HYOFFWIND – Power to Gas

Feasibility study for industrial scale conversion of renewable electricity (offshore wind) to green hydrogen with injection in the natural gas transmission grid.

End Report

(September 2019)

The feasibility study was made possible with the support of the Energy Transition Fund (ETF).

Table of Contents 1 General introduction ...... 4 1.1 Purpose of the study ...... 4 1.2 Executive summary ...... 5 2 Presentation of the project partners ...... 7 2.1 Eoly ...... 7 2.2 Fluxys ...... 7 2.3 Parkwind ...... 7 3 Power-to-Gas vision ...... 8 3.1 Societal challenges ...... 8 3.1.1 Climate change ...... 8 3.1.2 Local air quality ...... 8 3.1.3 Integration of renewable energy in the electricity grid – need for balancing ...... 8 3.1.4 Integration of renewable energy in the electricity grid: need for storage and conversion ...... 9 3.2 Social added value of Power-to-Hydrogen ...... 10 3.2.1 Making sectors sustainable ...... 10 3.2.2 Local air quality – no local emissions ...... 12 3.2.3 Balancing the electricity grid ...... 12 3.2.4 Positive impact on the economy ...... 12 3.2.5 Cost efficient transport of energy ...... 13 3.2.6 Cost efficient storage of energy in the gas grid ...... 14 3.3 Catalyst for green hydrogen economy ...... 15 4 Business economics ...... 16 4.1 Introduction ...... 16 4.2 H2 market today ...... 17 4.2.1 Grey hydrogen market ...... 17 4.2.2 Green hydrogen market ...... 19 4.3 Revenues ...... 20 4.3.1 Natural Gas grid Injection ...... 20 4.3.2 Industry ...... 20 4.3.3 Mobility ...... 21 4.3.4 Conclusion ...... 23 4.4 Alternative revenues ...... 24

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Hyoffwind – ETF feasibility study Public version 4.4.1 Grid balancing ...... 24 4.4.2 Oxygen (O2) ...... 24 4.4.3 Heat ...... 24 4.5 Cost structure ...... 25 4.5.1 Plant efficiency ...... 25 4.5.2 Equivalent full load hours ...... 25 4.5.3 CAPEX ...... 26 4.6 Business case...... 28 4.6.1 Conclusion ...... 28 4.7 Required government incentives ...... 30 4.7.1 EU Government incentives ...... 30 4.7.2 Federal government incentives ...... 34 4.7.3 Regional government incentives...... 35 4.7.4 Conclusion ...... 38 5 Engineering ...... 39 5.1 Introduction ...... 39 5.2 Summary conclusion ...... 40 5.3 Basis of design ...... 41 5.3.1 Ambient conditions ...... 41 5.3.2 Soil investigation ...... 41 5.3.3 Potable water ...... 41 5.3.4 Waste water ...... 41 5.3.5 Electrical requirements from the grid connection study (cos phi and harmonics) ...... 42 5.3.6 Noise conditions ...... 42 5.4 Electrolyser technology assessment and selection ...... 43 5.4.1 Alcaline / PEM ...... 43 5.5 The PEM technology is a more recent technology which evolved out of the space industry and is now more and more applied in electrolyser applications of increasing scale. System design 45 5.5.1 Principle diagram ...... 45 5.5.2 Electrical single line diagram ...... 45 5.5.3 Demiwater production ...... 47 5.5.4 H2 compression: diaphragm vs. reciprocating ...... 48 5.5.5 H2 injection in NG grid ...... 49 5.5.6 I&C ...... 50 5.5.7 Safety ...... 50

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Hyoffwind – ETF feasibility study Public version 5.5.8 CAPEX ...... 52 5.5.9 OPEX ...... 52 5.6 System sizing (CAPEX/OPEX optimization)...... 53 5.6.1 Redundancy/availability ...... 53 5.6.2 Advantage of modularity ...... 53 5.6.3 Scaling up of existing capacity (phased implementation) ...... 54 5.6.4 Fixed power input/fixed hydrogen output ...... 54 5.7 Operating principles ...... 55 5.7.1 Link with offshore wind production ...... 55 5.7.2 R2 grid balancing services ...... 57 5.7.3 MCR/MSOL ...... 58 5.7.4 Proposed operational profile ...... 58 5.8 Possible offtakes ...... 58 5.8.1 H2 offtake (NG injection, industry, mobility) ...... 58 5.8.2 Waste heat ...... 59 5.8.3 Oxygen ...... 60 5.9 Siting...... 61 5.9.1 Possible options for plant location ...... 61 5.10 Annexes ...... 62 6 Regulatory ...... 63 6.1 Introduction ...... 63 6.2 Overview of current regulation around power-to-gas ...... 63 6.3 Main regulatory barriers for power to gas ...... 63 6.3.1 Need for a network accessible by third parties on a non-discriminatory basis ...... 63 6.3.2 Injection of H2 in the NG grid: where are we today? ...... 63 6.4 Conclusion ...... 64 7 Permitting ...... 65

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Hyoffwind – ETF feasibility study Public version 1 General introduction 1.1 Purpose of the study

Eoly, Fluxys and Parkwind are co-developing the HYOFFWIND project with the intention to build a water electrolysis plant of about 25-33MWe in Zeebrugge, Belgium, by 2022-2023.

The parties are complementing their expertise:

- Parkwind develops, builds, operates and maintains off-shore wind farms;

- Eoly develops, builds, operates and maintains hydrogen facilities (0.5MWe plant for logistical mobility in operation on its distribution centre in Halle), and is also active as energy producer supplier and fuel supplier in Belgium;

- Fluxys develops, builds, operates and maintains natural gas handling and transmission systems in Belgium.

The project objective is to install a first industrial scale green H2 production installation in Belgium. In this way, the consortium expects to participate to the development of green hydrogen usages for mobility and industrial applications.

The plant will be dedicated to the production of green hydrogen. In order to optimize the usage of the installation and knowing that the development of hydrogen mobility may take time, the following additional revenue streams have also been considered:

- Offering ancillary services to Elia;

- Injection of green gas in the natural gas grid.

A phased implementation of a 25-33MWe installation has been considered as well. The phases that are considered are based on economic aspects, market evolution, and available support mechanisms:

- Phase 1: initial installation with a capacity of a third up to half of the final installation in terms of production (between 8 and 13MWe);

- Phase 2: extending capacity up to the full available electrical capacity (approximately 25- 33MWe).

The idea behind the phasing is to reduce the initial CAPEX of the installation by sparing the cost of some main equipment (such as electrolyser(s)/transformer(s)/rectifier(s)/compressor(s)/cooler(s)), and allowing to progressively develop the H2 market.

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Hyoffwind – ETF feasibility study Public version 1.2 Executive summary

Green hydrogen is seen globally as the key component in the transition towards a decarbonized future. In Belgium, 20-25% of the total energy demand will be fulfilled by electricity (taking into account increased electrification of various applications). The remainder of the total energy demand will be fulfilled by other energy carriers and is more difficult to be decarbonized (because it can’t be replaced directly with renewable energy). Hydrogen has a very high energy density and can be produced from renewable electricity by electrolysis. Because of this, hydrogen is the key component to achieve a full decarbonization of the energy demand. The below figure shows the projection of total energy demand in Belgium, and the energy demand of different sectors (source: federaal planbureau):

The consortium is convinced that the first steps to build the green hydrogen economy need to be realized in the short term, to achieve the long-term goals of the Paris climate agreement. This feasibility study, for a 25MWe electrolysis installation located in Zeebrugge, learns that:

- From a technical point of view, a 25MWe electrolysis installation is possible. Electrolyser manufacturers are ready to commercially offer industrial-scale solutions. These solutions can be offered as turn-key solutions.

- From a permitting point of view, a 25MWe electrolysis installation located in the harbor of Zeebrugge is not a SEVESO activity, and has limited impact on environment, people and nature. This view is also supported by the fire guard.

- From a regulatory point of view, additional effort is needed to develop a regulatory framework for green hydrogen. Especially when considering green hydrogen as an energy carrier and as an important component of a decarbonized energy mix. However, the regulatory framework is sufficiently developed to realize a 25MWe installation.

