Gasunie – “A sustainable energy supply is cheaper with green hydrogen than without it”
On 1 March 2024, Willemien Terpstra became CEO of Gasunie. She recently presented the annual figures for the first time, plus a new strategy.
says Terpstra, who wants Gasunie to safeguard current energy security, while also building the energy supply of the future with biomethane, hydrogen, carbon storage and heat.
Electrons and molecules both have their place in the energy supply of the future,
The 2024 annual report has just been published. What are the highlights, as far as you’re concerned?
What’s important to me is that our investments in the energy transition are really starting to take off.
“We’re past the phase of PowerPoint presentations and ambitious plans once and for all. Gasunie is actually building things now. We have three major initiatives ongoing: the Porthos project for carbon storage, the start of the hydrogen network in Rotterdam and the WarmtelinQ pipeline for distributing industrial waste heat to homes and businesses. These projects help us shape our new vision: new energy for a prosperous society.”
This new vision also requires a new strategy. What is the essence of this?
We have two top priorities. First of all, we’re working on making the energy supply more sustainable for businesses and households, while offering solutions to keep industry in the Netherlands.
“Two thirds of our investment budget is going into this. They are mainly projects relating to carbon transport and storage, and hydrogen. Plus the solutions for domestic households using heat and biomethane in combination with hybrid heat pumps. At the same time, energy security needs to be safeguarded. About one third of our investments goes into the current energy supply, based on natural gas. This is important, as we need to guarantee an uninterrupted energy supply during the energy transition. We’ll continue to distribute natural gas for as long as necessary. To achieve this, the capacity of terminals for importing liquefied gas will be expanded and we’re co-investing in northern Germany. We’re also looking into extending our floating LNG terminal in Eemshaven.”
How does the new strategy differ from the old one?
The strategy was last updated in 2016. At that time, the energy transition was still just an ambition and Gasunie was developing into a European gas transporter.
“The situation is completely different now. The ambition has become a reality. We’ve now ramped up our investments in the energy transition. What’s also important is that we’re now working with other parties such as TenneT on integrated solutions more than we used to. Sustainable gases and sustainable power both have their place in the energy supply of the future. It’s about making the energy transition possible both for households and for industry.”
Industry in Europe, and especially in the Netherlands, is going through a difficult time. What role does Gasunie play in making our industry ready for the future?
In my opinion, you can’t have a prosperous society without healthy industry.
“The realisation that our industry is in trouble is becoming more and more widespread. Last year’s report from the former President of the European Central Bank, Mario Draghi, about Europe’s competitiveness was important. Now that factories are closing their doors in the Netherlands, the feeling of urgency is increasing. Gasunie plays a key role in developing a reliable and affordable energy supply, both for industry and for households. One thing is certain: our industry won’t be able to become more sustainable without Gasunie’s infrastructure. When you look at today’s energy system, 20% of it is electric and 80% of energy is provided by molecules like natural gas. In terms of molecules, we play a role in their transmission through pipelines. Electrification of mobility, industrial processes and heating systems will increase the percentage of electricity in the energy mix, but we’ll still need molecules in the future. Industry and the chemical sector, for example, require molecules as feedstocks for the production of plastics. The energy system also needs to be flexible, robust and reliable, and you need molecules for that as well.”
But won’t you still need molecules as fuel too?
Without a doubt. Examples are furnaces and industrial processes that require very high temperatures.
“And we also need molecules as a buffer for electricity generation. The supply of green electricity from solar panels and wind farms is irregular. We saw that late last year. When we had no sunshine or wind for days, the power stations were working overtime. We’ll always need what we call flexible capacity, which will need to become sustainable too in the future. Now most power stations still run on natural gas, but in the future we’ll be moving more and more to biomethane, biomass and hydrogen.
We aren’t sufficiently aware in the Netherlands that electricity and molecules strengthen each other. You won’t make it with electricity alone. Infrastructure for electricity is highly expensive. Energy from molecules is complementary to energy from electricity. We need molecules for industry and at times when there is no electricity. On top of this, we already have the infrastructure for molecules in the form of our natural gas network. We can repurpose most of that network, which benefits circularity, speed and affordability. The interaction between electricity and molecules yields the most reliable and affordable sustainable energy supply for us.
Just look at hybrid heat pumps as an example. They mostly use electricity and they reduce gas consumption. You can absorb peak demand (especially in winter) with biomethane. This reduces the load on the power grid, makes grid congestion less of an issue and allows you to be fully sustainable. In many cases, complementary solutions are the cheapest and quickest ones you can develop from a system perspective. That’s important for businesses and households, as affordability is a real issue.”
The Delta Rhine Corridor and Gasunie’s hydrogen network play an important role in the transition, but these networks are becoming more expensive and will be finished later than planned. How will Gasunie be dealing with this?
To be fair, that’s a major challenge. It’s not just a challenge for Gasunie; a whole value chain will have to be set up.
“The hydrogen molecules will have to be produced, transported and consumed. Gasunie is a facilitating party in getting this value chain up and running, but many other businesses are also involved, both on the production side and on the consumption side.
It’s true that the energy transition projects are becoming more expensive, and our infrastructure is no exception. Inflation has made everything more expensive. The protracted licensing and objection processes are also affecting us. Prolonged proceedings have caused delays of one or two years. This affects the costs.
