OWE: Producing hydrogen using your facility

You are only being granted a subsidy for fully renewable hydrogen. You need to apply for a Guarantee of Origin for your hydrogen to demonstrate this. You can apply for these Guarantees of Origin from VertiCer. VertiCer gives us monthly measurement data about the renewable hydrogen produced.

You yourself are responsible for registering your facility with VertiCer in good time. The grid operator can arrange this for you. This is not the responsibility of the Netherlands Enterprise Agency (RVO).

In addition, a conformity assessment body (CAB) examines whether you meet the conditions of additionality and the 70% requirement for your hydrogen power generation based on the ‘delegated regulations’. 

By ‘conditions of additionality’, we mean certain rules that apply to plants. These regulations are about:

• the commissioning of the renewable electricity generation facility from which the electrolyser draws current;
• the production of renewable electricity without subsidies;
• aligning electricity production with its use in the electrolyser;
• the geographical proximity to the facilities (i.e. the bidding zone).

These regulations were laid down in Delegated Regulation (EU) 2023/1184.

By the ‘70% requirement’, we mean the requirement that the greenhouse gas emission reduction of all the hydrogen produced is at least 70%. These regulations were laid down in Delegated Regulation (EU) 2023/1185.

What do you need to do?

To demonstrate that your facility meets these requirements and produces fully renewable hydrogen, you must have your plant certified with an authorised conformity assessment body.

Your facility is certified during the first conformity assessment audit. Annual supervisory audits are carried out each year after that.

A certificate is valid for 5 years. After that, your company has to be certified again.

By sending us a statement, you notify us that you meet the requirement for fully renewable hydrogen and the 70% requirement we mentioned above. You have to send us this statement by 1 June each year, providing information about the previous calendar year.

The auditor at the conformity assessment body has to verify and sign the statement.

The statement summarises the volumes of fully renewable and non-fully renewable hydrogen produced during the previous calendar year, as well as the amount of renewable and non-renewable electricity used.

You can use the template given below for the statement.

Once you have commissioned your facility, you have to send us a progress report once every 2 calendar years. The progress report must state:

• a description of your experiences with producing hydrogen;
• information about how renewable the electricity is that you use for producing your hydrogen;
• monitoring information about your production of hydrogen and the outages and maintenance of your facility.

The template that you can use for this will be given below at a later stage. The template will clearly set out what we expect from you.

To assess whether you are receiving more government aid than allowed, we will ask you for some information. We will do this 1 year after you have commissioned your facility. It concerns the following:

• the costs incurred for building your facility (the investment costs);
• an overview of the income already received and to be received, including any support received other than the subsidy under this scheme for large-scale hydrogen production;
• An overview of the costs and revenues of producing hydrogen using your facility (i.e. from operations).

We will send you a form that you can use for providing this information. You will also be sent a template for the statement, which must be signed by your accountant.

We may ask you to cooperate in a subsidy evaluation up to 5 years after your subsidy amount was determined.

You will receive an advance on the subsidy each year for the hydrogen you expect to produce. We calculate your advance once you have put the facility into operation and the registration of the facility with VertiCer has been finalised.

The advance is a provisional amount, calculated on the basis of the expected production of fully renewable hydrogen that you stated.

The process is as follows:

• We calculate the advance payment based on the following formula: (expected annual average amount of fully renewable hydrogen to be produced) x (production price of fully renewable hydrogen – provisional correction amount for that calendar year) x 80%. The correction amount is explained in greater detail below.
• You will be paid 1/12th of this 80% advance every month.
• For the advances in the first year, we assume the expected production that you submitted.
• For the advances in subsequent years, we take your actual production of fully renewable hydrogen into account.
• We may lower your advance in the interim if your production is much less that expected.
• If you have a grid-connected or a dual-connected hydrogen power generation facility, then we will only give you an advance if you have also declared the renewable power purchase agreements for wind or solar power in the final report for the electricity you use during the first five years for a 2023 subsidy scheme for large-scale hydrogen production and the first three years for the 2024 subsidy scheme for hydrogen production.

