Dutch Hydrogen Market Faces Financial Hurdles Amid Soaring Costs

2025-03-03 green

Rotterdam, Monday, 3 March 2025.
Dutch hydrogen network costs have doubled to €3.8 billion, delaying projects and raising doubts about economic viability in a financially strained market.

Cost Escalation and Infrastructure Challenges

The ambitious Dutch hydrogen network project has encountered significant financial hurdles, with construction costs more than doubling from €1.5 billion to €3.8 billion [1]. Hynetwork, a Gasunie subsidiary responsible for building the hydrogen network, has warned of a ‘significant increase in transport tariff’ expected from 2031 onwards [1]. These cost increases stem from multiple factors, including reduced potential for reusing existing gas pipelines and rising material and supply chain expenses [2].

Technical and Economic Barriers

Recent analysis by TNO researchers reveals that green hydrogen production costs have reached approximately €14 per kilogram, substantially higher than previous estimates [1]. The transportation challenges are equally daunting, with hydrogen requiring three times more energy to transport compared to natural gas [5]. This efficiency gap translates into substantially higher operational costs, with hydrogen pipeline operations requiring 3-4 times more resources than traditional natural gas transmission [5].

Market Development and Future Prospects

Despite these challenges, innovative projects continue to emerge. The Zeevonk project, a joint venture between Vattenfall and Copenhagen Infrastructure Partners, represents a promising development in the sector. This initiative combines offshore wind and floating solar power with a 1 GW electrolyser plant, aiming to commence operations by 2029 [6]. The global context shows some promise, with worldwide hydrogen demand reaching 97 million tonnes in 2023, marking a 2.5 percent increase from the previous year [4].

Policy Response and Market Adaptation

Climate Minister Sophie Hermans has acknowledged the cost uncertainties, indicating plans to discuss the increased expenses with Gasunie [1]. The government’s original target of 4 GW green hydrogen production capacity by 2030 now appears increasingly challenging, with the Planning Bureau for the Environment projecting achievement of only one-third of this goal in the best-case scenario [1]. These developments suggest a necessary recalibration of the Netherlands’ hydrogen strategy, particularly given that current low-emissions hydrogen production remains at less than 1% of global production [4].

Bronnen

Hydrogen market Cost overrun