Production

Dutch climate subsidy scheme will allocate at least €750m to green hydrogen and other renewable fuels

The next SDE++ round is due to open for applications in September, with bids capped at €400 per tonne of CO2 avoided

The Dutch port of Eemshaven, which is set to be one of the country's hydrogen hubs.
The Dutch port of Eemshaven, which is set to be one of the country's hydrogen hubs.Photo: Getty
The Netherlands’ €8bn SDE++ subsidy scheme is set to ringfence a minimum of €750m ($824m) to be allocated to the production of “molecules” such as green hydrogen, advanced renewable fuels and biomethane, following state-aid approval by the European Commission.

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This is separate to the €1bn tender for large-scale green hydrogen projects and the €300m H2 import auction planned for next year.
SDE++ awards an operating subsidy for 12-15 years to reimburse “the unprofitable component” of a project, based on the difference between a fixed base rate of costs and the variable market value of the product generated by a given technology. This means that if the value of the product — such as renewable H2 — rises, the subsidy paid out to the producer falls.
The subsidy also accounts for any additional revenue or avoided purchase of CO2 emissions allowances under the European Emissions Trading System.

SDE++ ­— short for Stimulering Duurzame Energieproductie (Stimulation of sustainable energy production) — will also allocate at least €750m each to low-temperature heating (such as via geothermal energy, heat pumps and solar thermal) and high-temperature heat (such as heat pumps or electric boilers for industrial processes).

While a brochure listing out which technologies it will support has not been published for the 2023 round, which is due to open in September, the previous 2022 round supported electrolysis powered by both a direct connection to renewables and the grid.

However, climate and energy minister Rob Jetten wrote in a letter to the country’s parliament last month that he would “seek to switch as quickly as possible to the methodology as prescribed in the delegated acts for renewable hydrogen” in the SDE++ scheme.

The 2023 round will split its subsidies into five bands based on “subsidy intensity”, expressed in euros of subsidy requested per tonne of CO2 emissions reduction, with applications in the lower bands more likely to succeed.
SDE++ caps this at €400 per tonne of CO2 avoided, arguing that “stimulating technologies with a subsidy intensity higher than [this] is incompatible with a cost-effective energy transition”.

The scheme operates on a first-come, first-served basis, with projects ranked by subsidy intensity only in the event that the budget limit is exceeded on a given day.

Applicants are required to submit a feasibility assessment, including a financial plan, proof of equity capital, a detailed timeline of construction and commissioning, technical specifications, and an energy yield calculation for the facility.

And the SDE++ programme also checks regularly that it has not oversubsidised projects in certain categories, including electrolytic hydrogen, even if they have not received any other support.

It also prohibits projects from applying for other Dutch subsidies, such as the Sustainable Energy Investment Subsidy (ISDE), Energy Investment Allowance (EIA) or the Subsidy Scheme for Cooperative Energy Generation (SCE).

(Copyright)
Green H2NetherlandsSubsidiesEurope
Published 11 July 2023, 06:55Updated 11 July 2023, 07:07