bank. The auction is expected to launch in December 2026, with a proposed Innovation Fund budget of up to €500 million.

The draft Terms and Conditions are now open for public consultation. Stakeholders can provide feedback through the dedicated EU Survey until 24 August 2026. The feedback will feed into the final auction design, with a webinar expected after the consultation period.

Main changes under IF26 draft T&Cs

The draft T&Cs show only a few but impacting changes:

• Smaller EU budget: the IF25 budget of €1.3bn is cut down to less than half – with only €500m in IF26
• Fewer topics: IF26 has two topics instead of three:
  • RFNBO hydrogen: €350m
  • RFNBO / electrolytic low-carbon hydrogen: €150m

This confirms that renewable hydrogen remains the central focus of the European Hydrogen Bank, while electrolytic low-carbon hydrogen continues to have a place in the auction design.

• Maritime/aviation basket removed leaving no specific off-taker sector requirement in any topic. Previous auction experience showed stronger interest in RFNBO hydrogen production, while off-taker restrictions proved less attractive for developers, CINEA says. This change matters for projects targeting maritime or aviation demand, who will now have to compete against any other off-take sector. This change might be caused also be CINEA’s announcement of another (non-auction) call specific for the maritime topic.
• New grant caps: max €175m per RFNBO project and €150m per RFNBO / low-carbon project, lowering the previous limit of topic budget (from €300-600m in IF25)

Support will continue through a fixed premium, paid per kilogram of verified and certified hydrogen produced. The maximum support period will remain ten years, which keeps the basic support model familiar for developers who followed the previous hydrogen auctions.

Key hydrogen auction rules are maintained

Price-only ranking is maintained. Bids will be ranked from the lowest bid price upwards, with a disclosed ceiling price of €4/kg of hydrogen applying across both topics. The auction will remain one-stage, static and pay-as-bid.

Projects must use new hydrogen production capacity. The minimum project size will remain 5 MWe in a single location, and virtual pooling of capacity will not be allowed. The maximum grant amount will be €175 million for Topic 1 and €150 million for Topic 2.

Selected projects will need to provide a completion guarantee covering 8% of the maximum grant amount. The same section of the draft keeps the core delivery milestones: financial close within 2.5 years after signing the grant agreement and entry into operation within five years.

The draft T&Cs maintain important evidence requirements. Applicants will need to show a credible electricity sourcing strategy for 100% of planned hydrogen volumes. For RFNBO hydrogen, pre-contractual electricity agreements will need to cover at least 60% of the required total electricity volumes during the project implementation period.

Off-take evidence also remains important, even without sector-based off-taker restrictions. The draft T&Cs require Heads of Terms or similar signed pre-contractual documents covering at least 60% of the total hydrogen production volumes during the project implementation period. Integrated projects may use an internal reservation letter instead, under the conditions described in the draft Terms and Conditions.

Electrolyser and supply chain requirements continue relevant

Resilience requirements for electrolysers remain relevant. At least 75% of the electrolysers included in a project must originate outside the People’s Republic of China. For that share, stacks must also originate outside China, with limits on the origin of other main components.

Applicants will need to support these claims with evidence from electrolyser manufacturers, including declarations on manufacturing location and the origin of electrolysers and stacks. The planned origin of electrolysers for successful bidders will be published, and compliance will be monitored during implementation.

Auctions-as-a-Service will continue

The Auctions-as-a-Service mechanism is expected to remain available for IF26. This allows EEA countries to use national resources through the EU-wide auction mechanism, supporting eligible projects located in or delivering hydrogen to their territory.

Member States interested in using Auctions-as-a-Service should inform the European Commission of their intention to contribute by September 2026 and publicly confirm their contribution by 1 November 2026. This may create additional funding opportunities for projects that are competitive but cannot be supported within the Innovation Fund budget.

What happens next?

The public consultation runs until 24 August 2026. After that, the feedback will be used to finalise the auction design. The IF26 Hydrogen Auction is expected to launch by the end of 2026, alongside the wider IF26 Innovation Fund publication window.

PNO Innovation will continue to follow the IF26 Hydrogen Auction as the final Terms and Conditions become available.

Benefit from our expertise, built on a strong IF Hydrogen Auction track record

PNO Innovation can support you in performing the required calculations, structuring, and writing convincing documents, as well as managing the application process. More importantly, we can provide you the necessary insights for a successful bidding, which will give you clear and easy-to-understand strategic insights on the specific auction round.

This will help you make an assumption-based bidding decision that is not only low enough to be successful, but also as high as your project’s boundaries allow, so you can take the most out of your participation in the auction. Good preparation and a strong bid map are crucial to success.

In recent years, our experts have supported many energy-intensive companies and partnerships in successfully applying for the Innovation Fund. Contact our energy, chemical, and high-temperature industry experts today by submitting the contact form at the bottom of this page or by calling +31(0)88 838 13 81.