Gasunie – Supply and demand in the hydrogen value chain in north Netherlands coming together slowly but surely
Plans are underway to install large electrolysers to produce green hydrogen in the industrial areas at Eemshaven and Delfzijl. An underground hydrogen pipeline is ready to go at Emmen. Industrial companies are eager to transition away from natural gas. All the ingredients for a hydrogen economy in the northern region of the Netherlands are in place. And yet, companies are hesitant to make investment decisions. So, what is still needed to get the hydrogen value chain off the ground?
No one’s going to buy a bike if there are no bike shops. And if nobody wants to buy a bike nobody will want to sell them. It’s a classic chicken-and-egg situation: no demand, no supply, but also no supply, no demand.
The green hydrogen market finds itself in a similar chicken-and-egg situation. Energy company RWE plans to build two large green hydrogen plants at Eemshaven and has already received grants to do just that. Still, the company has not yet made an investment decision. Lijs Groenendaal, Director Hydrogen RWE Netherlands, explains, ‘We will only take the next step in moving the project forward once we have certainty about offtake.’
Switching to zero-carbon energy carriers
Why would RWE produce green hydrogen if there are no (or too few) customers? In principle, there are plenty of companies in the northern part of the Netherlands that would be happy to have sustainable hydrogen. Very much so, given that Dutch industry is required to become more sustainable. If plants and factories want to keep their social licence to operate, they need to switch from fossil fuels to zero-carbon energy carriers. And for companies that are unable to electrify their production processes, such as those in the chemical and basic industries, for example, zero-carbon hydrogen is the solution.
So, both supply and demand are present. But then why is it so difficult to get the production, transport, storage, and consumption parts of the value chain rolling? After initial optimism about green hydrogen, sentiment seems to be shifting. Projects are struggling to get off the ground or are being delayed, and expectations are being scaled back.
How do various parties in the hydrogen value chain in the north of the Netherlands view the developments? What is the current state of affairs?
Plans are underway to install large electrolysers to produce green hydrogen in the industrial areas at Eemshaven and Delfzijl. An underground hydrogen pipeline is ready to go at Emmen. Industrial companies are eager to transition away from natural gas. All the ingredients for a hydrogen economy in the northern region of the Netherlands are in place. And yet, companies are hesitant to make investment decisions. So, what is still needed to get the hydrogen value chain off the ground?
No one’s going to buy a bike if there are no bike shops. And if nobody wants to buy a bike nobody will want to sell them. It’s a classic chicken-and-egg situation: no demand, no supply, but also no supply, no demand.
The green hydrogen market finds itself in a similar chicken-and-egg situation. Energy company RWE plans to build two large green hydrogen plants at Eemshaven and has already received grants to do just that. Still, the company has not yet made an investment decision.
Lijs Groenendaal, Director Hydrogen RWE Netherlands, explains,
We will only take the next step in moving the project forward once we have certainty about offtake.
Switching to zero-carbon energy carriers
Why would RWE produce green hydrogen if there are no (or too few) customers? In principle, there are plenty of companies in the northern part of the Netherlands that would be happy to have sustainable hydrogen. Very much so, given that Dutch industry is required to become more sustainable. If plants and factories want to keep their social licence to operate, they need to switch from fossil fuels to zero-carbon energy carriers. And for companies that are unable to electrify their production processes, such as those in the chemical and basic industries, for example, zero-carbon hydrogen is the solution.
So, both supply and demand are present. But then why is it so difficult to get the production, transport, storage, and consumption parts of the value chain rolling? After initial optimism about green hydrogen, sentiment seems to be shifting. Projects are struggling to get off the ground or are being delayed, and expectations are being scaled back.
How do various parties in the hydrogen value chain in the north of the Netherlands view the developments? What is the current state of affairs?
Hydrogen essential for sustainability
Plasman says,
Hydrogen is essential for making our company more sustainable, but it does require a significant investment in wind energy, electrolysers, cables and pipelines.
‘Costs present a bottleneck. We compete on the global market, so if green production is much more expensive than production using fossil fuels, we risk pricing ourselves out of the market. That’s why it makes sense for us to start small,’
While supply and demand are evolving, slowly but surely, Gasunie is working on the pipelines that will connect production and offtake. ‘I’m pleased with the progress we’re making,’ says Gasunie’s Helmie Botter, who is responsible for hydrogen transport in the Netherlands. ‘We’ve made the most progress in Rotterdam. We’ve pressure-tested the pipeline there, with positive results. That section will be operational in the first half of 2026.’
