Spot market and certificate market simulation

Spot market and certificate trade simulation

The first spot market simulation study was conducted during 2023 in cooperation with TNO, Berenschot and many market parties. This project aimed to increase understanding of the hydrogen system and associated dynamics and volatility of marginal cost of production as an indicator of hydrogen pricing on a future hydrogen exchange.

Since 2023 much has changed, both at a regulatory level and with respect to infrastructure availability in 2030 and 2035. Much more clarity exists regarding how to interpret certain rules stemming both from the European Commission as well as from the Dutch Government. Furthermore, due to a large number of market developments affecting geopolitics, (electricity, steel and other) prices and technology, the assumed traded volumes (both physical and administrative) has changed considerably. An updated and expanded spot market simulation, among others specifically focussing on the trade (options) in hydrogen certificates, will be conducted in 2026.

Research Method

The I-ELGAS dispatch simulation model will be applied to evaluate the hydrogen trade expected in 2030 in selected regional hubs. The model will look at physical trade (including imports of hydrogen derivates) and at certificate trade. For 2030 a single regional physical volume scenario has been developed based on market data and sector experts. For the certificate trade we compare three possible systems, to better understand the implications of each system on the traded hydrogen volumes. In the modelling, the following expected or already announced regulations and policy instruments are taken into account:

1. EU Member State obligation under the Renewable Energy Directive (RED), Article 22a: the deployment of RFNBOs for final energy consumption and non‑energy purposes in industry in 2030 and 2035, such that they account for at least 42% and 60%, respectively, of hydrogen consumption. Hereafter: Member State obligation.
2. National law – annual obligation for renewable fuels of non‑biological origin in industry: an obligation for operators of industrial installations to annually use a certain percentage (4% in 2030; 9.9% in 2035) of their hydrogen consumption as renewable hydrogen units for industry. Hereafter: annual industry obligation.
3. Additional national policy in the form of subsidies to stimulate the use of RFNBOs and enable compliance with the Member State obligation by 2030, as proposed in the Explanatory Memorandum for the annual industry obligation. This can be done by providing subsidies to both the supply side and the demand side. On the supply side, this includes instruments such as OWE, SDE++, and IPCEI; on the demand side, reference is made to the announced consultation on how this will (likely) be implemented.
4. Obligation for renewable fuels of non‑biological origin in the transport sector, as laid down in Article 25 of RED III. This obligation requires a 1% share of RFNBOs in final energy consumption. Hereafter: transport sector obligation.
5. Mass‑balance system under RED III: This stipulates a physical connection between hydrogen and its sustainability certificate. As the hydrogen infrastructure is still under development, this requirement is temporarily waived within the annual obligation, allowing companies without physical access to renewable hydrogen to meet their obligation via trading of the sustainability certificate. Physically delivered hydrogen will in that case no longer be classified as renewable (RFNBO). Hereafter: temporary relaxation of bookkeeping rules.

Expected deliverables

• Updated simulation model for physical and administrative trade in the Dutch hydrogen market.
• Report with scenario analysis for 2030, 2035, and 2040, including the impact of infrastructure phasing.
• Insight into the future operation of the HWI W certification system and the book & claim mechanism.
• Advisory document for market participants and policymakers on the design of regional markets and certificate trading.
• Dataset and model files that can be used for follow‑up studies and decision‑making.

Insights from this study will help shape the development of the Dutch hydrogen market and the trading system specification for a possible future hydrogen exchange platform.