Hydrogen key to Dutch long-term offshore wind targets: IEA

The Netherlands' long-term targets for offshore wind deployment depend on strong hydrogen market development, the International Energy Agency said in a report Jan. 9.

The IEA also called on the Netherlands to increase demand certainty for low-carbon hydrogen through obligations and industrial decarbonization strategies.

"While demand for low‑emission hydrogen is potentially large, not only to meet domestic needs but also to export to other markets, investors want more certainty, and final investment decisions for electrolyzer projects are lagging," it said in the report titled "The Netherlands 2024."

The IEA said the Dutch roadmaps for offshore wind and hydrogen should be linked so large-scale electrolysis can take advantage of surplus offshore wind power production.

"If installed offshore wind capacity surpasses the absorption capacity of the grid, solutions must be available to guarantee demand beyond the grid to ensure the business case," it said.

Demand certainty

The Netherlands is targeting an installed green hydrogen production capacity of 3-4 GW by 2030, and has a large electrolysis project pipeline.

However, the IEA noted that final investment decisions are not being taken at the rate required to meet the Netherlands' target.

"The Netherlands will need to increase demand certainty for low‑emission hydrogen and ensure an integrated approach to support mechanisms along the entire value chain" in order to meet targets, the IEA said.

It said the Netherlands should transpose the updated EU renewable energy directive (RED III) requirements into national law, "and introduce an obligation for renewable hydrogen in industrial sectors to increase demand certainty."

The IEA welcomed steps the Dutch government was taking to transpose RED III into national law.

However, industry representatives have warned against watering down the industry targets for renewable hydrogen in the Netherlands' consultation on the proposed law.

"It lacks ambition and will set the wrong precedent in Europe, reducing the overall impact of RED III," Enertrag head of power-to-X derivative and trade Willem de Vries said on LinkedIn.

"The reduced ambition of the Netherlands (8% or 24% green hydrogen in 2030, omission of the ammonia industry) as compared to the target set in RED III (42% green hydrogen in 2030) is detrimental for the development of the overall green hydrogen industry," he said.

De Vries said the proposed law would result in higher costs for hydrogen production and transport, and further deferred investment decisions.

Platts, part of S&P Global Commodity Insights, assessed the cost of green hydrogen production via alkaline electrolysis in the Netherlands, backed by renewable power purchase agreements, at Eur8.95/kg ($9.22/kg) on Jan. 9, down from a peak of more than Eur14/kg in mid-December.

The assessment reflects one possible pathway for producing EU Renewable Energy Directive-compliant green hydrogen.