Vital link between supply and demand
The pipeline in Rotterdam is initially intended to transport hydrogen produced by Shell’s electrolyser (Holland Hydrogen 1) to the refinery in Pernis. It also forms the first section of the Delta Rhine Corridor, connecting Rotterdam with the Ruhr region of Germany.
The network is a vital link between supply and demand. Eventually, hydrogen supply will consist of hydrogen imports coming in through the Port of Rotterdam and hydrogen produced on land. Demand will be concentrated primarily in the industrial and chemical clusters in the Netherlands, Belgium, and Germany. On 5 September, the project procedure for the western section of the Delta Rhine Corridor got underway. This section runs from Rotterdam to Boxtel, where the new hydrogen pipeline will be connected to an existing pipeline, connecting Dutch industrial clusters with each other, with hydrogen storage facilities, and with the neighbouring countries.
Competitive tariffs
Gasunie is hard at work in the north of the Netherlands, too. Work is underway on the hydrogen pipeline between Delfzijl and Eemshaven, the section leading to Ommen and Emmen, and the section up to the German border. The latter will connect to the hydrogen network that Gasunie and other parties are building in northern Germany, which will, when completed, provide access to German industry as far afield as Hamburg and Bremen. ‘We are on track to have this part of the national network completed by the second quarter of 2029,’ says Botter. The HyStock hydrogen storage facility in salt caverns near Zuidwending will also be connected to the network.
As with tariffs and the electricity grid, there is also discussion about future transport tariffs for the hydrogen network. Gasunie is discussing a new financing model for the national network with the Ministry of Climate Policy and Green Growth. ‘The hydrogen market is developing more slowly than previously envisioned and the forecast costs have increased, bringing the future transport tariffs and Gasunie’s risk position under pressure,’ says Botter. ‘We are currently exploring solutions similar to the German model. This would mean that investments would be spread over a longer period, making tariffs stable, reliable and competitive for market participants.’
Fostering demand
Gasunie is also examining what additional measures are needed to help kick-start the hydrogen market. Botter explains, ‘In all scenarios, hydrogen is part of the energy system of the future. Having affordable hydrogen is under pressure in the short term. Low-carbon hydrogen and fostering demand are key elements in kick-starting the market, as is simplifying the rules in the early years of market development. Pragmatism is now needed to get the market rolling.’
If RWE completes the 50-megawatt electrolyser before 2029 (as planned), it will not be able to send the hydrogen by pipeline, given that Gasunie will only be completing the northern section of the hydrogen network in 2029/2030. Therefore, RWE is exploring an alternative together with Groningen Seaports: the kickstarter pipeline, a plastic pipeline running from Eemshaven to Delfzijl. To ensure that hydrogen is supplied to the industrial cluster in the eastern part of Groningen sooner rather than later, Botter is in discussions with regional TSOs to explore how these market players can be connected. ‘There’s a lot of potential, but it’s still a puzzle how we can bring together demand, supply and transport all at the same time.’
More complex than anticipated
Botter feels that the first step is the hardest. ‘There are a lot of parties who want to offtake smaller volumes of hydrogen, but those volumes alone aren’t enough to justify major investment decisions at RWE, Engie and Equinor. Once we have a number of larger producers and customers to close the loop, it will be easier for smaller parties to join.’
René Schutte of HyNorth, a public-private consortium that acts as a value chain coordinator, says:
It’s even more complex than we anticipated,
‘Interests of the various parties in the value chain are often conflicting. A producer needs to be able to charge high prices to offset their substantial investments, while customers can’t afford to cover a much higher price compared to natural gas.’
Getting around the chicken-and-egg problem
The timelines of various parties in the hydrogen value chain are also out of sync.
Schutte explains,
Where companies that build infrastructure look 20 years ahead, production companies look 10 years ahead, and customers look 3 to 7 years ahead
‘This means we need to develop large volumes for transport, slightly smaller volumes for production, and even smaller volumes for offtake.’
So Schutte is advocating for government support to break long-term production contracts into smaller, shorter-term offtake contracts. ‘What RWE and Equinor are offering is something very few parties can handle. We need to find a way around this chicken-and-egg problem. The government needs to assume risks – not that this necessarily means that this will cost taxpayer money.’
Government support for the final push
The hydrogen value chain in the north of the Netherlands is slowly getting off the ground. The infrastructure is being built, producers are ready, and buyers are interested. Government support is needed for the final push, because the price gap needs to be closed. Further delays in making industry more sustainable would be a shame, Schutte believes. ‘We have no choice. The world must remain liveable.’
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Gasunie – Supply and demand in the hydrogen value chain in north Netherlands coming together slowly but surely, source
