Oil giant Shell has taken a final investment decision (FID) to build a 200MW green hydrogen project at the Port of Rotterdam in the Netherlands — with no subsidies in place and before EU regulations have been finalised.

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Holland Hydrogen 1 — which Shell says will be the largest renewable H2 project in Europe upon completion in 2025 — will use a 200MW alkaline electrolyser supplied by Thyssenkrupp and be powered by the yet-to-be-built 759MW Hollandse Kust Noord offshore wind farm in the Dutch North Sea.

The 60 tonnes of hydrogen produced each day will be transported about 40km via pipeline to the company’s oil refinery at the Shell Energy and Chemicals Park Rotterdam, where it will replace some of the grey H2 used to remove sulphur from crude oil, although some of the supply might also be used to power hydrogen trucks, Shell said.

As the project has been given the green light before EU regulations have been finalised, there is a risk that the H2 produced might not be allowed to be labelled as “green hydrogen” due to proposed rules on “additionality”.

According to the public consultation on the so-called Delegated Acts, published by the European Commission in May, the renewable energy used to make green hydrogen must be sourced from dedicated new capacity, or from curtailed renewables, or green electricity purchased from the grid via strictly regulated power-purchase agreements. Hollandse Kust Noord is not “dedicated new capacity”.

Although if Shell is using the hydrogen itself, this may not be a big issue.

“To make an investment such as this, frankly, takes quite a lot of guts, knowing that not everything is in place,” Shell’s executive vice-president for emerging energy solutions, Anna Mascolo, tells Recharge.

But she suggests that further FIDs may have to wait until there is more regulatory certainty, explaining: “You cannot just continue making investments without knowing how things are going to work out.

“I think what you’re starting to see, not only for hydrogen, but for a lot of lower-carbon products, is that [there is] a bit of a disconnect in timing between people making investments and the regulatory environment. So you’re almost learning as you go along.”

It seems that there will also be an element of learning on the job when it comes to running the facility.

When asked what would happen to H2 production when the wind isn’t blowing, Mascolo replied: “The electrolyzer will use the baseload from the offshore wind farm. It's called a wind-load-following rule that is linked to the [EU] Renewable Energy Directive, where, at times, you can go into the grid to supplement to maintain the [stability of the] asset, but there is a minimum amount that you can do that.

“The electrolyser will also have some flexibility, so you can ramp it up and down within certain boundaries.”

She added that the project management team “will have to work on understanding how to operationalise [the project] on a day by day [basis]”.

Mascolo was also not certain if every electron used to power the electrolyser would be green, stating that it might depend on the energy mix on the grid on any given day.

And while the FID has been taken without subsidies, she explains: “That does not exclude for us to eligible or applying for subsidies later on.”

Mascolo explains that Shell has big ambitions in the green hydrogen space — planning to take at least 10% of the future global market — and that she expects Holland Hydrogen 1 to be the first of many renewable H2 projects for the company.

For instance, the oil giant is also co-developing the 10GW NortH2 offshore-wind-powered green-hydrogen project in the Netherlands, hoping to bring the first gigawatt on line by 2027.

To make an investment such as this, frankly, takes quite a lot of guts

“We want to play a leading tole in hydrogen. We want to be in the whole value chain, from production to supply, to trading — if there is trading at some point, shipping and sales, linking it back to our customers’ footprint, as well as out assets, because we can also use hydrogen in our own facilities.

“But Shell’s ambition cannot happen if we don’t see the right government support, the right regulations, if we don’t see customers picking up the product.”

While Shell says that Holland Hydrogen 1 will be the biggest green H2 project in Europe upon completion in 2025, this is far from certain, with several larger facilities planned to be up and running the same year.

For instance, BP plans to complete a 250MW project in 2025 that will also be powered by offshore wind to help decarbonise its own oil refinery in Rotterdam.

A 500MW green hydrogen project at the Portuguese port of Sines, led by Denmark’s Copenhagen Infrastructure Partners, is also due to be completed in 2025; the first 500MW of the 2GW SHYNE project in northern Spain is also scheduled to be finished that year, while construction is due to begin next year on the first 500MW of the 2GW Project Catalina in northeast Spain. Production is also scheduled to begin at the 7.4GW HyDeal España project by the end of 2025, although the scale of that capacity is not yet clear.