The Netherlands

Part 5

Making it safe, sustainable and transportable

Hydrogen market (B2B)

The market regulation of hydrogen will have various characteristics. First and foremost, the production of hydrogen through electrolysis will be a market activity. That said, large-scale electrolysis production could use steering and guidance (locatiebeslissingen) from the Dutch government. Therefore, the Minister for Climate and Energy intends to influence the location of large-scale onshore electrolysis production sites by means of: (i) spatial regulations; (ii) network planning; and (iii) establishing detailed policy frameworks (i.e. Energy Strategy Plans (Energiestrategieën) and the National Plan Energy System (Nationaal Plan Energiesysteem)).

The latest thoughts on the preferable locations for such large-scale onshore electrolysis production under the National Plan Energy System were published in July 2023 in the draft Programme Main Energy Structure (Ontwerp-Programma Energiehoofdstructuur). This publication indicated that, for now, the following areas and municipalities are indicated as the preferable locations for these types of projects:

• North Sea Channel area;
• Delfzijl and Eemshaven;
• Rotterdam and Moerdijk; and
• Borssele and Terneuze.

Secondly, private hydrogen networks established to date and new geographically limited private hydrogen networks remain private but newly developed large-scale private hydrogen networks may become part of the national hydrogen transport network (see below).

Finally, in the event of market failures, Dutch network companies (netwerkbedrijven) could play a role in developing underground storage facilities and import terminals for hydrogen. At a later development stage this should be a market activity and the Minister for Climate and Energy foresees a system of negotiated third party access regarding hydrogen import terminals and, subject to other EU Member States’ preference, either negotiated or regulated third party access with respect to hydrogen storage facilities.

Guarantees of origin and certification

A series of pilot audits regarding certification of renewable fuels of non-biological origin (RFNBOs) against the draft RED II requirements was concluded in December 2022. The pilot was organized by the Ministry of Economic Affairs and Climate, the Netherlands Enterprise Agency (Rijksdienst voor Ondernemend Nederland) and the National Hydrogen Programme. The pilot led to the conclusion that compliance with the RED II RFNBO criteria can be demonstrated by using RFNBO certification schemes.

In addition, as of 1 January 2023, CertiQ and Vertogas (subsidiaries of TenneT and Gasunie, respectively) have merged into one organization, called VertiCer. VertiCer has thereby become the sole agency in the Netherlands and a one-stop shop providing guarantees of origin for all sustainable energy carriers, including green hydrogen.

Finally, in its REPowerEU plan, the European Commission has outlined a “hydrogen accelerator” concept to scale up the deployment of renewable hydrogen. This plan demonstrates that the ambition is to produce 10 million tonnes and import 10 million tonnes of renewable hydrogen in the EU by 2030.

Hydrogen transport network

The Dutch government envisages re-using the existing gas infrastructure for its hydrogen transport network. The rollout plan for the hydrogen transport network will include details where (and where not) hydrogen transport infrastructure will be developed. In June 2022 the Minister for Climate and Energy informed the public that a flexible, adaptive and phased rollout of the hydrogen transport network is necessary given the current uncertainties on the development of a hydrogen market as well as the interdependency of production, demand and infrastructure of hydrogen.

Gasunie’s subsidiary HNS will in due course become the designated regulated hydrogen network operator for onshore transport. For now, HNS will take the lead in the development and management of the Netherlands’ hydrogen transport network. First, HNS is working on standard hydrogen connection and transportation agreements and it has received indications from the market on the expected use of the transport network. Secondly, other than the demand and supply side, there are other system elements that will impact the development of a hydrogen transport network. In this context, a hydrogen transport network is a prerequisite for transporting hydrogen (produced at and/or near the sea) to inland customers and (underground) storage locations. Both system elements are subject to ongoing further studies on behalf of the Dutch government. Finally, the Netherlands intends to function as a pivot in the developing hydrogen chain. The latter requires close collaboration and co-ordination with Belgium and Germany.

HNS must develop the hydrogen transport network at the right place and at the right time. Governmental conditions, which will be attached to HNS as a provider of a general service of economic interest (Dienst van Algemeen Economisch Belang), must ensure reasonable tariffs, non-discriminatory access and a reduction in the maturity risk (vollooprisico) for any governmental investments.

The Dutch State co-ordination scheme (Rijkscoördinatieregeling) will apply to the construction of the hydrogen transport network. This will enable a more time efficient and centrally co-ordinated spatial permitting process. Between 2025 and 2030 the Minister for Climate and Energy and the Dutch Authority for Consumers and Market (Autoriteit Consument & Markt) will work towards a system of regulated third party access with regard to the hydrogen transport network.

