Despite government initiatives Green Hydrogen market does not see dawn in ongoing 2023

In December, the price of Green Hydrogen in the Netherlands market saw a continuous decline, and this trend is anticipated to extend into January due to decreased market transactions. The persistently low Natural Gas prices have played a role in reducing production costs. Despite the government's attempts to foster optimism in the sector, the prices of Green Hydrogen have dropped, primarily influenced by elevated inventory levels in the market. Despite these challenges, the demand from the Green Hydrogen downstream fuel segment has remained strong. However, the announcement of a 4.5% interest rate has contributed to pessimistic market sentiments, further dampening the growth of the Green Hydrogen market.

In a concerted effort to boost investment in the sector, the government has implemented strategic measures. Notably, the European Commission has allocated a substantial Euro 800 million to provide support for producers involved in the renewable hydrogen (Green Hydrogen) sector. These producers are invited to engage in a competitive bidding process designed for financial assistance, wherein a fixed premium is designated for each kilogram of Green Hydrogen they produce. The overarching objective of this financial support is to address the prevailing cost gap between renewable and non-renewable hydrogen (Green Hydrogen) production. Presently, non-renewable hydrogen holds a more economically advantageous position, contributing to an inherent market imbalance. To counteract this disparity, the European Hydrogen Bank is actively offering financial incentives to bolster the overall competitiveness of renewable hydrogen (Green Hydrogen). In the upcoming pilot auction, renewable hydrogen producers have the opportunity to submit bids for EU support by proposing a premium price per kilogram of Green Hydrogen produced. The bids that align with the specified price criteria and meet other qualification requirements will undergo evaluation, ranking from the lowest to the highest bid price. Subsequently, support will be allocated in that order until the entire auction budget is fully utilized.

As per the information from the Chem Analyst Database, there is an anticipated decline in the price of Green Hydrogen in the Netherlands market during December and January. This forecast is grounded in the current market dynamics, which indicate a lower overall level of transactions and a cautious outlook for an immediate surge in demand from Green Hydrogen downstream industries. Moreover, the stability in Natural Gas prices throughout the week has led to steady production costs. However, a resurgence in demand is expected around mid-January, spurred by an increase in market transactions and a decrease in demand from the downstream industry during that timeframe. In Addition, the uptrend in expected to continue in February.