Investors should focus on scaling up hydrogen production and waiting for higher hydrogen use before creating transportation infrastructure, such as repurposing old gas pipes, according to the Dutch energy regulator ACM.
According to ACM, investors should prioritize bringing sufficient hydrogen production capacity online before establishing transportation links to avoid incurring unnecessary expenses due to underutilization.
It also stated that hydrogen consumption, which is currently “essentially absent,” must become common in order to justify pipeline investments. Hydrogen can be used for chemical products, heat-intensive industrial operations, heavy transportation, and electricity generation, as well as a type of energy storage, although it is not generally used today.
The electrolysis procedure used to manufacture hydrogen from renewables-generated energy is still “too expensive,” according to the regulator, thus fossil-fuel derived blue and grey hydrogen must be scaled up before sustainable green hydrogen.
However, ACM believes that factoring CO2 emissions into the cost of grey and blue hydrogen could help green hydrogen become more competitive.
According to the regulator, governments should provide subsidies to increase the technological performance of electrolysers employed in the production of green hydrogen.
Operators should take a “step-by-step approach” to constructing transportation infrastructure once hydrogen production and consumption have reached a certain threshold, according to ACM.
Firms should convert gas pipelines to hydrogen use in stages to avoid stranding assets after the change, according to the report. Investors should first focus on establishing pipeline projects at industrial sites in the Netherlands, which are primarily located along the coast near seaports.
According to ACM, industrial sites can easily use hydrogen, and offshore wind sites could provide an opportunity for green electrolysis in the future.
Hydrogen could potentially be carried to seaports in liquid form or as ammonia.
Government regulations governing hydrogen markets and accompanying infrastructure should be adopted in stages rather than all at once, according to ACM. This will allow for “innovation” while eliminating “market power abuse.”
