Supply and demand in the hydrogen value chain in north Netherlands coming together slowly but surely

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.’

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?

RWE, active on the production side of the value chain, plans to build two projects in the north of the Netherlands. The first project is Eemshydrogen, which involves building a 50-megawatt electrolyser in the seaport industrial area in the province of Groningen. The green power that will feed the hydrogen plant will come from RWE’s Westereems wind farm. The second project is twice as large: this is to be a 100-megawatt electrolyser to be built at RWE’s Magnum power station at the port in Eemshaven. The Oranjewind offshore wind farm, currently under construction, will supply the power.  

‘We are currently reviewing the design choices,’ says Groenendaal. ‘We are looking at synergy opportunities to reduce costs. But we can’t move forward without offtakers.’ 

Not only RWE, but energy and services group Engie, too, has plans for electrolysers, though its HyNetherlands project has been delayed. ‘We will, however, continue working to get the project off the ground,’ says an Engie spokesperson. ‘We still believe there’s an important role for HyNetherlands to play in making the chemical and industrial sectors in the Netherlands and Germany more sustainable.’

Companies building wind or solar farms to power their electrolysers face not only uncertainty about customers but also another hurdle: the ‘feed-in tariff’. The Netherlands Authority for Consumers and Markets (ACM) intends to introduce this tariff so that power producers also pay for grid connections. Currently, only customers (offtakers) pay for these. However, in response to backlash from the energy sector, introduction of the tariff has been postponed. ‘The issue surrounding the feed-in tariff has a major bearing on investment decisions being held back,’ says Groenendaal. 

Norwegian-based Equinor is also developing a hydrogen plant in Eemshaven. However, the Norwegian energy company is not building an electrolyser for green hydrogen but rather a plant that converts natural gas into ‘blue hydrogen’. Equinor will capture and store the CO₂ released in the process in aquifers. However, the company has yet to make an investment decision.

The letter sent by Minister Sophie Hermans of Climate Policy and Green Growth to the Dutch House of Representatives on 14 July does not help matters. The letter stated that no additional financial support is currently available for blue hydrogen. This news came as a disappointment to Alexander Jongenburger, Business Development Manager at Equinor. ‘That letter is not helpful when it comes to developing the hydrogen system. Producing blue hydrogen would be a good way to kick-start the hydrogen system, which is unlikely to be possible with green hydrogen alone.’ Jongenburger hopes that when a new Dutch government is installed it will come to a different decision. 

So, there are plans for the supply of hydrogen, but what’s the situation on the demand side? René Hartman, Head of Industry at GETEC Benelux, is busy working on just that. His company supplies electricity, steam and natural gas to companies at the GETEC Park Emmen industrial park. The 30 companies, of which 12 are production plants, still need 100 million cubic metres of natural gas annually, partly to generate electricity and steam in several cogeneration (combined heat and power) plants. ‘The only way to replace high-calorific natural gas is with hydrogen,’ says Hartman.

Hartman explains that the cogeneration plants are being adapted to run on pure hydrogen. A grant has also been made available for this. ‘Currently, we can already blend in 18% hydrogen for use in the existing plant. The existing plant needs to be adapted to effectively distribute pure hydrogen,’ says Hartman. Gasunie subsidiary Hynetwork already has a hydrogen pipeline running from a former gas purification plant (GZI Next)  in Emmen to GETEC Park Emmen. ‘The plan includes testing everything and filling the existing hydrogen pipeline with hydrogen, which we will deliver to GZI Next using tube trailers,’ says Hartman.      

GETEC is studying whether it can build a 25-megawatt electrolyser at the industrial park in Emmen or in the surrounding area, perhaps combined with a solar farm. ‘We are currently working on a feasibility study. We will know by the end of 2026 whether this is a positive business case and whether we can actually make an investment decision.’ With the combination of its own production and supply from the Hynetwork hydrogen network, Hartman anticipates increased hydrogen usage at GETEC Park Emmen in the future.

From an economic viewpoint, replacing natural gas with hydrogen is a challenge, says Hartman, especially if the development and use of blue hydrogen is not fostered. ‘With the current price of hydrogen and its availability, it’s not attractive to use it as a replacement for high-calorific gas, but if we can also use hydrogen as a feedstock for production processes,      that’s a different story. For such applications you can justify higher prices. If that works, the ball will start rolling and we’ll get the hydrogen value chain off the ground in the northern region of the Netherlands,’ Hartman predicts. ‘There has to be a driver on the user side, because without customers it simply won’t work.’

At Plasman, COO of magnesium manufacturer Nedmag in Veendam, is also doing the sums. The kilns used to process the magnesium salts must reach high temperatures, and that’s only possible with hydrogen. ‘The price is an issue, however. We don’t want to use hydrogen as a high-quality feedstock: we need it as a fuel, we burn it up. Green hydrogen is still far too expensive for that. The government’s decision not to focus on blue hydrogen, which is cheaper, will cause a delay of one or two years,’ says Plasman.

All the same, Nedmag is busy preparing to phase out their use of natural gas. The company’s annual consumption is between 30 and 35 million cubic metres. Hydrogen has also been tested in the burners of one of the kilns. Like at GETEC the hydrogen was delivered by tube trailer. ‘That all worked well,’ says Plasman, looking back on the exercise. ‘We learned a few lessons; after all, you find that things work out differently in practice than in theory. Hydrogen leaks quickly, and that’s something we had to address. And we succeeded, too. It was a demo project that generated a lot of interest and attention in the hydrogen community.’ 

The next step is installing a small 0.5-megawatt electrolyser on the Nedmag site, which should be completed by the end of 2026. ‘We’ll be working alongside VDL, who wants to gain more experience with electrolyser production.' This project, funded in part by the Netherlands Enterprise Agency (RVO), will produce a small volume of hydrogen, which will then be blended with natural gas. For the next step, Nedmag is studying larger electrolysers – first a 5-megawatt unit and then stepping up to a 20-megawatt unit. ‘I estimate the chance of success at fifty percent,’ says Plasman. 

‘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,’ Plasman says.

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.’

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.

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.’

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.’ 

‘It’s even more complex than we anticipated,’ says René Schutte of HyNorth, a public-private consortium that acts as a value chain coordinator. ‘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.’

The timelines of various parties in the hydrogen value chain are also out of sync. ‘Where companies that build infrastructure look 20 years ahead, production companies look 10 years ahead, and customers look 3 to 7 years ahead,’ Schutte explains. ‘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.’

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.’