The European Commission has approved state support for renewable hydrogen projects with developers to compete for production subsidies in 2027.
The Netherlands is planning a competitive auction in the early half of 2027 in order to enable the renewable hydrogen producers to shrink the cost gap with the supply of fossil-based.
The European Commission has authorized a €780 million, or US$900.2 million, Dutch subsidy program in order to support the development of 400 MW of renewable hydrogen production capacity.
The scheme could deliver almost 40,000 tons of renewable hydrogen a year, but projects still have to compete for funding and make their own investment choices.
Grants to Encourage Investment and Production
Successful projects will be awarded an initial upfront grant of as much as 80% of eligible investment costs.
They may also get a fluctuating production premium for 5 to 10 years, which helps to close the gap between the cost of producing renewable hydrogen and the market price.
Applicants will need to prove that their hydrogen is RFNBOs according to the European definition of renewable fuels of non-biological origin.
The Commission anticipates the Dutch subsidy program to promote the production of almost 40000 tons of renewable hydrogen per year.
It estimates that the substitution of fossil-based hydrogen could prevent around 324,000 tons of carbon dioxide emissions per year.
Approval Does Not Imply 400 MW Will Be Installed
The subsidy scheme is set up with the approval of €780 million. This does not constitute the final decision to invest in any single electrolyzer project.
Developers still need to secure renewable electricity, customers, permits, and other types of funding before they get the project to begin.
That distinction is crucial because European hydrogen auctions have had high initial interest, but some selected projects have withdrawn later due to low demand, financing terms, and development risk.
It is worth noting that the scheme is compatible with the Dutch renewable hydrogen programs endorsed by the Commission in 2023 and 2024.
The 2024 program has made available €998 million, or around US$1.15 billion, to fund a minimum of 200 MW of electrolysis capacity with a similar mix of investment grants along with production premiums.
Previous Dutch funding supported projects include the likes of the 200 MW ELYgator electrolyzer from Air Liquide in Rotterdam, which is projected to produce about 23,000 tons of renewable hydrogen a year from the end of 2027.