- From an economical point of view, the feasibility study learns that it is very difficult to achieve a healthy business case for green hydrogen. This is because the market for green hydrogen is not yet developed (with regards to production, distribution and end usage), and because of the impact of the electricity price (commodity and grid fees) on the cost structure of green hydrogen. The high investment cost for a 25MWe electrolysis installation, prevents entrepreneurs from taking the risk of developing the green hydrogen market.

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Hyoffwind – ETF feasibility study Public version The government could take some actions to reduce the entrepreneurial risk, and help realize the social added value of green hydrogen:

- CAPEX support: would reduce the investment cost (and associated risk) for entrepreneurs. In addition, it has a positive impact on the levelized cost of producing green hydrogen. This could result in a better offering towards end users, and therefore have a positive impact on the green hydrogen economy. CAPEX support lowers the production cost of green hydrogen and brings the cost closer to break-even level / the revenue MWh from mobility and industry. CAPEX support can speed up the Final investment decision. - OPEX support: OPEX support: can speed up the volume/scale up of the hydrogen production. - Proactive collaboration from the Belgian authorities needed to introduce Important Projects of common European interest (IPCEI’s) on Hydrogen to EU DG Grow. Hyoffwind can act as an H2 source for buyers in an IPCEI application. - Up and running system of guarantees of origin: a transparent and cost-efficient system platform to create, trade and cancel guarantees of origin can take more market value. - Reducing grid fees and public service obligations: this has a positive impact on the levelized cost of producing green hydrogen. - Initiatives to expand the hydrogen mobility market - Initiatives to expand the hydrogen industry market. o Stimulate the usage of Hydrogen with more incentives in the revision of the EU ETS Monitoring & Reporting directive.

In conclusion, this feasibility study positively answers the question whether the technology is mature enough to realize industrial-scale production of green hydrogen. However, the market for green hydrogen is not yet developed. This means that the realization of an industrial-scale electrolyser without financial support is very challenging. The valorization of green hydrogen is a major component in the business case, and this leads to a chicken-and-egg situation. The consortium has a strong belief in green hydrogen and the further development of the green hydrogen market, both in industry and mobility.

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Hyoffwind – ETF feasibility study Public version 2 Presentation of the project partners 2.1 Eoly

Eoly is the sustainable energy producer of Colruyt Group. Eoly generates electricity with wind turbines, solar panels, and combined heat and power. The company relies on proven technologies for the production of carbon-free energy, but also experiments with innovative technologies such as hydrogen.

Eoly is also a B2B electricity supplier for companies with a consumption exceeding 5GWh per year. 2.2 Fluxys

Fluxys is a Belgium-based, fully independent gas infrastructure group. The company is a major gas transit operator and its offering combines gas transmission, gas storage and terminalling of liquefied natural gas (LNG).Present across Europe, Fluxys contributes to a sustainable energy future and our passionate teams secure reliable and affordable energy flows into the market.

Besides its pipeline, storage and LNG terminalling assets in Belgium (owned and operated by Euronext listed Fluxys Belgium), Fluxys' partnerships include ownership in an LNG bunkering ship, the Interconnector and BBLpipelines linking the UK with mainland Europe, the Dunkirk LNG terminal in France, the NEL and TENP pipelines and the EUGAL pipeline project in Germany, the Transitgas pipeline in Switzerland, the DESFA gas transmission infrastructure and LNG terminal in Greeceand the TAP pipeline from Turkey to Italy under construction to bring gas coming from Azerbaijan and potentially other sources to Europe.

Over the last decade Fluxys has become a reference partner for gas infrastructure projects and ventures across Europe. The company’s ambition is to keep stepping it up and develop into a preferred gas infrastructure partner outside Europeas well.

Furthermore, Fluxys is more and more exploring technologies related to the energy transition (e.g.: CCS, CO2, hydrogen, etc.) which is illustrated by it’s participation in the Hyoffwind project.

2.3 Parkwind

Parkwind believes the future is powered by renewable energy. With over 10 years of experience in developing, financing and operating wind farms, Parkwind has established a unique position in the industry. With already 552 MW under operational management, Parkwind is determined to continue increasing the share of green energy through its collaborative approach with local communities, governments and suppliers. While currently installing another 219 MW in the North Sea, Parkwind is also developing new projects in Ireland and Germany. Applying new technologies , innovative design solutions and installations techniques, Parkwind ensures the transition to green energy respects the environment and all its stakeholders.

Composed of over 90 professionals operating from offices in Belgium and Ireland, Parkwind consolidates all offshore wind energy activities of its Belgian shareholders : the Colruyt Group, Korys and PMV.

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Hyoffwind – ETF feasibility study Public version 3 Power-to-Gas vision 3.1 Societal challenges

3.1.1 Climate change

The latest IPCC report (see link) and the Climate Conference of Paris (COP21) indicate that it is necessary to limit global warming to 1.5°C (compared to pre-industrial levels). To reach this objective, it is necessary to globally reduce the net CO2 emissions to zero.

In line with the international Climate agreement of Parijs, the European Commission has published a strategy to become climate neutral by 2050 (see link). The strategy includes all sectors of our economy, and each sector must strive for neutral CO2 emissions.

In the short term, the EU will adopt a series of directives and EU regulations that will affect the climate and energy landscape in the 2021-2030 period. These directives and regulations are in line with the strategy towards 2050. These directives include (amongst others):

- The Clean Energy Package for all Europeans (see link); - The Clean Mobility Package (see link); - The Gas Package 2020 (see link).

It is clear from all these guidelines that more investments in renewable energy are needed.

3.1.2 Local air quality

The impact of transportation on the local air quality is significant. The transportation sector is responsible for:

- 36% of the total emissions of nitrogen oxides (NOx); - 34% of the total emissions of soot; - 12% of the total emissions of fine particles

With 36% of the total emissions of nitrogen oxides, the transportation sector is the most important source of nitrogen oxides (see study VMM).

3.1.3 Integration of renewable energy in the electricity grid – need for balancing

Renewable energy sources (wind, solar) are characterized by:

- Decentral production; - High unpredictability and fluctuations in the amount of energy produced.

As the energy system evolves into a low-carbon system, the coordination of production and consumption will become a huge challenge for the electricity grid. To ensure balance on the transmission and distribution network, and to avoid local network congestion, decentralized balancing is needed (see study Elia).

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Hyoffwind – ETF feasibility study Public version 3.1.4 Integration of renewable energy in the electricity grid: need for storage and conversion

Also related to the increasing integration of renewable energy production, there is an increasing need for storage options to catch the surpluses of green energy. Due to the increasing electrification of energy demand, the summer-winter profile must also be added to this. The energy demand is much greater in winter than in summer (heat). The seasonal fluctuation in energy demand is now largely absorbed by the gas network.

30 Gas Maxmin-Ratio: 3.0

15 Power Maxmin- Ratio: 1.3 10

Monthly Average Total Load in GW in Load Total Average Monthly 5

0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Gas Consumption Power Consumption

The need for storage capacity is increasing due to the increasing electrification of energy demand and the increasing integration of renewable energy sources. There are different ways to store energy. The following picture provides a comparison of the possibilities depending on the capacity and storage duration:

While batteries will play an important role in accommodating small variations (within the day), they will not be able to meet the need for high capacity storage with current technology. This need can be met by Power-to-Hydrogen.

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Hyoffwind – ETF feasibility study Public version 3.2 Social added value of Power-to-Hydrogen

Power-to-Hydrogen, based on renewable electricity, can provide an answer to the above societal challenges, because:

- Hydrogen can be used as fuel in mobility, as feedstock in industry, and can be injected in as a carbon free energy carrier in the existing natural gas grid; - A hydrogen electrolysis installation can be used to offer ancillary services.

According to a study of the World Energy Council, hydrogen is indispensable to achieve the objectives of the Paris Climate Agreement (see link). In the below sections, the social added value of Power-to- Hydrogen is discussed in more detail.

3.2.1 Making sectors sustainable

3.2.1.1 Mobility Hydrogen can be used in mobility by means of a fuel cell. A fuel cell performs a reverse electrolysis reaction (hydrogen is converted into electricity and water). No harmful substances are released during this reaction (no CO2, no NOx, no fine dust). By using hydrogen in mobility, a significant CO2 reduction can be realised.

