Analysing the economic viability of hydrogen-fueled gas turbines in a sustainable Dutch electricity system
An exploratory modelling approach
M.N. van Kaauwen (TU Delft - Technology, Policy and Management)
Laurens J. De Vries – Graduation committee member (TU Delft - Energy and Industry)
P.W.G. Bots – Graduation committee member (TU Delft - Policy Analysis)
W. Nijmeijer – Mentor (Rebel Group)
Wouter van den Berg – Mentor (Rebel Group)
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Abstract
The Dutch government aims to establish a CO₂-neutral electricity system by 2035, phasing out natural gas and coal while increasing the share of variable renewable energy sources. However, the intermittency of these sources presents challenges for maintaining system reliability, particularly during prolonged periods of low renewable generation, known as Dunkelflautes. Hydrogen-fueled gas turbines have been identified as a potential solution, offering CO₂-free electricity generation and system flexibility.
This study assesses the potential role of hydrogen-fueled gas turbines in ensuring system adequacy and evaluates whether, and to what extent, government intervention is necessary to stimulate investments. A quantitative exploratory modelling approach is employed to analyse the economic viability of hydrogen turbines and system reliability under various uncertainties and market conditions. A simulation model of the Dutch electricity system is developed in Linny-R, a graphical modelling tool specifically designed for the formulation of MILP problems. Through various scenarios for the period from 2030 to 2050, the influence of deep uncertainties is analysed. Additionally, qualitative insights from expert interviews complement the analysis.
The findings indicate that, under anticipated government scenarios, significant electricity shortages are expected, particularly in later years as vRES capacity increases. While demand flexibility and battery storage alleviate shortages to some extent, they are insufficient to fully replace dispatchable generation. Hydrogen turbines can mitigate these shortages, provided sufficient hydrogen is available. However, their financial viability remains highly uncertain, as profits are highly dependent on scarcity rents rather than consistent operational hours.
Due to uncertainties, market failures and policy expectation, the study concludes that market forces alone are unlikely to drive sufficient investment in hydrogen turbines. Without intervention, investment risks remain high, leading to underinvestment and reliability issues. Among the policy measures evaluated, capacity remuneration mechanisms (CRMs) emerge as the most robust solution, as they reduce revenue uncertainty and improve financial feasibility. Reliability options, a specific form of CRM, prevent excessive generator profits through a clawback mechanism while ensuring electricity affordability.
For interventions to be effective and facilitate large-scale hydrogen turbine deployment, a coordinated approach is necessary to support the maturation of the entire hydrogen value chain. Parallel development of hydrogen production, storage, and infrastructure must be actively monitored, with targeted support where needed. A proactive approach from the government is important to prevent supply shortages and avoid the higher costs associated with delayed intervention. Without decisive action, the transition to a sustainable, reliable, and affordable Dutch electricity system faces significant risks and delays.