We will know how much hydrogen you have actually produced at the end of the calendar year. For this, we use your statement concerning fully renewable hydrogen and the final correction amount. The correction amounts are outlined further on.

We offset your advance against your actual production and the correction amount. This is called ‘adjusting the amount’.

The calculation of the adjusted advance is as follows:

• (amount of fully renewable hydrogen produced in that calendar year + banked excess production) x (production price of fully renewable hydrogen – final correction amount for that calendar year) x 100%

If you are entitled to an additional amount, we will immediately settle that amount with you.

If you have received advances and the actual subsidy amount is lower than the advance, then we will offset the excess amount received with the next monthly advances.

We will be in touch as soon as possible

We will adjust your subsidy as soon as possible after the publication of the final correction amounts. It sometimes takes a little longer if we do not yet have information on your production for a full calendar year, including the statements of fully renewable hydrogen from the conformity assessment body. We need time to be able to adjust.

The Netherlands Environmental Assessment Agency calculates the provisional correction amounts each year. By November of each year, this agency announces these amounts for the following year.

The provisional correction amount is the expected market price for hydrogen production using a steam methane reformer during the period from 1 September to 31 August preceding the calendar year for which the provisional correction amount is determined. The value of the Guarantees of Origin, if applicable, for the renewable hydrogen is included, plus any advantages from the system of tradable greenhouse gas emission allowances (ETS allowances; see the drop-down menu below).

Final correction amounts in April

The Netherlands Environmental Assessment Agency announces the final correction amounts each year in April after the end of the year. We will publish the provisional and final correction amounts once they are known. We calculate the advances on your subsidy based on the provisional correction amount, and we adjust your advance retrospectively based on the final correction amount.

If your company is part of the Emissions Trading System, then you have avoided purchases or revenues generated through the sale of carbon dioxide emissions allowances under the European Emissions Trading System (EU ETS). We take this into account in the correction amount: the correction amount rises according to revenues from ETS. So you will be given less subsidy because you already have revenue from this emissions trading.

You may produce less hydrogen in a calendar year than the maximum total production covered by your subsidy. This is what we refer to as the ‘annual production that is eligible for subsidy’. You can make up for production that you do not utilise in later years, so that you can take maximum advantage of your subsidy. It is called ‘forward banking’. At the end of the term of your subsidy, we can extend your subsidy period by one year at most at your request. You can get the subsidy for the shortfall in production during this year.

You may also produce more hydrogen than the maximum eligible annual production. You can then use this excess in production to compensate for production shortfalls you may have in later years. We refer to this as ‘backward banking’. This kind of banking is capped at 25% of the annual production eligible for a subsidy. The banking conditions for your project are outlined in the letter notifying you of your subsidy decision.

In both cases, these transactions are processed automatically.

The term of the operating part of you subsidy is included in your subsidy decision. If you apply for a subsidy in 2024, it will be a minimum of 5 and a maximum of 10 years, plus a banking year if applicable. If you applied for a subsidy in the 2023 round, it will be a minimum of 7 and a maximum of 15 years, plus a banking year if applicable. We will determine how much subsidy you are entitled to at the end of this period. We take the entire subsidy period of your project into account in the process.

You will have received part of your subsidy allowance through advances and adjustments. If it is clear from the determination of your subsidy that you are entitled to more subsidy than has been paid, you will be paid the amount you are still owed. If it is clear from the determination of your subsidy that you received more subsidy than you were entitled to, then you have to refund the amount unduly paid. The subsidy period for your project ends once the final subsidy amount has been determined.

We will send you a letter

We will send you a letter informing you of our intention to determine your subsidy. This letter will include details of your facility’s production and the subsidy advances you have received. Please check whether the information is correct and complete. If that is the case, we determine your subsidy.

You will not receive the letter directly after the end of the subsidised project

We can only determine the level of the subsidy once the final correction amounts are known for the calendar year in which you had your last eligible production. The Netherlands Environmental Assessment Agency publishes these figures on around 1 April of the following calendar year. Also, we must have received all measurement values and statements regarding fully renewable hydrogen before we can establish the level of your subsidy for your project. For this reason, you will not get a letter informing you of our intention to determine your subsidy immediately after the subsidy period ends.