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    Netherlands starts on hydrogen network: interview


Gasunie tells NGW about its plans to turn scattered industrial clusters into an interlinked hydrogen network with cross-border links.

by: William Powell

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Netherlands starts on hydrogen network: interview

Several countries in Europe are discussing the how and the when of a hydrogen market; some have even got as far as a hydrogen strategy. But the Netherlands late in June went a little further, allowing Dutch gas transmission system operator Gasunie to proclaim in its first-half report July 21: “The Netherlands is the first country in Europe to start building nationwide hydrogen infrastructure and Gasunie has been tasked with developing it by the Dutch government.”

Gasunie’s physical presence in the German gas transmission system means it can also work in developments in the east. Gasunie’s share in the planned hydrogen infrastructure there has been nominated by the German government as an Important Project of Common European Interest.

In the first six months of this year, Gasunie transported 133 TWh within Germany – 4% less than in the same period last year despite the lower temperatures and less wind – and is still seeing demand for mains connections. CEO Han Fennema said: “Germany has great scope for carbon emission reduction over the coming years as they switch from coal and oil to natural gas.” The higher carbon price will help drive the move away from coal, he said. At home, Gasunie transported 460 TWh in the same period.

The government, an active shareholder in the Dutch gas industry since its creation, extended its control in September 2019 with the assumption of control of Groningen output, formerly the domain of NAM; and the purchase of the Zebra line in the southwest of the country near the border with Belgium.

Gasunie is the country’s only high-pressure grid operator and hence also the sole owner of all cross-border capacity. The Zebra network was built to receive gas from the UK-Belgium Interconnector. In addition to Germany and Belgium, Gasunie also delivers Groningen gas to France.


Repurposing the pipes

Making the existing natural gas pipelines suitable for hydrogen starts with the infrastructure within the regional industrial clusters. Gasunie says it will then connect these to each other, to storage facilities and to other countries. Gasunie sees the network developing that way, given that industry is the only sizeable sector to use baseload hydrogen – for this decade at least. “Hydrogen is making a major contribution to reducing CO2 emissions in industry, and soon also in mobility and the built environment," it says.

The emphasis has to be on designing an affordable energy transition. The Hyway27 report that was used by the Dutch government to make its decision, made this point in relation to cost effectiveness: “The decision to re-use the current natural gas infrastructure helps enormously, making the development of a national hydrogen network four times cheaper than completely building it from scratch.”

This has never been done anywhere in the world before: building piece by piece a nationwide hydrogen grid and all from the hand of one principal, according to Hans Coenen, the company’s head of corporate strategy speaking in an interview with NGW July 20.

He said it is possible because there are two gas grids: one built to carry Groningen gas, which consists of about 9% nitrogen; and the rest to carry high calorific gas. There is a lot of duplication and 85% of the hydrogen network will comprise hardware that is already operational now, he says. Gasunie is carefully considering which pipelines to allocate to hydrogen but whichever are chosen, they will be separately managed from the natural gas networks.

Gasunie told the government earlier in the month that Groningen can be shut three years earlier, which means that some of the development work may start that much sooner. But Coenen said this suggestion was not motivated by a desire to free up the Groningen gas pipelines for hydrogen transport. “The government has fully accepted that Groningen must close and we are helping with that. Those pipelines will be candidates for conversion but it was the government’s plans to close Groningen that have to be accommodated, not ours,” he said.

The hydrogen network will also abide by the same competitive, market-oriented rules that govern the European natural gas networks. And even though others may compete with infrastructure, it is a fact that the company enjoys an advantage by virtue of its existing asset base.

“The government has asked us to build a hydrogen network and we will apply the regulatory principles governing capacity allocation on the basis of non-discriminatory, third-party access. We do of course have a competitive advantage owing to our extensive asset base. That is the case in most industries however where capacity is a natural monopoly,” he said.

The two networks will be operated and financed as separate regulatory assets: some pipelines in the network have already been depreciated but others – such as the Zebra network in the southwest – are only halfway through their average 50-yr life. If maintained well, pipelines often can be operated beyond their asset depreciation period, he said. Also, it is not possible to predict at this point whether natural gas pipelines will be completely shut down in 2050.

Factors like these are naturally taken into account by the ministry for the economy and climate in relation to the necessary future framework, which they are looking into at this moment, he said.

It calculates that it already has 10-15 GW of capacity available for hydrogen transport without the need for compression and it is not looking at blending it with natural gas for subsequent separation: that is inefficient, Coenen says. “We are looking at pure hydrogen networks. There has been talk of blending, but with each country having its own industry standard, an overall EU standard would need to be introduced, if that is what other pipeline operators wanted. This would be a task for the EU-wide industry group ENTSO-G. But a better solution for cross border trade is to use pure hydrogen and we see the conversation heading that way, he said.

Although difficult to convert into natural gas-equivalent  the biggest electrolysers currently are only 20 MW. “And given that the Dutch government’s climate agreement includes 3-4 GW of green hydrogen, we will not need to worry about compression for this decade at least,” Coenen says.


Paying the bill

The €1.5bn ($1.6bn) cost of conversion covers the 15% of new pipelines to be constructed and preparing the existing natural gas pipelines for hydrogen transport. This involves cleaning the pipelines, as well as replacing certain parts such as gaskets and adjacent assets.

The bulk of that cost will covered by transport tariffs as all the buyers in the early stages will be industrial and not domestic consumers. However some government intervention will be needed as otherwise the cost recovery will be too slow. It will take time to build up demand and for a hydrogen supply chain to emerge “The Dutch government is currently also looking into this aspect of the decision. We are confident that it will result in a feasible solution,” he said.

He sees the conversation in the European Commission moving away from all-electrons to a more balanced mix with molecules. The cost of using electrons will be very high as the Dutch energy supply is only 20% electrons and even doubling that by 2050 still implies 50-60% of gas. In terms of peak Dutch capacity, electrons account for 20 GW while gas account for 400 GW. 

“Molecules have the advantage in terms of cost and ease of transport and storage. Our present standard of service is to be able to meet all Dutch gas demand at -17 °C: industry, households, power generation,” he said. This might have been easier with Groningen, but without it, there might be some compromise. But if the government chooses to relax the standard and raise the minimum temperature, some comfort might be lost.

In any case, Tennet (the state power grid operator) and Gasunie have been working together very closely, for some time, thinking in terms of an “energy system.” Having state-owned enterprises run both the energy grids does simplify the calculations. We are not each voting for our own company’s system but for what is needed for a robust energy system for the future. Competition between the two could add to costs,” he said.

This can include building expensive redundancy and turf wars where activities overlap or energy supply problems face alternative and competing solutions. Given the colossal costs that the transition to hydrogen entail, every euro will need watching.