Dutch green hydrogen goals to boost power prices from 2024 - ICIS analysts

Author: ICIS Editorial

2021/07/26

By Daisy De Selliers

LONDON (ICIS)--Netherlands’ ambitions to develop a green hydrogen infrastructure could add bullish pressure to power prices from 2024 onwards, according to ICIS analysts forecast.

In its climate agreement, the Netherlands plans to deploy 3GW to 4GW of electrolyser capacity by 2030 to produce green hydrogen and develop the national infrastructure for the transport of hydrogen.

The latest announcement came on 22 July as the Dutch government granted Demonstration Energy and Climate Innovation (DEI+) subsidy of €3.6m to PosHYdon project to build the first offshore green hydrogen pilot.

IMPACT ON DUTCH MARKET

In a base scenario where Dutch green hydrogen electrolyser capacity would reach 4GW by 2030, average power prices between 2025 and 2030 could be 4% higher than in an economic scenario where there would be no subsidies for any kind of hydrogen production.

ICIS analysts do not expect significant price impact of hydrogen before 2024.

In 2030, ICIS analysts expect Dutch power prices at €57/MWh in a base scenario against €51/MWh in an economic scenario.

This bullish impact is largely due to the higher power demand required for green hydrogen production via electrolysis.

ICIS analysts modelled scenarios that considered the renewable generation expansion, the rise in electricity demand, the emission reduction on the industry side and the impacts on carbon and power price.

HYDROGEN PROJECTS

The PosHYdon project will use an offshore platform to convert seawater into demineralised water, and then into hydrogen via electrolysis using electricity produced by offshore wind turbines in the Dutch North Sea. It is expected to start up by the end of 2021.

Partners include oil and gas exploration and production company Neptune Energy, gas company Gasunie, offshore service company DEME and electric utility Eneco.

The Dutch government also announced on 30 June that it will commission Gasunie to develop the national infrastructure for hydrogen transport.

This followed the completion of the HyWay27 study that showed that the existing natural gas network can be used for and adapted to the transport of hydrogen. A Dutch hydrogen network will also enable to connect users, suppliers, storage and other countries.

The national hydrogen network is scheduled for completion in 2027 and will consist of 85% recycled natural gas pipes, supplemented by new pipes.

Gasunie estimates the investment for the entire project at €1.5bn. Gasunie will be in charge of connecting these pipelines between each other, to storage locations and to other countries.

The Dutch government started to develop a plan for green hydrogen development and will discuss and decide about financial support to develop the network.

Renewable energy developer BayWa also announced on 10 June that it finalised its cooperation agreements for the SinneWetterstof Hydrogen Pilot Project and started preparation for construction of an electrolyser using excess electricity from a 50MW solar farm to produce green hydrogen.

Another consortium with Equinor, Gasunie, Groningen Seaports, RWE and Shell launched the NortH2 project in February 2020 aiming to produce green hydrogen using 4GW of energy from offshore wind farms by 2030.

The project involves the construction of wind farms in the North Sea and an electrolyser plant in Eeamshaven seaport by 2027. It also considers building offshore electrolysers.