A feasibility study of Hydrogen Council (see link) and a potential study for green hydrogen from VEA (see link) indicate that the primary application of hydrogen in mobility will be heavy duty (up to 70% on hydrogen). The below graphics give a comparison of the emissions of different bus technologies (based on data from De Lijn, see link):

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Hyoffwind – ETF feasibility study Public version

The below table gives the average CO2-emission per year of a vehicle in Belgium, and the amount of green hydrogen needed to replace this vehicle by a emission neutral fuel cell vehicle:

Transport CO2 emissions NOx emissions Amount of H2 needed Diesel car 3.960 kg CO2/year 18,9 kg NOx/year 270 kg H2/year Diesel bus 95.130 kg CO2/year 1080 kg NOx/year 8100 kg H2/year

Note: the substantially lower overall energetic efficiency of hydrogen for FCEVs compared to electric vehicles has an impact on the renewable energy production capacity that is required. FCEVs require overall about 3x more renewable energy input compared to electric vehicles per 100km drivin distance. This means that circa 3x more solar or wind capacity has to be installed for the same driving distance with hydrogen mobility compared to electric mobility. This puts an additional burden on the resources required for production. However, for heavy duty transport hydrogen can solve some critical issues such as autonomy and riving speed. Electric mobility has to be applied whenever possible, green hydrogen has to be applied when electric mobility can not be applied or is practically not feasible.

3.2.1.2 Industry Green hydrogen has two applications in industry. Green hydrogen can be used to replace grey hydrogen (produced by means of steam methane reforming). Green hydrogen can also be used to rearrange certain industrial processes (processes that currently don’t use hydrogen, and have high emissions, could be rearranged to processes that use green hydrogen and have lower emissions).

3.2.1.3 Injection in the natural gas grid By injecting into the natural gas network, fewer carbon-rich gases must be burned in order to meet the same energy demand. The amount of gas that must be burned to meet a specific energy demand is determined by the calorific / energetic value of that gas. Since the main component of natural gas is methane, we do the comparison with this gas:

- Calorific value methane (CH4): 55.50 MJ/kg; 11/67

Hyoffwind – ETF feasibility study Public version - Calorific value hydrogen (H2): 142.18 MJ/kg.

By injecting 1kg H2 in the natural gas grid, the combustion of 2.57kg CH4 can be avoided. This corresponds with an avoided CO2-emission of 6.34kg.

3.2.2 Local air quality – no local emissions

As discussed above, both the production (electrolysis of green electricity) and the consumption of green hydrogen are free of emissions (no CO2, no NOx, no fine particles).

3.2.3 Balancing the electricity grid

- Increase supply of ancillary services The chance of imbalance increases due to the growth of renewable energy. Elia therefore needs additional options to be able to insure the system balance. The installation can be used as an R2 reserve with the advantage that, if combined with injection into the natural gas network, it can run indefinitely, where other technologies become less efficient after a while. In addition, contrary to traditional providers of ancillary services with a comparable size (such as CHPs on natural gas), a hydrogen electrolysis installation has no emissions. A different calculation method applies to CHPs on biogas.

- Net congestion and reducing additional grid investments The installation of Power-to-Gas installations at strategic locations, such as the arrival of the electric cables coming from the wind parks at sea, will be able to limit additional investments in the electric grid.

3.2.4 Positive impact on the economy

About 35 leading companies have joined the Power-to-Gas cluster. This business cluster comprises companies that are active in the entire hydrogen value chain: from the production of renewable energy (wind, solar) and hydrogen technology (electrolysis, compression) to end users of hydrogen (transport sector, chemistry).

This cluster aims to build up expertise in green hydrogen by working together on pilot projects in the region. Provided that there is a support framework from the Belgian authorities, this expertise can be built up, exported to other regions and lead to additional jobs. Moreover, hydrogen produced locally gas, from green electricity, partially replaces imported natural gas. This has a positive effect on the trade balance.

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Hyoffwind – ETF feasibility study Public version

The below figure illustrates the role that green hydrogen can fulfil to decarbonise different sectors:

3.2.5 Cost efficient transport of energy

Transport of energy in gaseous form by pipelines is more efficient than transport of energy in electric form by cables. This can be illustrated by comparing the investment cost of the naturalgas pipeline between Belgium and the UK (IUK pipeline), and the electric cable between Belgium and the UK (Nemo link).

Property IUK Nemo Length 235 km 140 km Cost 450 GBP (initial) + 164 GBP (extension) 690 mio EUR

~700 mio EUR Capacity 30.000 MW 1.000 MW

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Hyoffwind – ETF feasibility study Public version 3.2.6 Cost efficient storage of energy in the gas grid

The below figure compares the cost per MWh to store energy for different technologies. Storing energy in the gas grid is the most cost efficient solution. As discussed in section 4.1.4, it is possible to store very large amounts of energy under gaseous form:

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Hyoffwind – ETF feasibility study Public version 3.3 Catalyst for green hydrogen economy

Power-to-Gas can offer an answer to societal challenges, can have a positive impact on the image and reputation of Flanders, and can create economic added value.

• The total energy system cost is minimized through the optimization of the compatibilities of the gas and electricity system, which will result in a lower energy bill for Flemish end customers (companies, SMEs and private individuals). This gives companies more oxygen and increases the purchasing power of the Flemish citizen. This increased purchasing power can then flow back to the economy.

P2G converts renewable electricity in renewable gas. Transport of energy under gaseous form via pipelines is much more cost efficient than transport of energy under electric form via cables. Storage of energy under gaseous form is also much more cost efficient than storage of electricity. The existing gas infrastructure is mature and suited to transport renewable gas. The investments in the gas infrastructure have already been made, and no significant additional investments are needed. The current flexibility of the demand for heat (important variations between summer/winter consumption) is almost entirely absorbed by the gas network. P2G can prevent important investments in the electric grid.

• Further growth of renewable energy, so that the Flemish renewable energy objectives can be respected and that no fines need to be paid.

Increasing penetration of intermittent renewable energy (wind, solar) has a negative impact on the business case for new investments in wind/solar because too much curtailment is needed in periods with a lot of wind/solar. P2G prevents curtailments and makes sure that (production of) electricity can be valorized at all times. P2G maximizes the potential roll-out of renewable energy sources and allows storage of energy across seasons.

• Efficient decarbonisation of sectors that are otherwise difficult to decarbonise. The use of renewable gas in mobility and industry makes it possible to make sectors (that are otherwise difficult to decarbonize) climate neutral and makes it possible to always use the most efficient source of energy per sector (for example: residential heating).

• Roll-out of the hydrogen economy in Flanders. The green hydrogen economy in Flanders can be stimulated. An installation for the production of green hydrogen can attract companies that need a lot of hydrogen, and otherwise need to pay for CO2 emissions.

The execution of the HYOFFWIND project can have a positive impact on Flemish companies active throughout the hydrogen value chain (production, transport, usage). Knowledge about green hydrogen will accumulate within Flemish companies. This knowledge can be exported. The installation will be, as much as possible, built by local contractors. The installation will be operated by 3 companies with a presence in Flanders (Eoly, Parkwind and Fluxys). The development of this new activity can lead to new recruitment.

• There is a positive impact on the trade balance and the employment.

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Hyoffwind – ETF feasibility study Public version 4 Business economics

4.1 Introduction

Recent studies on H2 electrolysis invariably come to the conclusion that green hydrogen can become competitive with grey hydrogen (steam methane reforming) in the future (2030) because of the high production cost of green hydrogen. This leads to a chicken-and-egg situation where the real break- through of industrial scale green hydrogen can’t be initiated. In addition, the manufacturers of hydrogen electrolysers have limited, to no, experience with flexible, large-scale installations.

In the feasibility study, the partners want to investigate the potential valorizations and the needed economical stimuli to realize a large-scale conversion unit for green hydrogen in 2022-2023, in order to facilitate the further expansion of the green hydrogen economy. The following valorization options will be investigated:

- Green hydrogen for mobility; - Green hydrogen for industrial applications; - Injection of green hydrogen in the gas transmission grid as a carbon free energy carrier for building heating and for mobility (CNG).

The three valorization options mentioned above are the main focus of the feasibility study, because these valorization options allow the expansion of the green hydrogen economy. In addition to these three valorization options, some additional revenue streams will be investigated in detail:

- Grid balancing; - O2; - Heat.