It’s also important to note that the first cost estimates for the hydrogen infrastructure are from before the start of the war in Ukraine. Partly because of this war, we’ve concluded that we’ll need to use certain natural gas pipelines for longer. As a result we’ll only be able to convert a smaller part of the network to hydrogen in the short term, which increases the required investments.
Together with the government, we’re looking at practical proposals to accelerate licensing. It currently takes 8 to 10 years altogether to be able to lay a pipeline. We obviously respect people’s democratic right to object, but the success of the energy transition is of strategic importance and serves national interests. I think that should be given a little more weight. We can’t afford to lose too much time.”
What could Gasunie actually do to speed up the licensing process?
The construction of our national hydrogen network involves many thousands of landowners. Gas pipes are already present in a large part of those routes, and we want to convert them to hydrogen use.
“When the pipelines were constructed, we already made arrangements with all the landowners. Should we now really be making new arrangements with all of these owners, just because we want to transport a different molecule through that pipe? We’d like to rely on the existing arrangements, and that’s what we’re discussing with them.”
The first companies from the energy-intensive industry have announced their departure from the Netherlands. Will you have enough time?
It’s true that we’re seeing businesses closing in Rotterdam. De-industrialisation has been quietly ongoing for a while now.
“It’s what they call death by a thousand cuts. Many businesses in basic industry are interconnected, for example, because they supply waste heat or steam to each other. Every link that disappears weakens the whole cluster, until everything collapses.
The problem is that there won’t be many options for our industry over the next 5 to 10 years. Things are getting tight and urgency is high. You need infrastructure to become more sustainable. We’re really at a tipping point now. The question is whether we’ll be getting more sustainable with or without our industry.
Failing to make our industry more sustainable would be disastrous for the economy and employment, and it would make us dependent and vulnerable. I recently spoke to Mario Draghi about this. He said that in Europe we’ve underestimated the fundamental importance of energy and industry. These aren’t just sectors, they’re enablers for the rest of the economy and society. It’s obviously true that you can do chemistry somewhere else, but if you consider it an essential pillar of your economy, which it is, you realise how important it is to keep the chemical sector in Europe. It’s required for strategic autonomy. We shouldn’t become too dependent on other regions in the world, as there’s too much geopolitical uncertainty for that.”
It comes down to creating value chains for sustainable hydrogen and carbon storage. How is Gasunie contributing to this?
It all starts by understanding the role of molecules in the energy system.
“More and more offshore wind farms are being constructed and these produce more and more electricity. But the proceeds of these wind farms are dropping, because there are more and more hours during which they produce a surplus. During periods of high wind, these turbines produce more electricity than we need. This creates negative prices. Converting the surplus into green hydrogen means that you’re doing something useful, as you’re creating green molecules for industry and possibly for the gas-fired power stations you need as back-up. It increases the number of hours that wind and solar farms operate, which improves their business case.
Another benefit is that transporting molecules is cheaper than transporting electricity, so converting part of your wind energy into green hydrogen will lower your total investments for infrastructure.
In my opinion, many people are often too quick to conclude that the cost price of green hydrogen is too high. It’s true that a kilogram of green hydrogen is still expensive, but if you look at the energy system as a whole, you’ll see that green hydrogen makes a sustainable energy supply cheaper compared to not using any molecules. Electricity may be efficient to use, but transporting it is expensive. It’s the other way round for molecules: you lose a little energy during use, but transporting them is cheap. We need to find the right mix here.
I think that, as Gasunie, we need to explain the integration of electrons and molecules more clearly. We need to pass some of the value we create with green molecules on to our industry. I believe we should be quite pragmatic in this. Our ultimate goal is clear: creating an energy system without fossil fuels, but on our path towards this we’ll need to allow low-carbon molecules like blue hydrogen. That is cheaper and helps us move forward.”
But European regulations don’t allow the use of blue hydrogen
We shouldn’t regulate new markets too much before they’ve even had a chance to develop.
“The European RED 3 Directive (Renewable Energy Directive, ed.) includes lots of rules that stand in the way of developments. Before you’re allowed to call molecules ‘green hydrogen’, for example, you need to demonstrate that new green electricity is being generated for it, otherwise it’s seen as displacement. The consequence is that there are now wind turbines standing idle in northern Germany and Denmark that may not be used for the production of green hydrogen. RED 3 requires new wind turbines to be constructed for the production of hydrogen. I believe this is a case of putting the cart before the horse.
The idealism behind RED 3 is understandable as such, but now it’s only being restrictive. Industry needs options to become more sustainable. I’d say: let’s get that hydrogen economy up and running first, otherwise you won’t have a market to regulate.”
So you still have a lot to do. What does the new strategy mean to the organisation and its employees?
We’re no longer the monopolist that only transports natural gas.
“The energy transition has moved us onto new paths and markets that need to be developed. Our knowledge can be put to good use there too, but it’s a different type of playing field that requires more flexibility. We’ll have to be more outward-facing as an organisation, so we can respond better to what businesses and households need. Gasunie is already seeking collaboration increasingly often. On top of this, we’ll have to look at affordability as well as energy security.
The new strategy is obviously not an isolated development. It serves as confirmation of the path Gasunie has taken over the past years, and it’s a popular within the organisation. Gasunie’s employees are proud of the role we play in society and the sustainable ambition we convey. We’re also managing to recruit new colleagues in a shrinking job market. Gasunie has over 3,000 employees, and they have a lot of positive energy.”
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Gasunie – “A sustainable energy supply is cheaper with green hydrogen than without it”, source
