Hydrogen exchange offers opportunities for a hydrogen market

A hydrogen exchange, along the lines of the electricity and gas exchanges, could act as a catalyst for a market for climate-neutral hydrogen. It could also help the economic growth of a hydrogen market. This is evident from the exploratory study, ‘A Hydrogen Exchange for the Climate’, which was presented online to Minister Wiebes of Economic Affairs and Climate Policy on 30 September.

As a result of the study, Gasunie and four Dutch port authorities are now arranging for a definition study to be carried out into the practical design of an exchange on which hydrogen can be traded freely. A hydrogen exchange could be set up in stages and grow incrementally along with the formation of a market for climate-neutral hydrogen. The follow-up study that is currently being launched will be headed by Bert den Ouden, former CEO of the Dutch Energy Exchange, and will run for a maximum of one year.

Ulco Vermeulen, member of the Executive Board of Gasunie: 'Every day, we work with partners on developing the Dutch hydrogen supply chain because we have confidence in the opportunities that hydrogen presents, both in terms of climate targets and our economy. Our gas trading site TTF now houses Europe's largest virtual market for natural gas. A hydrogen exchange could have the same catalytic effect on the market forces driving hydrogen.'

CEO of Port of Rotterdam Authority, Allard Castelein, on behalf of the sea ports: ‘It is important that we all pull together on this. Not only do we want to speed up the development of hydrogen in the Netherlands, we also want to make sure our country plays a pivotal role in the renewal of Northwestern Europe’s energy system.’

Hydrogen exchange creates win-win situation

The growing demand for climate-neutral hydrogen creates the necessity for the market to work properly and for transparent, efficient pricing. A hydrogen exchange will be able to facilitate both. For example, distribution within the market can be optimised because it will allow parties to trade with each other on a knowledgeable basis, while the development of the hydrogen market can be accelerated. The exploratory report ‘A Hydrogen Exchange for the Climate’, which was Commissioned by the Ministry of Economic Affairs and Climate Policy and prepared by Bert den Ouden, shows that it would create a win-win situation for all parties involved.

The exploratory report provides a vision of a gradual formation of a hydrogen exchange that grows along with the hydrogen market and the development of hydrogen networks. In terms of volatility and temporal dynamics, the hydrogen market is expected to be half-way between the electricity market and the gas market. The Netherlands has a unique starting position due to its cost-efficient approach to sustainable energy, its location, which is perfect both for offshore wind and the landing of hydrogen imports, the role that Dutch industry plays in hydrogen, and the unique gas infrastructure that can be converted to transport hydrogen. The Netherlands also has a track record when it comes to energy exchanges: as the designer of the system of market coupling in respect of the European electricity exchanges, and the creation of Europe’s leading gas market.

In the definition study that is now about to start, and which will also be headed by Bert den Ouden, more extensive studies will be conducted into the practical aspects of how a hydrogen exchange could be set up in the Netherlands. This study is expected to take between nine months and one year to complete.

Hydrogen transport infrastructure

Hydrogen is an important link in the transition to a low-carbon economy. The demand for hydrogen is set to grow over the coming decade. From our international ports to our manufacturing and heavy haulage industries, more and more sectors are placing hydrogen at the forefront of their sustainability plans. The port authorities of Rotterdam, Amsterdam, Groningen and North Sea Port (Vlissingen, Terneuzen and Ghent) are all engaged in hydrogen infrastructure plans for their industries and other new initiatives in their respective areas. For some time, Gasunie has been working on plans for a national infrastructure connecting all these points, and in particular to make the import and transit to Germany and Belgium possible, while making hydrogen accessible to even more parties, especially newcomers, medium-sized and smaller organisations.

Hyway27

Much still needs to be done when it comes to the scaling up of production and the roll-out of clean hydrogen applications. This is why hydrogen is a vital cornerstone of the Climate Agreement and the policy of the Ministry of Economic Affairs and Climate Policy. As for transporting hydrogen, infrastructure is essential. As part of the Hyway27 project, the national government, Gasunie, TenneT and the Port of Rotterdam Authority are working alongside other parties to find out whether and under what conditions part of the gas grid can be used for the transport and distribution of hydrogen. The results of this study are expected in the first quarter of 2021.