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Hyoffwind – ETF feasibility study Public version 4.2 H2 market today 4.2.1 Grey hydrogen market

The grey hydrogen market in Belgium is very mature. Grey hydrogen is used for industrial purposes, with the largest consumers located in the harbor of Antwerp. The chemical and petrochemical industry in Flanders use almost 207 kton of grey hydrogen annually (source : VEA study).

The grey hydrogen market is today dominated by Air Liquide. Air Liquide is the owner/operator of the hydrogen pipe system in Belgium. This pipe system consists out of 613km of piping, with important junctions near the harbor of Antwerp and the harbor of Ghent. The piping infrastructure is used to transport hydrogen from production facilities closer to consumers. Consumers are either connected directly to the pipelines, or Air Liquide delivers hydrogen in cylinders or tube trailers. In some cases, Air Liquide produces hydrogen locally on the customer site. On the customer site, infrastructure is installed to make the hydrogen process-ready (reducing hydrogen pressure, additional purification, etc.). This infrastructure is installed on the customer site, but remains property of Air Liquide. The below figure shows the piping infrastructure of Air Liquide.

The below table summarizes some of the characteristics of the grey hydrogen market:

Topic Remark Applications Industrial applications. The most important sectors are the chemical and petrochemical sector.

Grey hydrogen is not used for mobility, and is not injected in the natural gas grid. Production facilities for grey hydrogen are not used to offer ancillary services to the electrical grid.

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Hyoffwind – ETF feasibility study Public version Hydrogen quality The quality that is needed, depends on the application. Typically, hydrogen transported by tube trailer (or in cylinders) has a quality of 99.99%. Hydrogen transported by pipeline has a quality of 99.9%. A detail of the contaminations can be found in the appendix. Market structure Industrial gas suppliers (such as Air Liquide) typically perform the following activities:

- Producing hydrogen; - Transporting/distributing hydrogen to the customer; - Additional gas treatment on the customer site.

Contracts between industrial gas suppliers and consumers are long-term (multiple years) and exclusive. The infrastructure for gas treatment is installed by the industrial gas supplier on the customer site, but remains property of the industrial gas supplier. Pricing See below.

4.2.1.1 Market value

The hydrogen market is dominated by private companies. There is no global price database. There is no transparency about hydrogen pricing. The grey hydrogen price needs to be estimated based on the key drivers that impact the hydrogen price.

(1) Location of the consumer: hydrogen is produced in large scale from centralized production sites. It needs to be delivered to the consumer. This can be done by pipelines, or by tube trailers (or by a combination). (2) Purity of the hydrogen: higher hydrogen purity implies higher hydrogen production costs. (3) Production cost of hydrogen: grey hydrogen is produced by steam methane reforming. The hydrogen price is largely determined by the cost of natural gas.

➔ Green hydrogen prices need to compete with grey hydrogen prices (also see chapter ‘Green hydrogen prospection’). At current price levels for grey hydrogen, this is not possible. A higher value for green hydrogen needs to be realized by valorizing the social benefits.

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Hyoffwind – ETF feasibility study Public version 4.2.2 Green hydrogen market

The green hydrogen market in Belgium is not existing, and still needs to be developed. There are however several pilot/demonstration projects for green hydrogen (see the figure below). In order to speed up the development of applications for green hydrogen, there is a need for an industrial-scale production site for green hydrogen.

As becomes visible from this overview, the green hydrogen market is primarily focused on mobility. Green hydrogen is not yet used for industrial applications and is not yet injected in the natural gas grid. There is no large-scale production facility for green hydrogen that offers ancillary services to the electrical grid.

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Hyoffwind – ETF feasibility study Public version 4.3 Revenues 4.3.1 Natural Gas grid Injection

Value of green hydrogen Green hydrogen can be injected in the natural gas grid (NG grid). When injected in the natural gas grid, the value of hydrogen is derived from the value of natural gas. The below figure shows the price evolution of natural gas during the last couple of years on the SPOT ZTP (Zeebrugge Trading Point) market.

The last year, the gas price has fluctuated between 10 €/MWh and 25 €/MWh. There are some seasonal variations: the gas price is lower during summer than during winter. This is linked to the seasonal variations in gas consumption.

Green hydrogen that is injected in the natural gas grid has an estimated value of 10-25 €/MWh.

The total volume of green hydrogen produced by the project can be injected into the natural gas grid in Zeebrugge.

4.3.2 Industry

Value of green hydrogen The green hydrogen prospections learned that the price of green hydrogen needs to be competitive with the price of grey hydrogen. Otherwise, it is economically not feasible to use green hydrogen for industrial applications (chemical, petrochemical, metallurgical industries).

HYOFFWIND includes a tube trailer filling station (+2 tube trailers), so that green hydrogen can be transported to industrial users (transportation is not in scope).

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Hyoffwind – ETF feasibility study Public version Green hydrogen that is used for industrial applications has the same value as grey hydrogen that is used for industrial applications.

Expected volume of green hydrogen for industry As part of the green hydrogen prospection, several industrial companies in the chemical, petrochemical and metallurgical sector have been contacted. Most companies expressed interest in making their processes more sustainable, but require that the green hydrogen price is competitive with the price of grey hydrogen. There are no firm commitments of industrial users.

Currently, 207kton of grey hydrogen is produced annually in Flanders. Grey hydrogen is produced by industrial gas suppliers (primarily by AirLiquide) or by large consumers. In addition, hydrogen is also produced as a byproduct from other processes (approximately 60kton per year).

Hydrogen that is not produced as a byproduct can be replaced by green hydrogen. However, because of the current price levels for grey hydrogen, this is a very difficult market to enter.

4.3.3 Mobility

Value of green hydrogen In a hydrogen refueling station (HRS), hydrogen is sold for approximately 10 €/kg (250 €/MWh). This price includes the following:

- Production of green hydrogen; - Transportation/distribution of green hydrogen from production site to HRS; - Investment cost for HRS (+ margin).

HYOFFWIND includes a tube trailer filling station (+2 tube trailers), so that hydrogen can be transported to hydrogen refueling stations (HRS).

Expected volume of green hydrogen for mobility The number of hydrogen refueling stations is an important indicator for the amount of green hydrogen used in mobility (passenger cars, public transport, heavy duty, etc.). Currently, there are two public hydrogen refueling stations in Flanders:

- Zaventem: fuel station from Air Liquide; - Halle: fuel station from Colruyt Group (DATS24).

In addition to these active fuel stations, four additional fuel stations are being planned. Colruyt will open a new HRS in Wilrijk. Three other fuel stations are being planned as part of the H2Benelux project. The H2Benelux project includes 8 fuel stations along the TEN-T Corridors (Trans European Transport Network), accompanied by at least 10 Fuel Cell Electric Vehicles (FCEVs) per fuel station.

Because of the limited number of fuel stations in Belgium, it is difficult to forecast the demand of green hydrogen for mobility based on the current demand. In Germany, there are currently 74 active hydrogen fuel stations (and 28 fuel stations planned). The situation in Germany could help to estimate the demand. The below figure shows the number of HRS in the neighboring countries:

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Hyoffwind – ETF feasibility study Public version

The below figure shows the relation between the number of fuel stations and the daily amount of green hydrogen volume sold:

There is almost a linear relation between the number of fueling stations, and the volume of green hydrogen sold. There are currently 74 H2 stations in operations, and approximately 8.8 tons of H2 is sold daily (every station adding around 118kg).

Based on this analysis, and taking into account that not every HRS will be supplied by a central hydrogen production facility, the consortium made an estimation for the demand of green hydrogen for mobility.

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Hyoffwind – ETF feasibility study Public version 4.3.4 Conclusion

There are three valorizations for green hydrogen. It can be used in mobility, for industrial applications, or it can be injected in the natural gas grid. The below table summarizes the value of each valorization.

Valorization Value range [€/MWh] Injection in NG network 10 – 25 Industry Medium value Mobility High value

For each valorization, the consortium estimated the market size (based on technical limitations, economical limitations, prospection with potential users).

Because growth will be limited in the first years, an installation with a capacity of 12.3MWe might match the demand more closely. Because of this, business cases have been developed for two installations: a 12.3MWe installation, and a 25MWe installation.