Dutch parliament has been informed that the hydrogen and gas market decarbonisation package is being discussed in the European fora. Trilogues on this package, which will introduce rules on low-carbon hydrogen are ongoing and EU co-legislators (European Parliament and Council) intend to reach a political agreement on the text likely by end of this year, which will need to be streamlined with the definition of green hydrogen under the Renewable Energy Directive. In this context, a delegated act (DA) with more details on when renewable fuels of non-biological origin (RFNBOs), which include hydrogen and its derivates, can be considered “green” under RED II has been adopted. The Dutch government supports the newly introduced binding national minimum targets for the industry of 42% in 2030 and 60% in 2035 for green hydrogen and RFNBOs proposed in RED III. The Netherlands is closely monitoring these EU developments regarding RED and any hydrogen associated delegated acts.

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The overall investment costs of a hydrogen transport network are currently estimated at EUR 1.5 billion. The Dutch government intends to employ a subsidy of EUR 750 million to deal with low transport volumes and not being able to fully compensate market costs during the rollout phase. The Netherlands foresees a three phase rollout of the hydrogen transport network.

First, large industrial clusters near the Dutch coast (including Belgium and Germany) and connections with storage locations in the northern part of the Netherlands (Groningen and Drenthe) will be established (2025-2026). An alternative route could be necessary whilst an important gas pipe is not expected to be ready for re-use by 2026. Gasunie currently explores alternative routes through Noord-Brabant and the Betuwe. Secondly, further expansion of the hydrogen network (primarily north-south connections) will be realised (2027/2028). Thirdly, the final rollout of the hydrogen network, in particular connecting the province of Zeeland with the Chemelot chemical cluster in Limburg will be realised (by 2030). Following the summer of 2023, the first construction works for the hydrogen transport network will commence. A 30km pipeline will be built between the Tweede Maasvlakte and Pernis, near Rotterdam.

Specialists have advised the Dutch government to apply a minimum quality of hydrogen equal to 98 mol%. This minimum quality requirement will be evaluated three years following the commercial operations date of the hydrogen network.

With regard to the production of renewable hydrogen by means of offshore electrolysis, which is expected to kick off after 2030, the (regulation of) offshore hydrogen infrastructure must be considered. The Minister of Economic Affairs and Climate prefers that Gasunie will - in due course - be appointed as the offshore hydrogen network operator. Also, Energie Beheer Nederland will be involved in the development of the hydrogen transport infrastructure offshore as it currently participates in all (offshore) gas infrastructure in the Netherlands. Its expertise could play an important role in re-designing and re-using existing gas infrastructure assets for renewable hydrogen transport.

In the context of offshore electrolysis, the Dutch Minister of Climate and Energy indicated to the Dutch government on 28 June 2023 that the wind farm zones Hollandse Kust and Ten Noorden van de Waddeneilanden would be the preferable locations for two demonstrative projects in this respect. EUR 632 million from the Climate Fund will be made available for such projects, in addition to a total reservation of EUR 1,150 million in future budget.

Hydrogen storage

Next to transport, the storage of hydrogen will become an important part of the Dutch hydrogen infrastructure. In this respect, a hydrogen transport network road map Energy Storage (routekaart Energieopslag) was published in June 2023. This road map will also discuss the role of hydrogen storage. Hydrogen storage can take place by way of (i) short-cyclical storage to deal with temporary surpluses in supply and demand, (ii) seasonal storage to take into account seasonal fluctuations in supply and demand and (iii) long-cyclical storage to guarantee sufficient supply in case of calamities. The general hydrogen road map, published in November 2022, states that three to four salt caverns with a total storage capacity of 750 to 1000 GWh will be required by 2030. According to the current plans, EUR 125 million has already been reserved to cover the financial risks of large-scale hydrogen storage, which amount can be doubled for additional caverns, if needed.

Import

The Dutch government will create viable conditions for the import of hydrogen. On this basis market participants can work on business plans to develop (vertical) hydrogen supply chains. Further research is being undertaken regarding the expected import volumes for hydrogen and LOHC products. The sustainability criteria for renewable hydrogen will take the lead with regard to the importing of hydrogen. The Dutch Minister for Energy and Climate has already indicated mid 2023 that he intends to set out a tender of EUR 300 million for import of hydrogen carriers in the direction of North-West Europe in 2024.

Currently, the Netherlands has (various forms of) co-operation agreements with Portugal, Chile, Uruguay, Namibia, Canada, Spain and the United Arab Emirates on the import and export of (renewable) hydrogen. Noteworthy in this respect is that the Minister for Climate and Energy confirmed to the Dutch parliament that it will perform a corporate social responsibility risk analysis (Maatschappelijk Verantwoord Ondernemen risico-analyse) regarding hydrogen imports.

Current expectations are that ammonia (NH3) will become the dominant carrier for hydrogen, as it is a generally accepted carrier in practice. Ammonia is a globally traded commodity with known properties and a logistics infrastructure that is in place. In light thereof, there are various plans in the Netherlands to expand existing ammonia import facilities and introduce new ammonia import terminals.