Dutch €1bn green H2 subsidy scheme to open in October

The Netherlands will accept bids for its €998mn ($1.07bn) scheme to support large-scale renewable hydrogen production plants on 15-31 October.

This round aims to support construction of "at least 200MW of electrolysis capacity" and has a budget more than four times larger than a previous subsidy round held last year, for which the successful bidders were announced in April.

It was initially announced by Dutch enterprise agency RVO in March and approved by the European Commission in July.

A single project can apply to receive a maximum subsidy of up to 50pc of the total amount. The subsidy scheme entails support for up to 80pc 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 €9/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 €3.8131/kg and the final cost cannot be lower than €1.7997/kg.

A final "grey" production cost will be determined by 1 April 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 will be selected based on their requested investment and operational subsidies, which will be expressed as € per MW of electrolysis capacity.

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.

By Akansha Victor