The Dutch government is widening its support for hydrogen projects through new initiatives as the Netherlands aims to lead the way in producing hydrogen for the northwest European market.

The government, which collapsed last week but continues to operate in a caretaker role until elections in March, has launched a consultation on what shape short-term state support for hydrogen projects could take. It is seeking industry input on how to best allocate €35mn ($42mn) annually in a first tender of a total budget of €250mln dedicated to hydrogen.

At the same time, the country’s green energy subsidy scheme, known as SDE++, attracted a bid from a hydrogen project for the first time, preliminary results show. The latest auction, held over three weeks in November and December, admitted participation of projects generating hydrogen through electrolysis for the first time, paving the way for hydrogen to compete for public money with other renewable energy sources such as wind and solar PV.

“CO2 reduction comparisons are not the best way to support hydrogen developments” van Niekerk, NWBA

“In 2020 we expanded the rules in order to stimulate the uptake of other CO₂-reducing technologies next to renewable energy sources. In this way various new technologies, such as hydrogen, qualify for subsidies,” the government says.

As part of its plan to become northwest Europe’s main hydrogen supplier, the Netherlands wants to convert chunks of its existing gas pipeline system to transport hydrogen. The government has a target of 500MW of installed electrolyser capacity by 2025 and as much as 3-4GW by 2030.

SDE++ suitability

In its consultation on short-term support mechanisms, the government proposes three options: dedicated hydrogen from electrolysis tenders within the existing SDE++ framework; a new subsidy scheme tailored to hydrogen from electrolysis; or an investment subsidy. The consultation will close on 9 February.

The consultation is aimed at investors making decisions during 2022 or 2023. For the longer term, the government says it is in discussion with the European Commission about the creation of the correct European framework for supporting hydrogen electrolysis. “For support in the long-term, the ministry of economic affairs and climate policy is exploring both broadening of existing instruments as well as the development of new ones,” the government says.

However, opinions are split about hydrogen’s inclusion into the SDE++ scheme. It pits hydrogen against low-carbon technologies that have had more time to mature, putting hydrogen electrolysis projects at a disadvantage because the nascent technology remains more costly. “Present CO₂ reduction comparisons are not the best way to support hydrogen developments and other support criteria would be better, especially when focusing on upscaling potential of the technology or contribution to building a new infrastructure for hydrogen distribution,” says William van Niekerk, chairman of NWBA, the Netherlands Hydrogen and Fuel Cell Association.

The Netherlands Enterprise Agency will now assess which low-carbon energy projects will qualify for subsidies. Overall, the latest round attracted more than 4,000 bids totalling €6.4bn, compared with an available budget of €5bln. The hydrogen project that participated in the auction requested a subsidy of €2mn and proposed building an electrolyser of 2MW.

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Author: Karolin Schaps