An 8-12.3MWe installation is seen as the first phase of a phased implementation of a 25MWe installation. In the first phase, an 8-12.3MWe installation is built. In a second phase, this can be scaled up to 25MWe. In the first phase, the following infrastructure will be foreseen for the final capacity:

- Grid connection to the ELIA grid (36kV); - Utilities such as water and sewage; - Buildings and road infrastructure; - Tube trailer filling station; - Injection station to inject green hydrogen in the Fluxys gas transmission grid.

Note: the size of the installation in the first phase varies between 8MWe and 12.3MWe depending on the standard size of the modules offered by electrolyser suppliers.

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Hyoffwind – ETF feasibility study Public version 4.4 Alternative revenues As the business case for power-to-gas in the current economic situation is quite challenging, the consortium has analyzed the possibility to have additional incomes. In particular, 3 elements were studied:

- Reuse waste heat from the electrolyser; - Sell the oxygen produced; - Participate to ancillary services. 4.4.1 Grid balancing

Due to the increase of fluctuating renewable energy generation, balancing the power grid will be one of the biggest challenges of the future energy system. This is illustrated in the “Adequacy and Flexibility study” published by Elia in 2019.

Figure 1: source Elia.be

Power-to-gas, making the link between the power and gas system, is ideally place to offer flexibility to the overall system. 4.4.2 Oxygen (O2)

As for hydrogen, there is no global price database for oxygen (O2). Based on a study on sewage treatment plants (see link), the estimated value of oxygen is 30 €/ton.

Because potential customers or opportunities in the vicinity of the plant location have not yet been approached, O2 is not considered as an alternative revenue at this stage.

4.4.3 Heat

The price for heat is approximately 20 €/MWh. Because of its low value (low temperature value), and because potential customers or opportunities in the vicinity of the plant location have not yet been approached, waste heat is not considered as an alternative revenue at this stage.

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Hyoffwind – ETF feasibility study Public version 4.5 Cost structure 4.5.1 Plant efficiency

The plant efficiency is not significantly impacted while designing the installation for a 12.3MWe and a 25MWe installation. Therefore, the same efficiency has been considered in both cases to compare the business cases.

4.5.1.1 Overall plant efficiency @ MCR

Efficiency is defined as the amount of MWh hydrogen produced at 90 bar, compared to the power input at the ELIA EAN metering point.

Based on the different consultation rounds that the consortium held with electrolyser manufacturers, chemical plant engineering companies, and contractors, the overall plant efficiency lies around 68% - compression to trailers excluded.

4.5.1.2 Degradation of electrolyser stack efficiency

The electrolyser stack efficiency degradation is explained in § 6.4.1.

The average efficiency degradation is 1.2% per year. The efficiency degradation varies often between 1% per year and 2% per year.

4.5.2 Equivalent full load hours

For the business case, the plant availability has been considered as the same for a 12.3MWe and a 25MWe installation. The plant availability is determined by two parameters:

- Unplanned shutdown: this depends on the reliability of the installation. The reliability of the installation is highly dependent on the design and the redundancyof the compressors. The consortium believes that a reliability of 95% can be considered for the BC. - Planned shutdown: planned shutdown is needed for annual maintenance. Based on the consultation rounds with electrolyser and compressor manufacturers, chemical plantengineering companies and contractors, the consortium believes that 2 weeks are needed for annual maintenance.

Given the above assumptions, the plant availability is 91.35%. As indicated above, the availability can be increased by incorporating redundancy in the design.

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Hyoffwind – ETF feasibility study Public version 4.5.3 CAPEX 4.5.3.1 CAPEX 12.3MWe

CAPEX 25MWe

(1) Grid fees

The grid fees can be calculated using a simulation tool from Elia for transport tariffs. The below table summarizes the costs:

Component Range cost Comment Connection cost 30.000,00 €/year Elia estimates that the connection cost will be 28.836,60 €/year (detail study). Available power for 234.436,84 €/year offtake Monthly + yearly offtake 1,0937 €/kW * baseload * 12 peak Contribution for MIN(250 000; 5.1601 €/kWh * 365 * 24 * certificates renewable availability * baseload) energy Federal contribution MIN(250.000; 3.4439 €/kWh * 365 * 24 * availability * baseload) * 1.011 Contribution renewable • If 365 * 24 * availability * baseload < energy 20.000: 0.2118 €/kWh * 365 * 24 * availability * baseload • If 365 * 24 * availability * baseload < 250.000: 0.0799 €/kWh * 365 * 24 * availability * baseload • Anders: 0.0080 €/kWh * 365 * 24 * availability * baseload

Other 3,4522 €/kWh * 365 * 24 * availability * baseload

(2) Feedstock

The two most important feedstock are electricity and water.

Component Range cost Comment Electricity 50 €/MWh Based on the average BELPEX price on the day ahead market. Water 4 €/m³ o 0,039494444 MWh H2/kg H2 (HHV) o 11,14 liters of potable water consumed / kg H2 @ 80% efficiency of demiwater production plant o 4 €/m³ potable water consumed (includes all charges)

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Hyoffwind – ETF feasibility study Public version 4.5.3.2 OPEX 25MWe

(1) Grid fees

The grid fees can be calculated using a simulation tool from Elia for transport tariffs. The below table summarizes the costs:

Other 3,4522 €/kWh * 365 * 24 * availability * baseload

(2) Feedstock

The two most important feedstock are electricity and water.

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Hyoffwind – ETF feasibility study Public version 4.6 Business case

Three business cases have been investigated for the two different installation (12.3MWe and 25MWe).

- No reserve The installation is operated at MCR (full-load) for the entire lifetime of the plant (20 years). The hydrogen that is produced is sold to mobility, industry and injection. - Baseload adapted to mobility/industry + R2Down The load of the installation is adapted to the demand for green hydrogen in mobility and industry. The remaining capacity of the installation is used to offer R2Down ancillary services to Elia. - R2Down The entire capacity of the installation is used to offer R2Down ancillary services to Elia.

4.6.1 Conclusion

A profitable business case for hydrogen, in the current market conditions, is very difficult. A business case based on providing ancillary services for 20 years is unrealistic, because this market is undergoing continuous changes, new regulatory frameworks with new market players and is very unpredictable.

To achieve a profitable business case, the green hydrogen market for mobility/industry needs to be stimulated (because hydrogen for mobility/industry has a higher value than injection in the natural gas grid). To realize the full potential of green hydrogen in mobility/industry, some barriers need to be removed:

- Mobility: to make the transport sector more sustainable, it is necessary to switch from fossil fuels to renewable energy sources. Both Battery Electric Vehicles (BEV) and Fuel Cell Electric Vehicles (FCEV) will play an important role. Currently, there is no extensive refueling infrastructure for hydrogen vehicles. In addition, hydrogen-powered FCEV are especially interesting for heavy-duty, long-distance transport with short reload times. For these reasons, in the first years in which the installation is operated, the consortium will mainly focus on selling hydrogen for heavy-duty transport, public transport, garbage trucks, etc. - Industry: to be able to sell green hydrogen to industry, a hydrogen transport network is needed that can be used to connect multiple power-to-gas facilities of green hydrogen with industrial consumers.

In anticipation of a hydrogen transport network, hydrogen will be distributed via tube trailers. This can be achieved using existing technologies.

The image below shows what the delivery of hydrogen could look like. Containers with hydrogen bottles are filled on site and then transported by truck to the various gas station or industrial users. DATS24 foresees the construction of 4 additional hydrogen filling stations in 2019-2020. These could be supplied via such a logistics chain.

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Hyoffwind – ETF feasibility study Public version

Figure 1: Logistic chain for delivery of hydrogen

This system is then scalable by providing more trucks or large containers, and will be able to stimulate the development of the market.

Figure 2: Further development of the logistic chain

Once the hydrogen offtake become important enough, a hydrogen pipeline may be considered. This could reduce the costs and the number of trucks needed.

When the market is fully developed, an industrial-scale hydrogen production facility will be profitable:

- Demand for green hydrogen in mobility/industry is high; - Distribution network (either via tube trailers or via pipeline) for green hydrogen is mature and developed.

In anticipation of a fully developed green hydrogen market, government incentives are needed to stimulate investments in hydrogen plants that are large enough (industrial scale is needed) to develop this market.

