The European Commission has approved €998 million ($1.08 billion) in state aid for a Dutch subsidy scheme to support green hydrogen production, Kallanish reports.

The scheme is expected to support the construction of at least 200 megawatts of electrolysis capacity, the commission said Monday.

Under the scheme, the Dutch government will provide direct grants worth up to 80% of the upfront investment cost of the projects. It also includes a “variable premium” for 5 to 10 years.

The grants, open to projects with at least 0.5 MW of electrolyser capacity, will be awarded following a competitive auction set to run this year. To be eligible, developers will also have to prove their hydrogen complies with the EU criteria for the production of renewable fuels of non-biological origin (RFNBOs).

“Developing renewable hydrogen production is a key aspect of the EU’s climate neutrality goal,” says Margrethe Vestager, EU vice-president in charge of competition policy. “This €998 million Dutch scheme will help scaling up the production of renewable hydrogen in the Netherlands by providing support to electrolysers projects of all size, while ensuring that any potential competition distortions are kept to the minimum.”

The Netherlands is targeting to reach 500 MW of electrolyser capacity in 2025 and 3 to 4 gigawatts by the decade-end. The EU, meanwhile, aims to install at least 6 GW of electrolysers by 2024 and at least 40 GW by 2030. 

The EC’s Dutch state aid approval comes on the heels of the Commission approving a €1.2 billion Spanish scheme to support the production of green hydrogen.

Last year, the commission also approved a €246m Dutch scheme to support the construction of at least 60 MW of electrolysis capacity.