Netherlands launches subsidy scheme for green hydrogen production
In an effort to meet climate targets, the Dutch government’s intention to encourage the production of renewable hydrogen has resulted in a EUR1 billion subsidy scheme, which has received the approval of the European Commission. The Dutch government seeks to support at least 200MW of new green hydrogen production capacity.
This subsidy is the successor to the 2023 subsidy scheme entitled ‘Scaling up fully renewable hydrogen power generation using electrolysis’ (OWE) and the government will accept bids from 15-31 October.
This subsidy is for companies that build and use hydrogen power generation facilities to produce renewable hydrogen. For this a company can use an electrolyser that has a production capacity of at least 0.5 megawatts.
The facility may be linked to a wind or solar electricity generation plant using a direct line. The facility may also be connected to the electricity grid with a connection (i.e. it is a grid-connected facility). A combination of both is also possible.
A single project can apply to receive a maximum subsidy of up to 50% of the total amount. The subsidy scheme entails support for up to 80% of a project’s investment costs. It will also cover operating costs, with the latter to be granted for 5-10 years — depending on a project’s specific requirements — through a contracts-for-difference mechanism.
For the operating subsidies, project developers have to provide their expected renewable hydrogen production costs up to a maximum of EUR9/kg. The subsidy is then calculated as the difference between this renewable hydrogen cost and the cost of making “grey” hydrogen from natural gas through steam methane reforming.
The “grey” production cost will be determined on annual basis by the government. For 2024, it has been provisionally set at EUR3.8131/kg and the final cost cannot be lower than EUR1.7997/kg.
A final “grey” production cost will be determined later for each preceding year based on actual costs and market conditions. The cost calculations also take into account the value of guarantees of origin for renewable hydrogen and any revenues or cost savings from greenhouse gas emission allowances from which the project might benefit.
Projects must be completed and start production within five years of receiving the subsidy, although there is a possibility of extending this deadline by up to two years in certain cases.
