Energy

Incentivising Investment in European Renewable Hydrogen Production_December 2022

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2 Contents 1. EXECUTIVE SUMMARY ........................................................................................ 4 1.1 Framing the Issue ................................................................................... 4 1.2 The Proposed Solution .......................................................................... 5 2. ISSUES A RH2 SUPPORT SCHEME NEEDS TO ADDRESS ............................... 7 2.1 Legal framework for public intervention to stimulate RH2 production ............................................................................................... 7 2.2 Demand-side quotas not enough on their own to stimulate RH2 production ....................................................................................... 7 2.3 Key considerations for the design of a supply-side support scheme ..................................................................................................... 8 3. PRESENTATON OF EXISTING / PROPOSED SUPPORT SCHEMES ............. 13 3.1 Overview ................................................................................................ 13 3.2 Netherlands ........................................................................................... 14 3.3 United Kingdom ................................................................................... 15 3.4 Denmark ................................................................................................. 17 3.5 France ..................................................................................................... 18 3.6 Germany ................................................................................................ 19 3.7 United States ......................................................................................... 21 4. KEY CONSIDERATIONS FOR AN EFFECTIVE REVENUE SUPPORT MODEL ............................................................................................................................... 24 4.1 Introduction ........................................................................................... 24 4.2 Overview of a variable premium (contract for difference) model ...................................................................................................... 24 4.3 Overview of a fixed premium model ............................................. 25 4.4 Variable premium / CfD model – pros and cons ....................... 26 4.5 Fixed premium model – pros and cons ......................................... 30 4.6 Demand (volume) risk ........................................................................ 31

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