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25 June 2020

Dutch-Danish hydrogen swap highlights future EU collaboration

The Netherland’s will fund a 100 MW tender for renewables, but not on home soil. Instead, it will aim to tap the excess capacity available in Denmark in exchange for €100 million that has been earmarked for the production of green hydrogen.

Through a deal signed by Dutch energy minister Eric Wiebes and his Danish counterpart Dan Jorgensen, Denmark will supply 8 TWh of renewable energy to the Netherlands, with the option to double this for an additional €100 million.

This €100 million will be allocated for Denmark’s early build out of green hydrogen production, through 100 MW in power-to-X capacity through electrolysis. The tendering process for this is as yet unclear, but could fall under a Contracts for Difference (CfD) mechanism to promote volume of production, following the success of schemes in offshore wind in the UK and Germany.

With Denmark holding a leading position in Europe’s offshore wind sector and the Netherland’s pushing to become an early leader in the green hydrogen market, the deal could signal the start of an ‘I’ll scratch your back if you scratch mine’ scenario, as both country’s try to build their presence in areas where the other has greater expertise.

Another key reason behind the deal is to pull the Netherlands over the line in its target to reach 14% renewable energy by 2020. The country was only at 7.4% by the end of 2018 and an 8 TWh boost from Denmark will provide an additional 1.4%.

Beyond 2020, the Dutch-Danish partnership could be pivotal to the Netherland’s plan to hit 32% renewables by 2030, not exclusive to the possibility for a further 8 TWh. With 1.7 GW of offshore wind compared to the Netherland’s 957 MW, Denmark has established itself as a hub for the sector. The Netherlands is set to add a further 3 GW of capacity over the next 3 years through the Borssele and Hollandse Kust Zuid wind farms, before pushing past 10 GW by 2030.

The country will also be keen to grab a share of the spoils of any offshore wind hubs in the Baltic and North Sea’s – another area where Denmark is leading the way. This week the Danish government gave the green light for the development of two energy islands totaling 5 GW, as well as the 1 GW Hesselo offshore wind farm.

These artificial islands are currently key contenders for the first large scale power-to-X plants, which is where the Netherlands will hope it can lend its expertise.

The Netherlands is one of the countries that was first to publish its hydrogen strategy as part of its push for net-zero emissions, where it identified its commitment to “scaling up and rolling out hydrogen as part of a North-western European approach.” Shell and Gasunie are already planning a 4 GW wind-to-hydrogen project as part of the Dutch Climate Accord, stating that this could grow to 10 GW by 2040.

While the Dutch-Danish deal could progress into one of the largest EU agreements in the clean energy sector to date, a similar deal was seen in the past between Luxembourg, Lithuania and Estonia, with Luxembourg falling short of its renewables pledges, while the Baltic nations had exceeded their national goals.