Dutch government to hold €1bn green hydrogen subsidy auction in October

A single project could walk away with half of the budget

Sophie Hermans, Dutch minister for climate policy and green growth.

Sophie Hermans, Dutch minister for climate policy and green growth.Photo: Martijn Beekman/Dutch government

The Dutch government will hold its previously announced €1bn ($1.1bn) auction for subsidies to support both investment and operating costs for green hydrogen projects from 15 October to the end of that month.

The maximum amount a single project could walk away with is 50% of the €998,330,000 budget. However, bidders will be ranked on a euro-per-megawatt basis.

The state aid will also go towards both investment costs to build the plant and operating costs for five to ten years to fill in the price gap with grey H2, rather than one or the other.

However, the government will only foot the bill for 80% of eligible costs to develop the project, and once commissioned, offers further monthly payments calculated as 80% of the difference between the production price of “fully renewable” hydrogen and the cost of making grey H2 from a steam methane reformer.

The government has this year calculated an average grey hydrogen price at a little over €3.81/kg and set an absolute minimum of €1.7997/kg.

This means that even if the actual market price of grey H2 in the calendar year is lower than that minimum, the government will only pay out the difference in renewable hydrogen production and the set minimum, capped at €9/kg — and will pay out nothing if the cost of grey H2 is the same or higher.

Both types of subsidy are only available to “renewable” hydrogen, as defined in the EU’s delegated acts, which set out strict limits on the electricity that electrolyser projects can purchase (see panel below) in an effort to prevent extra emissions from fossil-fired power on the grid.

The government will allow projects that produce additional hydrogen outside of this definition to apply for state aid — but only the H2 that meets the delegated acts’ criteria will receive subsidies.

Developers must have already secured environmental permits in order to apply for subsidies, while the facilities must be on line within five years of the cash being awarded.

The auction is open to projects with 0.5MW or more of capacity, and is expected to support 200MW in total.

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