Once the tender criteria have been defined by the funding provider, Hintco procures the products through individual tender processes, known as lots.

A single tender can consist of multiple lots, each with its own set of rules and specifications tailored to the characteristics of the product being purchased.

Short-term contracts on the demand side play a key role in ensuring the efficient use of concessional (governmental) funding, while fostering price transparency and market liquidity. For this reason, many lots in the current H2Global auctions will feature one-year Hydrogen Sales Agreements (HSAs). These short-term agreements are essential to establish H2Global reference prices and indexes, laying the groundwork for a more mature hydrogen market.

At the same time, some off-takers, particularly in certain sectors, may require volume security over a longer horizon but struggle with fixed-price exposures. To address these needs, the H2Global mechanism is exploring models that allow Hintco to enter into longer-term sales agreements by adding additional layers to the existing structure. Detailed concepts for such models are already being developed and foreseen for upcoming tender designs.

The H2Global auctions are divided into supply-side (HPA) and demand-side (HSA) auctions.

HPA auctions:

In principle, all companies or consortia that produce renewable hydrogen or derivatives such as renewable ammonia and methanol can participate in the supply-side auctions targeting these products.

The concrete eligibility criteria can differ between the various H2Global tenders and individual lots and will always be clearly outlined in the respective calls and tender documents.

If you are a producer of renewable hydrogen or derivatives, you can participate in the HPA auction in one of the ongoing or upcomiong tenders. For details, please check the HPA tender section.

HSA auctions:

For the H2Global pilot and second tender, companies intending to purchase renewable hydrogen or derivatives can participate in the demand side (HSA) auctions.

The HSA auctions for offtakers of renewable hydrogen or derivatives are scheduled to take place 12 months before the delivery of the first quantities of product auctioned in the respective HPA auction.

For more details, please check the HSA tender section.

If you are a producer of renewable hydrogen or derivatives, you can participate in the HPA auction in one of the ongoing or upcomiong tenders. You can find the details regarding ongoing and upcoming HPA auctions in the HPA tender section.

The demand side (HSA) auctions for offtakers of renewable hydrogen or derivatives are scheduled to take place 12 months before the delivery of the first quantities of product auctioned in the respective HPA auction.
For more details, please go to the HSA tender section.

The combination of subsidies from different sources and support schemes (e.g. local schemes in the country of production, tax exemption, etc.) is possible. However, any subsidies received must be made transparent to Hintco as a double funding must be avoided.

The provider of the funds determines the conditions under which Hintco receives financial support to offset the expected cost difference arising from its trading activities. These conditions are outlined in a grant agreement, specifying key parameters such as the hydrogen's "color" classification (or other criteria for defining clean hydrogen), the geographic focus, and any potential additional requirements.

The H2Global mechanism, along with Hintco, is designed to be highly flexible and adaptable - remaining "color-agnostic" in its approach. However, all terms and conditions must align with H2Global’s overarching commitment to promoting environmental and social sustainability while contributing to global climate action.

The hydrogen derivatives in the pilot tender – renewable ammonia, renewable methanol, and eSAF – were selected by BMWK, based on a market analysis and a market consultation carried out in 2021.

The products auctioned in future tenders may vary according to the individual objectives of the respective funding bodies.

No, the H2Global instrument is highly flexible and can, in principle, be applied to various products, technologies or commodity, in any region.

Its implementation depends on the terms and conditions set by the respective funding body - provided these conditions align with H2Global’s core commitment to promoting environmental and social sustainability and supporting climate action.

As the trader and physical intermediary, Hintco is the sole recipient of public funds allocated within this support scheme. These funds are drawn by Hintco based on the actual cost-of-difference incurred, which may vary across HSA auctions due to fluctuations in the demand-price curve.

Importantly, in the current setup, funds are not provided to Hintco upfront. Instead, they are disbursed upon request when a price difference arises between the long-term, fixed purchase price Hintco pays to suppliers (under the HPA) and the short-term sales prices determined through demand-side (HSA) auctions.

The process works as follows:

1. The HSA customer (offtaker) pays Hintco in advance of the delivery date.
2. The producer delivers the product.
3. Hintco draws the necessary funds from the fund provider under the grant agreement to cover any negative spread between the purchase and sales price (if applicable).
4. Hintco pays the producer within the agreed payment terms.

No, the H2Global instrument is not limited to imports; it can also be applied to hydrogen production and offtake within Europe. Although the H2Global pilot tender was restricted to imports from outside the EU due to the specific programming of funds provided by the German government, the current joint H2Global tender, supported by Germany and the Netherlands, includes production within Europe as well.

In bilateral H2Global initiatives between Germany and countries like Canada and Australia, the offtake is planned to occur in Germany, while both exporting and importing governments contribute funds to cover Hintco’s expected cost difference.

Additionally, several governments outside the EU are exploring the possibility of using the H2Global instrument independently, without direct European involvement, to support their own hydrogen market development efforts.

In the first tender, eligibility criteria for the HPA auction included minimum requirements as to the financial (e.g. equity ratio of at least 20%) and technical capacities (e.g. references) of participants in order to maximize the likelihood of projects being realized.

In principle, all companies can take part in tenders, including small and medium-sized enterprises (SMEs) and start-ups. SMEs can contribute resources and expertise either as part of a bidding consortium or as a subcontractor.

Hintco is currently in the process of structuring the criteria and award procedure for the HSA auction part of the pilot tender. In principle, any interested party located in the EU will be able to submit a bid to purchase the products sold by Hintco on the EU market. Start-ups and SMEs will also be able to participate as long as they are able to honor the contractual agreements.

