D3.3 Individual and system uncertainties in hydrogen value chain developments

Many uncertainties cloud the role that renewable hydrogen may fulfil in the future Dutch energy system. These uncertainties hinder decision-making by public and private stakeholders which leads to a (too) slow uptake of renewable hydrogen in the Dutch energy mix. Investment decisions of individual stakeholders stall due to uncertainties across the value chain from supply to end-use. How to effectively deploy mitigation strategies enabling investment is not self-evident in the multi-stakeholder context of a new value chain such as that of renewable hydrogen.

The main objective of this HyDelta 2.0 research activity was to enhance the understanding of the impact of risk and uncertainty on stakeholder collaboration and investment decision-making. The conclusions drawn and recommendations made in this study focus on both the uncertainty identification as well as collaborative mitigation of uncertainties.

The first key insight drawn is that the large variety (100+) of investment uncertainties can be structured in a much smaller number of groups. We have identified 11 such groups. Interdependencies between uncertainties in those groups emerge. These uncertainty groups each need to be perceived as collectively acceptable before business cases can turn positive in support of investment decisions.

The second key insight illustrates the need to collaborate: Individual investment decision-makers rarely have a direct influence over all these groups of uncertainties. Collaboration between stakeholders along the value chain is required to reduce uncertainty to acceptable levels, enabling more synchronised decision-making.

Addressing uncertainties collectively can be done through deployment of three mitigation strategies:

• the presence of the uncertainty to prevent stalling investment decisions
• potential consequences of the uncertainty to stakeholder(s) able and willing to take responsibility for (e.g. governmental bodies). Partial transfer may also be a viable strategy.
• the possibility of occurrence and/or consequence of the uncertainty by sharing the responsibility of preventive mitigation measure deployment and dealing with consequences.

Two recommendations can be considered by value chain stakeholders and Dutch government: Stakeholders in hydrogen supply chains can follow the Value Network Analysis-based process to identify, (re)distribute and mitigate investment uncertainties. An entity that has the mandate to broker agreements and distribute value, cost, uncertainties and coordinate mitigation measures needs to lead this process to achieve acceptable residual uncertainties in investment decisions of both public and private stakeholders.

Dutch governmental bodies should explore policy concepts that (1) triggers value chain collaboration and (2) aids in mitigating unacceptable uncertainties without an owner that hamper investments.