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Hyoffwind – ETF feasibility study Public version 4.7 Required government incentives 4.7.1 EU Government incentives 4.7.1.1 Financial support mechanisms 4.7.1.1.1 EU DG Clima – Innovation Fund

What is DG Clima – Innovation Fund? The most recent revision of the European directive, which regulates the emissions trading system for fixed installations and aviation operators (EU ETS), determines the establishment of a (European) Innovation Fund. That fund will be fed with the income from the auction / sale of at least 450 million ETS emission allowances from the trading period 2021-2030, which currently amounts to around 10 billion euros. The Innovation Fund can offer both CAPEX and OPEX support from this budget to projects that meet the funding priorities.

Actions taken In close cooperation with the Flemish administrations Vlaio, Department of Environment, and EWI, the consortium explained the HyoffWind project to DG Clima in the context of the preparation of the expected first call from the Innovation Fund (currently scheduled for mid-2020). HYOFFWIND was one of the first potential/detailed projects that was presented by a member state.

Match between HYOFFWIND and DG Clima – Innovation Fund Both the scope (funding priorities) and the timing and the type of support (OPEX – CAPEX) corresponds with the needs of the HYOFFWIND project.

The HYOFFWIND project corresponds with the following funding priorities of the Innovation Fund:

• To provide large-scale storage of renewable energy, and • To make multiple sectors (mobility, chemical & metallurgical industry, natural gas grid) more sustainable

Usage Social added value Green hydrogen for Grey hydrogen (produced by steam methane reforming) can be replaced by green industrial hydrogen in existing industrial processes. By doing this, these processes can become more sustainable. applications

In addition, some (other) processes that currently don’t use hydrogen, can be made more sustainable by replacing these processes with processes that use green hydrogen. Green hydrogen for To make the transport sector more sustainable, a range of technologies (electric, mobility (bio-)CNG/(bio-)LNG) need to be deployed. Battery electric vehicles are most interesting for limited distances, and if quick recharging is less important.

Green hydrogen, (bio-)CNG and (bio-)LNG are more interesting for larger distances, and if quick recharging is important. This is the case for heavy duty transport, busses, garbage trucks, etc. Injection of green By injecting green hydrogen in the natural gas grid, the following social added value hydrogen in the can be realized: - Long term, cost efficient storage of renewable energy; natural gas grid - Cost efficient transport of renewable energy; - Making the natural gas grid more sustainable; - Making traditional providers of ancillary services more sustainable (gas plants, CHPs on natural gas).

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Hyoffwind – ETF feasibility study Public version Ancillary services The flexibility of the installation is high enough to offer ancillary services. Through ancillary services, power-to-gas can help limit congestion on the electric grid.

If congestion can be limited, investments in the electric grid infrastructure can be decreased.

Project maturity The Innovation Fund supports projects that have already completed the feasibility study (subject of this report) and that are in the phase just before “Project preparation / financial close / construction”.

Timing Innovation Fund In accordance with the current timing, which was communicated to HYOFFWIND, within the Innovation Fund, the first call for the submission of an application file in the Innovation Fund would be in mid-2020.

Timing HYOFFWIND project The current timing of the HYOFFWIND project is in line with the timing of the Innovation Fund.

4.7.1.1.2 DG Grow – IPCEI (Important project of common European interest) status/State aid rules

What is an IPCEI? The European Commission decided to prepare an IPCEI Framework agreement for Hydrogen. An IPCEI status makes it possible for H2 projects to be financially supported up to 100% of "the market failure" in accordance with the EU State aid rules.

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Hyoffwind – ETF feasibility study Public version Objective of an IPCEI:

- Significant support to the EU Climate objectives & Security of energy supply; - Overcome the market failure (supply/demand deadlock); - Kick-start the massive hydrogen production and utilization.

Actions taken The HYOFFWIND consortium closely follows up the preparation of Belgian IPCEI applications and aligns on this topic with DG GROW, Waterstofnet vzw and the administrations involved.

Match between HYOFFWIND and IPCEI Potential IPCEI projects can create a positive impact on additional H2 offtake volume for the HYOFFWIND project. Additional H2 offtake volume can be created by connecting consumers by an H2 backbone (Hyflow) and/or by H2 consumption by trucks for logistics retail applications (Hytruck/Orange Camel) or other yet to be worked out IPCEIs.

Potential IPCEI projects are:

- Hyflow: H2 transport & storage backbone from Zeebrugge (BE) to Eemshaven (DE); - Hytruck/Orange Camel: H2 trucks for the retail sector.

The IPCEI status needs to be requested by member states in Q1 2020. The consortium is always available to provide further input and detail in order to achieve supported and substantiated H2 IPCEI applications by Belgium as member state.

Hyoffwind can act as an H2 source for buyers in an IPCEI project. Whether or not to integrate Hyoffwind in an IPCEI application needs further investigation.

4.7.1.1.3 Other EU funding

Fuel Cells and Hydrogen Joint Undertaking (FCH JU)

FCH JU calls for CAPEX support have been monitored. Until now, no direct link was found between the scope of the calls and the scope of the HYOFFWIND project.

LIFE Integrated project

Until now, no direct link was found between the scope of LIFE integrated projects and the scope of the HYOFFWIND project.

Horizon 2020/Europe

Horizon 2020/Europe is aimed at research and development (low TRL). Because of this, HYOFFWIND is not eligible for this support mechanism.

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Hyoffwind – ETF feasibility study Public version 4.7.1.2 Regulatory and administrative framework 4.7.1.2.1 CertifHy Guarantees of Origin

Actions taken Active involvement and participation to the CertifHy workshops.

What is a guarantee of origin? A Guarantee of Origin (GO) labels the origin of a product and provides information to customers on the source of their products. It operates as a tracking system ensuring the quality of a product such as hydrogen or electricity.

Added value of GOs for HYOFFWIND Because of Guarantees of Origin (including the PoO (Proof of Origin) & PoS (Proof of Sustainability)), the green hydrogen produced by HYOFFWIND (produced from renewable energy) can distinguish itself from hydrogen produced in another way. This means that, given the willingness in the market to pay a slightly higher price for green hydrogen, more value can be taken out of the market. A higher market value limits the need for remaining support resources to achieve a balanced business case.

4.7.1.2.2 HyLaw project

Actions taken Active involvement and participation tot he Hydrogen Europe Hylaw project.

- The legal framework surrounding the injection of hydrogen into the gas grid, in particular: ▪ Permitting requirements; ▪ Injection limits; ▪ Payment and remuneration mechanisms; ▪ Gas Quality requirements; ▪ Safety and end-user equipment requirements - Permitting of Hydrogen Refueling stations, in particular: ▪ Multi-fuel refueling stations; ▪ Stations with on-site production; ▪ Stations storing low.

The complete end report can be consulted on the HyLaw project website.

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Hyoffwind – ETF feasibility study Public version 4.7.2 Federal government incentives 4.7.2.1 Financial support mechanisms 4.7.2.1.1 Energy Transition Fund (ETF)

In the business case, investment support can reduce the CAPEX component and close “the market failure”.

Actions taken/proposed Don't just limit investment support to research infrastructure. Addition of art. 41 of the General Block Exemption Regulation (investments that are considered compatible with the internal market and as such are exempt from the state aid notification obligation at the European Commission): “Investment aid to promote energy from renewable energy sources” in the Royal Decree of 9 May 2017 on establishment of the terms of use of the Energy Transition Fund.

This proposed action was discussed during the intermediate reporting on the HYOFFWIND status, and was suggested to the cabinet of the federal minister of energy.

4.7.2.2 Regulatory and administrative framework 4.7.2.2.1 Electricity transport grid fee

The transport grid fee lie between 14 and 38 €/MWh for the HYOFFWIND project (depending on operational profile). A substantial reduction of the grid fees for Power-to-Gas installations can significantly improve the business case for various operational scenarios.

Actions taken This point was raised through the recent Elia tariff consultation (Public consultation on Elia's proposal with regard to the decisive elements regarding the anticipated developments in the tariff proposal for the period 2020-2023 - dated 13/02/2019). This will have to be further included with the future federal energy minister and with the CREG.

4.7.2.2.2 Gas injection grid fee Gas injection fees have a limited contribution to the HYOFFWIND business case.

Actions taken Fluxys discussed this with CREG and ACER.

