D7A.2 Techno-economic analysis of hydrogen value chains in the Netherlands: value chain design and results

Becoming a carbon neutral continent is one of the main political priorities of the European Commission. The Commission is currently spending a lot of attention in establishing the set of required legislations, known as the Fit for 55 package, to move towards the in-between goal of 55% emission reduction compared to 1990 in 2030. Similar intentions are made by the Dutch government, that initially aimed for 49% emission reduction in 2030, but the new government decided to target with its policies to achieve 60%. Many studies showed the need for green molecules to fulfil the energy and material demands in a sustainable manner. Hydrogen, renewable and/or low carbon, is foreseen as one of the important carriers to fulfil this transition.

In this study, levelized costs of potential hydrogen value chains, divided by five types of end-uses are modelled in the Dutch context in a systematic way. The study gives detailed insights in the foreseen 2030 cost breakdowns and compares the costs with the existing, and foreseen sustainable alternatives to give insights in their potentials and drawbacks. Broad attention is paid to the most impactful parameters that are uncertain, in order identify their sensitivities on the results. As in every modelling study, the quantitative results should be evaluated with sharp notice on the assumptions used, to fully understand them and to gather the correct insights. Related to the main aims of this study, specific attention is paid to the following aspects: to obtain insights in the most critical costs and determinants for acceptable business cases, to identify the impact of different hydrogen sources (domestic green, domestic blue or import) and to analyse the relations between the different value chains. Based on the results and analysis performed in this report, we conclude the following key insights related to different parts of the value chain:

1. Hydrogen production. There is a high uncertainty range in the dominant cost factors that will determine what source of hydrogen will become most competitive in 2030. A significant difference between green hydrogen production plants with dedicated offshore windfarms and newly constructed blue hydrogen production plants using ATR+CCS, is that the main cost uncertainty of green is in the CAPEX, before the investment decision, while for blue these are in the OPEX (i.e. natural gas price), which remain uncertain at the moment when the investment decision is made.

2. Transport. Launching customers can act as steppingstones towards a cost-effective transport system for hydrogen on a national, regional and local level. A cross-sectorial approach could benefit the transport costs of regional pipelines for different types of end users. In this example, the relatively large volumes of decentral industrial high temperature heat plants could help to achieve the volumes to make hydrogen locally available for other types of end users.

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   End-users. In all types of hydrogen end uses, production costs represent the largest share in the total value chain costs. Note in this regard, however, that in the end no single value chain step can be missed to make hydrogen available at the right place, form and time. Situational aspects, technological details and/or mutual benefits of combinations between end-users strongly determine what options are available and cost effective, and where and when. The document contains a description of the most important end-users: industry (including decentralized high-temperature heat consumers and feedstock consumers), e-fuels, and the built environment.