For future tenders, the overall procedure as well as the detailed eligibility and award criteria may vary.

From a budgetary and state aid perspective, state funds must be used efficiently. This means that no projects may be subsidised if an investment decision (FID) has already been made. Necessary preparatory work (i.e. detailed technical and economic planning, discussions with financial institutions or other customers, etc.) is permitted and encouraged.

Offtakers have different requirements. While a few sectors require volume and price security over a longer period of time to make investment decisions (e.g. the steel industry), many offtakers are hesitant and unable to be exposed to long-term price and volume obligations in what is a very nascent and unpredictable stage of the market development.

The reason Hintco only enters into short-term sales agreements (HSA) on the demand side is twofold:

• Hintco aims to use public funding in the most effective and efficient manner possible, as public funds are scarce and their impact towards market creation should be maximized. The short-tenured auctions allow Hintco to benefit from any potential change of the demand side’s ability and willingness to pay a higher premium for the product over the timeframe of the HPA. In other words: government subsidy only flows in the amount needed to close the actual and continuously changing differential cost gap. If Hintco’s revenues increase because the market is prepared to pay higher prices for clean hydrogen or its derivatives, this reduces the state’s subsidy share accordingly.
• Hintco aims to actively contribute to the creation of a functioning market. Through short-term supply contracts, Hintco regularly generates price transparency and liquidity, thus pointing to the important elements for the development of a market.

Nevertheless, longer-term sales contracts as part of the H2Global mechanismare also envisaged and might be added to future tender designs.

Under the H2Global scheme, the contract negotiations with the participating bidders are finalized before the final bids are submitted. Once the best bidder has been identified, the award of the winning bidder closes the enforceable contract with Hintco. This ensures the highest quality of bids and increases the probability of project realization. This process is different from other support schemes, under which binding contracts are only finalized after the best bidder has been awarded.

The Pilot Auction was open to projects from all over the world that are subject to very different national regulatory regimes. This made it necessary to specify comprehensive social and environmental criteria that all applicants had to meet. Regulations that have entered into force during the pilot tender or that are in the legislative process such as the Carbon Border Adjustment Mechanism (CBAM) and the EU Supply Chain Act also had to be taken into account by Hintco and understood by the consortia participating in the auction.

Due to the complexity of the tendered product, bidders had to clarify many technical, economic and regulatory issues to prepare binding offers. The resources required for this could not be anticipated by many bidders, which is why Hintco granted several deadline extensions at various stages of the process.

All these findings will be incorporated into the design of future tenders. This will ensure that the H2Global mechanism becomes even more efficient, speeding up future tender processes.

The price signals generated through H2Global tenders encompass several key components, including the product price, transportation costs, and applicable export and import duties. This comprehensive pricing structure ensures that all significant costs related to the delivery and handling of hydrogen products are taken into account.

The prices emerging from HPA auctions provide valuable initial insights into the market, helping to establish a baseline for understanding product pricing and associated costs.

Meanwhile, the price signals from HSA auctions are particularly useful, as they are updated annually, offering more frequent and regular insights. These signals play a crucial role in tracking ongoing market trends and providing a clearer understanding of the hydrogen market’s evolving dynamics.

Moreover, the price data published by Hintco is expected to establish tangible reference prices, which could, in turn, support the implementation of future mechanisms like CfDs.

In the pilot auction, the supply side is responsible for the transport and logistics of the product into a pre-defined delivery triangle (Belgium, Germany, and the Netherlands). The final port of delivery is indicated in the project of the winning bidder (signatory to the HPA) and must meet the requirements set out in the rules of the auction process.

The HSA offtaker (signatory to the HSA) must collect the product at a predefined date and time from the point of delivery of the product.

The costs, as well as the emissions, resulting from the transportation process must be accounted for and monitored by the seller in compliance with the emission requirements set out in the HPA.

HSA auction are scheduled to ocurr 12 months before the delivery of the first quantities of product auctioned in the respective HPA auction.

Approximately one year before the first HSA auction, interested bidders have to sign framework HSA contracts with Hintco - a pre-requisite for participating in the HSA auction. After the HSA auction, the awarded bidder(s) will enter into an individual HSA with Hintco.

Find out more in the HSA tender section.

The H2Global instrument is designed to be highly flexible, replicable, and scalable. Governments worldwide are actively engaging with H2Global to explore potential new tenders.

Several models are currently being developed, including:

• Joint Import Tenders: Two or more countries provide funding with the goal of each receiving a share of the final product. A notable example is the ongoing joint tender between the Netherlands and Germany.
• Bilateral Trade Tenders: Two countries collaborate to promote trade between a hydrogen-producing nation and a hydrogen-importing nation by jointly providing funding.
• Extended Sales Models: New models are being explored to enable Hintco to enter into longer-term sales agreements by adding additional layers to the existing structure. Detailed concepts for these models are already under development and are expected to feature in upcoming tender designs. However, short-term contracts on the demand side play a key role in ensuring the efficient use of concessional (governmental) funding, while fostering price transparency and market liquidity. For this reason, most lots in the current and near-term H2Global auctions will feature one-year Hydrogen Sales Agreements (HSAs). These short-term agreements are essential to establish H2Global reference prices and indexes, laying the groundwork for a more mature hydrogen market.

The H2Global instrument can be applied to any clean product, in any region, under conditions set by the respective funding provider - as long as these conditions align with H2Global’s core commitment to environmental and social sustainability and its mission to combat climate change.

H2Global’s tenders will not all look the same. Each tender is customized to the needs of the provider of the funds and specific market characteristics.