European hydrogen project investors have said they are holding back on taking FIDs because of uncertainty around the regulatory environment.

Decisions on key European policies—such as the European Commission’s consultation on two delegated acts to clarify rules around green hydrogen or the updated green energy targets under the Renewable Energy Directive (Red)—remain outstanding, making it difficult for investors in the sector to plan ahead. MEPs in the European Parliament voted through an amendment to Red recently on the delegated acts that mean they may take even longer to emerge.

“There are a lot of opportunities emerging globally, but at the same time we have to acknowledge that we do not yet know [under what conditions] we can produce renewable hydrogen,” said Anja Benz, senior regulatory adviser for hydrogen at Danish firm Orsted, at an industry conference in Rotterdam.

“We have to acknowledge that we do not yet know [under what conditions] we can produce renewable hydrogen” Benz, Orsted

“That means we cannot conclude important contracts like [power-purchase agreements] and hydrogen-purchase agreements… it is absolutely key to have that investment certainty, to have a regulatory framework in place to deliver on the investments.”

Orsted is a growing player in the nascent green hydrogen space and plans to build a 1GW plant on the Dutch-Belgian border.

Fellow Nordic energy company Statkraft agrees that investment decisions are difficult to take in an uncertain regulatory environment. The Norwegian renewable energy firm plans to open a 4MW electrolyser in the port of Gothenburg next year, producing 2t/d of green hydrogen.

“An investment decision has not been made,” Ulf Eriksen, vice-president of hydrogen at Statkraft, told the conference. “It is still challenging to make that FID in terms of getting the right decisions and approvals, getting the framework in place.”

National and EU strategies

Many national governments have put domestic hydrogen strategies in place, feeding into the European goals but also diverting emphasis to different sectors.

“What is lacking at the moment is the connection of the national strategies to the European strategy and really making it a connected strategy that allows hydrogen to be run across borders—that allows hydrogen projects to be delivered with financial decisions,” says Holger Kreetz, COO of asset management at German energy firm Uniper.

Unlike renewable energy projects such as solar parks and windfarms, hydrogen developments are not easily put in place due to a lack of infrastructure and demand certainty.  

“The challenge is one of creating a whole value chain, with all of the counterparties across that value chain having sufficient certainty,” says Michael Wagner, special adviser on hydrogen at consultancy Afry.

“We have seen a lot of heavy industries migrate out of Europe. The hydrogen producers need to have confidence these industries are going to be there to consume the hydrogen.”

A representative of the European Commission, policy officer Justin Rosing, declined to comment on the timing of upcoming regulatory changes at the conference, but said the Commission was supportive of the industry and was trying to set market principles.

“We went forward quite swiftly since we launched the hydrogen strategy,” he told the conference. “Hydrogen is in a very special position in Europe if you look at public funding that has been initiated over the past five years.”

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Author: Karolin Schaps