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Hyoffwind – ETF feasibility study Public version 4.7.3 Regional government incentives 4.7.3.1 Financial support mechans 4.7.3.1.1 Overview

Actions taken During the realization of the present feasibility study, regular coordination took place with the relevant Flemish administrations and the respective ministerial cabinets:

- Vlaams energieagentschap (VEA); - Vlaams agentschap innoveren en ondernemen (VLAIO); - Departement economie, wetenschap en innovatie (EWI); - Departement omgeving.

The applicability of existing subsidy instruments was examined and possible new options discussed. (E.g. DG Clima Innovation Fund, (Super) Strategic Ecology Support, Flemish Climate Fund, Energy Moonshot projects, etc.).

Taking into account the strategic importance of the HYOFFWIND-project, this resulted in (amongst others):

- A constructive meeting with DG Clima concerning the Innovation Fund, with the support of the above mentioned administrations; - The commitment of the above mentioned administrations to bring the HYOFFWIND file to the level of a senior officer (Administrator – General). - Creating a basic file per administration in the run-up to a new Flemish government.

A CAPEX and detail OPEX support system was submitted to the Vlaams Energieagentschap (VEA) and the cabinet of the Flemish energy minister.

4.7.3.1.2 Operational support mechanism

European principles for operational support An operational support mechanisms must be compatible with the ‘Guidelines on state aid for environmental protection and energy’ from the European Commission (see link). Below a short summary of these guidelines:

- Aid for energy from renewable sources other than electricity; - Operating aid will be considered compatible with the internal market if the following cumulative conditions are met: ▪ The aid per unit of energy does not exceed the difference between the total levelised cost of producing energy (‘LCOE’) from the particular technology in question and the market price of the form of energy concerned; ▪ The LCOE may include a normal return on capital. Investment aid is deducted from the total investment amount in calculating the LCOE; ▪ The production costs are updated regularly, at least every year; ▪ Aid is only granted until the plant has been fully depreciated according to normal accounting rules in order to avoid that operating aid based on LCOE exceeds the depreciation of the investment.

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Hyoffwind – ETF feasibility study Public version If these European guidelines for operational support are followed, the following conclusions can be drawn:

- The incentive to get maximum value from the market (without operational support) remains; - Operational support follows the evolutions of the market (support is limited in time); - Oversubsidization is avoided, by yearly monitoring: ▪ The market situation; ▪ Costs and revenues. - Operational support gives investment security for entrepreneurs by avoiding market risks (uncertain fluctuations in the electricity cost); - A mechanism for green hydrogen is also applicable to other renewable gasses (provided that criteria are adjusted); - Limited administrative burden.

A known operational support mechanism that follows these guidelines, and that is already used by VEA for different low-emission technologies, is Onrendabele Top (‘OT’).

Principles applied to Power-to-Hydrogen In analogy with LCOE (Levelised Cost of Producing Energy), and in line with the EU guidelines that LCOE may include a normal return on capital; we propose a Levelised Cost of Producing Hydrogen (‘LCOH’) for Power-to-Hydrogen.

LCOH is the total amount needed to make Power-to-Hydrogen profitable (using electrolysis from green electricity as technology). This total amount includes the following components (per MWh produced hydrogen):

- Investment cost; - O&M: ▪ O&M building and infrastructure; ▪ O&M installation; ▪ Personnel costs. - Fuel costs: ▪ Commodity price of electricity (incl. guarantees of origin); ▪ Grid fees for electricity; ▪ Water. - Return on capital (10% IRR)

OT – Onrendabele Top Onrendabele Top (‘OT’) is defined by VEA as ‘The amount per MWh of green energy production or cogeneration that must be added so that the investment achieves the required return over the lifetime.’

Applied to Power-to-Hydrogen, taking into account the definition of LCOH, this means that OT can be calculated as:

- OT = LCOH – revenue (from sales of hydrogen)

To prevent that this support mechanism would result in over subsidization, the consortium proposes that the fuel costs are updated annually: - Electricity price (incl. Guarantees of Origin);

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Hyoffwind – ETF feasibility study Public version - Grid fees of electricity; - Water.

In addition, the revenues need to be updated annually as well:

- Revenue from sales to mobility; - Revenue from sales to industry; - Revenue from injection in the natural gas grid.

For all other components, an indexation of 2% per year would be applied.

4.7.3.1.3 Summary

In close consultation with the Flemish administrations (VEA, Vlaio, EWI, department environment), existing subsidy instruments were examined as well as possible new options. A basic file per administration was prepared in the run-up to a new Flemish Government. As soon as the policy priorities and the possible new governance functioning structure of the administrations are known, HYOFFWIND will contact these administrations again. Public resources in the form of CAPEX and / or OPEX support remain necessary at this moment in order to arrive at a viable business case. Given the strategically assessed importance and the social added value of the project, further efforts will be made to achieve this.

4.7.3.2 Regulatory and administrative framework 4.7.3.2.1 Guarantees of Origin (green gas, heat, cooling)

Actions taken Active input and cooperation in the policy preparation process (with cabinet of the Flemish minister of Energy and the regulator VREG).

This resulted in the publication of:

- The decree introducing a system of guarantees of origin for gas, heat and cooling; - The (implementation) decision to introduce a system of guarantees of origin for gas, heat and cooling.

Currently, the VREG regulator with Fluxys Belgium (which was designated as production registrator for the production of gas from renewable energy sources), is working out the necessary modalities to enable the issuance and tradability of gas guarantees of origin.

Added value of GOs for HYOFFWIND Because of Guarantees of Origin (including the PoO (Proof of Origin) & PoS (Proof of Sustainability)), the green hydrogen produced by HYOFFWIND (produced from renewable energy) can distinguish itself from hydrogen produced in another way. This means that, given the willingness in the market to pay a slightly higher price for green hydrogen, more value can be taken out of the market. A higher market value limits the need for remaining (public) support to achieve a viable business case.

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Hyoffwind – ETF feasibility study Public version 4.7.4 Conclusion

From previous contacts and analyzes of possible support mechanisms (EU - Federal - Flemish) we can conclude that there is currently no ready answer to support the HYOFFWIND project with the establishment of an economically positive business model.

Both on the CAPEX and on the OPEX side, a support mechanism must be set up so that the business risk can be limited to an acceptable level. Market risk and electricity price are factors that cannot be underestimated in the long term and which have a very significant negative impact on the business case.

In order to realize Power-to-Gas projects, such as the Hyoffwind project, support will have to be developed in the short term so that these projects can be realized.

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Hyoffwind – ETF feasibility study Public version 5 Engineering 5.1 Introduction

Eoly, Fluxys and Parkwind are co-developing the HYOFFWIND project with the intention to build a water electrolysis plant of about 25-33MWe in Zeebrugge, Belgium, by 2022-2023.

The parties are thereby complementing their expertise:

• Parkwind develops, builds, operates and maintains off-shore wind farms;

• Eoly develops, builds, operates and maintains hydrogen facilities (0.5MWe plant for logistical mobility in operation on its distribution centre in Halle, and is also active as energy and fuel supplier in Belgium).

• Fluxys develops, builds, operates and maintains natural gas handling and transmission systems in Belgium.

The HYOFFWIND plant will be dedicated to the production of green hydrogen. In order to optimise the usage of the installation and knowing that the development of the hydrogen mobility may take time, the following additional revenue streams have also been considered:

• Injection of green hydrogen in the natural gas grid;

• Offering ancillary services to ELIA.

The main functionalities that shall be present in the plant are:

• Hydrogen production;

• Hydrogen treatment;

• Hydrogen compression;

• Hydrogen injection;

• Tube trailer filling station.

The associated facilities and systems are:

• The buildings;

• The utilities (venting, cooling, demiwater, N2 purging, compressed air, etc.);

• The fire fighting and safety protection;

• The electricity system (incl. grid connection, power transformer, AC/DC rectifiers, etc.);

• The monitoring & control;

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Hyoffwind – ETF feasibility study Public version • The fire and gas detection;

• The communication;

• The security;

• The roads and fences;

• The sewage and drainage.

A phased implementation of a 25-33MWe installation has been considered as well. The phases that are considered are based on economic aspects, market evolution, and available support mechanisms:

• Phase 1: initial installation with a capacity of a third up to half of the final installation in terms of production (between 8 and 13MWe);

• Phase 2: extending capacity up to the full available electrical capacity (approximately 25- 33MWe).

