European Commission reveals how it will calculate 25% limit on Chinese electrolysers
The upcoming €1.2bn ($1.3bn) European Hydrogen Bank auction will assess whether or not an electrolyser is “made in China” — and therefore subject to a 25% limit — by taking stock of the components used in individual stacks, the European Commission confirmed in a document published this week.
This means that any cell production, surface treatment or stack assembly in China would count towards the 25% limit.
The European Commission raises the example of a 100MW project, with ten stacks of 10MW each.
“If three of those stacks either contain cells produced in China, have received surface treatment in China, or have been assembled in China, then 30MWe will be considered to be sourced from China,” the document notes.
“In this case the project would not pass the 'Contribution to achieving security of supply of essential goods and contribution to Europe’s industrial leadership and competitiveness' criterion.”
However, the restriction would not apply to balance of plant equipment.
Bidders seeking to access subsidies via the European Hydrogen Bank — which has a ceiling of €4/kg of H2 — would have to declare where they plan to source their electrolysers and submit as evidence non-binding deals such as memorandums of understanding or letters of intent with suppliers.
If awarded subsidies, once the project reaches financial close, developers must provide contracts with their electrolyser manufacturers which confirm adherence to the 25% limit on stacks made in China.
The project developers must also submit evidence of compliance with this criterion at the start of operations and at the end of the ten-year subsidy period.
The 25% restriction on the supply chain has been criticised as overly vague by electrolyer maker HydrogenPro, which sites all 300MW of its stack manufacturing capacity in Tianjin, China.
Other firms, such as Nel, have pointed out that since developers are unlikely to use two different sets of equipment for a project, they would likely avoid using any stacks made in China.
The auction, which is due to be launched on 3 December, also requires bidders to confirm that operational control and data storage for the green hydrogen project takes place within the European Economic Area.
Source: HydrogenInsight