Green H2 criteria to boost PPA prices

By Rachael Burnett, Montel

The latest amendment to EU regulation around green hydrogen eligibility would raise competition among power purchase agreement (PPA) offtakers and further increase prices, experts agreed.

A recent decision by the EU to relax criteria for green hydrogen production would increase competition among offtakers and see PPA prices rise even more, experts warned at an industry conference hosted by Altenex Energy.

Green hydrogen could create competition with corporates looking to sign PPA deals, especially if it was not well regulated, one analyst said. The latest revision of rules around green hydrogen production were “disappointing” and “very weak in relation to additionality”, he added. “Obviously it’s important to get projects started but we need to avoid direct competition between renewable electricity which could be directly used [as] this is always more efficient,” he said.

Around 200 GW of renewable capacity is needed to produce 10m tonnes of green hydrogen, the annual target under the RePowerEU plans. However, increased competition was “not a problem of itself”, a developer said at the event. “The solution isn’t to try and put the brakes on that but to enable more renewable energy projects to be built,” he added. There was a lot of potential for increased green capacity as “all developers have huge pipelines” although the success rate of potential projects was small, he said. PPA supply would struggle to meet demand because of permitting and interconnection issues.

For more insights, visit the full article by Montel.