Developing a hydrogen market in the Netherlands

In the Dutch Climate Agreement (2019), a target of 3 to 4 GW of electrolysis capacity by 2030 was set. However, only one final investment decision has been made for substantial electrolysis capacity in the Netherlands, and numerous investment decisions have been delayed over the past year. At present, the Netherlands appears to be off track to meet the target. This report for Invest-NL explores the barriers to making investment decisions and the development of a hydrogen market.

Insights from twelve stakeholder interviews indicate that significant hurdles remain for initiating investments and establishing bilateral contracts for green hydrogen. These include:

1. High production cost for green hydrogen that does not yet align with the value to end users, leaving an unprofitable gap.

2. Uncertainty about policy, particularly how EU regulations translates into Dutch procurement obligations for green hydrogen.     

3. Hydrogen infrastructure is still in an early stage of development. With few final investment decisions taken on transport infrastructure, and limited confidence in its timely development.

The key recommendations are:

1. Explore what is required for a coordinated and stepwise scale-up of green hydrogen production and imports, and identify the most effective subsidy mechanisms to support this.

2. Initiate a process to facilitate bilateral contracts.

3. Launch an exploration to map the value of green hydrogen for end-users (where the additional costs are low relative to the consumer price).

4. Provide stakeholders with sufficient clarity on existing policy frameworks and infrastructure development to enable well-informed investment decisions.

5. Collaborate together with the Ministry of Economic Affairs and Climate Policy (EZK), Gasunie, and developers of trading platforms and standardised products to define an optimal rollout strategy for introducing standard products and a hydrogen trading exchange, including how the involved parties can support each other.

The research has been positively received within the sector and has already led to follow-up research by Invest-NL exploring the potential for a supply chain approach (recommendation 3).