5.2 Summary conclusion

The technical feasibility studies conducted by the consortium are indicating that:

• The equipment manufacturers and contractors market has been prepared and a sufficient number of candidate tenderers have expressed a firm interest to offer an industrial concept for a 25MWe water electrolysis plant for green hydrogen production; • A full turn-key type contract (EPC) is possible; • Both of the existing electrolyser technologies (alkaline and PEM) are matching with the hydrogen composition and can accommodate to the required flexibility such as to enable grid support services for ELIA; • The area of the envisaged site in the port of Zeebrugge is sufficient to accommodate the project and can be connected to the ELIA power grid at 36kV level and to the natural gas transport grid of Fluxys at 85 bara; • In order to limit the initial CAPEX expense and to better follow the hydrogen demand-side market growth, a phased implementation of the project has been examined and can be implemented. Acting so can limit the initial CAPEX, however the specific CAPEX (€/kWe plant capacity) for the first phase becomes considerably more expensive whereas the total CAPEX for the project is also more expensive compared to the full implementation at once.

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Hyoffwind – ETF feasibility study Public version 5.3 Basis of design

5.3.1 Ambient conditions

The following ambient air temperature data would be selected for the proposed site location in Zeebrugge:

• Minimum ambient air temperature: -20 °C; • Maximum ambient air temperature: 35 °C.

These are the common range of temperature used by Fluxys for its own industrial installation installed in the vicinity of the station.

For the air cooler heat exchanger thermal capacity, in order to not oversize the equipment, one can envisage to reduce the design ambient air temperature to a lower value (typically 28°C). This means that the capacity of the installation might be limited when the ambient temperature is above 28°C at plant location.

5.3.2 Soil investigation

Site investigations and laboratory tests were performed in 2012 (on request of Fluxys) to support the civil design during the detailed engineering phase for a project in the vicinity of the HYOFFWIND location.

The soil conditions of that project are available.

5.3.3 Potable water

The electrolyser installation needs demineralized water to work properly. Therefore, a connection to the public water network of Farys would be necessary and contact has been taken with the company.

The analysis of the potable water by Farys which is the distributor in region Zeebrugge can be downloaded from: https://www.farys.be/sites/extern/files/LG2.pdf.

Farys_Drinkwaterond erzoek.pdf Contact has been taken with Farys about this specific point.

5.3.4 Waste water

The following waste water streams from the plant can be listed:

• Sanitary waste water; • Rain water;

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Hyoffwind – ETF feasibility study Public version • Waste water coming from the demiwater production unit (cleaning of membranes and regeneration of resins using 30% grade NaOH- and HCl-solutions).

Companies located in the port of Zeebrugge have to install their own, appropriate IBA (an individual waste water treatment) from which the cleaned effluents have to comply with VLAREM and then can be rejected in the public sewer pipe in the Aziëstraat. This public sewer ends up in the “zuidelijk insteekdok”.

Contact has been taken with MBZ about this specific point, and a meeting was organized end of July 2019.

5.3.5 Electrical requirements from the grid connection study (cos phi and harmonics)

A detail study was ordered from Elia. The results are available (SF12MWOR0 Zudok EDS 898).

5.3.6 Noise conditions

The maximum allowable noise level of the installations will have to comply to the VLAREM II regulations and the permit. In particular, reference is made to chapters 2.2 and 4.5 and appendix 2.2.1. and 4.5.4. of VLAREM II. The maximum noise level for HYOFFWIND is expected to be 40 dB(A) at 200 meters from the fence. These values have to be reconfirmed with the requirements of the permit and during the detail design.

Reference is also made to the decision of the Flemish Government of 22/07/2005 concerning the evaluation of the control of the ambient noise.

As a general rule, each equipment will be designed in such a way that individual noise pressure level is below 80 dB(A) at 1 meter. For the compressors, this requirement being too stringent, it is required that the compressors will be limited to 85 dBA @ 1m and installed within building(s).

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Hyoffwind – ETF feasibility study Public version 5.4 Electrolyser technology assessment and selection

5.4.1 Alcaline / PEM

The following two water electrolyser technologies are commercially available for the production of hydrogen: Alkaline and Proton Exchange Membrane (PEM).

The main characteristics of alkaline technology are:

• The electrolyte is based on a 30% KOH solution such as to obtain the appropriate electrical conductivity; • The catholyte and anolyte compartments of each cell are separated by a diaphragm which allows permeation of OH-. Modern diaphragms are asbestos-free: typically, Zirfon-type membranes (made by AGFA, https://www.agfa.com/specialty- products/solutions/membranes/zirfon/) are used; • The electrodes are typically coated with nickel, although more recently more complex electrode coatings are applied in order to increase the current density to decrease the number of cells (which results in a CAPEX advantage for the same plant capacity); • Hydrogen and oxygen gas bubbles are formed in the catholyte and anolyte and need to be separated via liquid-gas separators. Due to the contact with the electrolyte, the hydrogen and oxygen gases contain microdroplets of the electrolyte, and as such also KOH. Therefore, the gas purification of alkaline electrolysis needs to be more extended; • The operating temperature is generally 70 – 80 °C.

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The main characteristics of Proton Exchange Membrane (PEM) technology are:

• Only the anolyte compartment is fed with ultra-pure water without any chemical additives; • A membrane electrode assembly (MEA) which consist of a diaphragm which allows permeation of H+ (typically Nafion-type membranes of Dupont de Nemours, but some of the PEM stack manufacturers claim to be able to produce their own membranes), and on which specific catalysts and electrical conductor layers are deposited at both sides of the membrane in order to form a cathode and an anode: o The oxygen gas is formed at the anode side of the MEA and has to be separated out of the anolyte via a liquid-gas separator; o The H+ diffuses through the Nafion-membrane and is immediately obtained as hydrogen in gaseous form at the cathode side of the MEA. No liquid-gas separation is required:

o The produced hydrogen is intrinsically of a high purity since there are no chemical additives in the electrolyte. • The operating temperature is generally 50-60 °C.

Both technologies are available with the electrolyser stacks operated at atmospheric pressure or at elevated pressure (fixed pressure between 10barg and 50barg depending on supplier). The alkaline technology has a long and extended track record and has been applied for very big industrial plants (e.g. NEL, IHT), whereas this technology has also been widely applied in so-called chlorine-alkaline plants for the production of chlorine and caustic soda out of NaOH (e.g. Thyssenkrupp, Asahi Kasei, Solvay).

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Hyoffwind – ETF feasibility study Public version 5.5 The PEM technology is a more recent technology which evolved out of the space industry and is now more and more applied in electrolyser applications of increasing scale. System design

5.5.1 Principle diagram

5.5.2 Electrical single line diagram

HYOFFWIND will be fed with green electricity from offshore windparks. Two options were studied:

• Option 1: direct line from a windpark connected to HYOFFWIND. A dedicated cable connects the onshore substation (150 kV or 36 kV) with HYOFFWIND. Electricity from HYOFFWIND is not injected in the electricity grid, and therefore not traded on the electricity markets. The dedicated cable implies a high investment cost (modification in the substation – installation of 8 km of cable in the harbor) and operational costs. • Option 2: indirect line from offshore windpark to HYOFFWIND. A high voltage transmission cable from ELIA connects the windpark with the onshore grid. Electricity from offshore windpark is injected in the electricity grid, and traded on the electricity markets. HYOFFWIND is also connected to the electricity grid, and buys electricity on the electricity markets.

The first option appears to be not feasible, because it cannot be realized in line with the regulation of Direct Lines. Therefore, the second option has been studied in more detail. For the second option, an orientation study (from ELIA) was ordered to investigate the options to connect HYOFFWIND to the high voltage transmission grid. ELIA presented two options:

• Option 2a: 36kV cable from the existing substation ZEEBR to the proposed location for HYOFFWIND (distance +- 7km); • Option 2b: 36kV cable from a new substation closer to the proposed location for HYOFFWIND. This option has a lower investment cost (shorter cable), but a longer lead time. A location for a new Elia 36 kV substation needs to be available as well.

The below figure shows the single line of the two options:

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Option 2a : direct cable from substion L. Blondeellaan

Option 2b : Reïnforcement of the 36 kV grid via new 36kV substation 46/67

Hyoffwind – ETF feasibility study Public version 5.5.3 Demiwater production

The demiwater installation needs to meet the following requirements:

• Yearly volume: 30.000 – 45.000 m³/year; • Nominal volume: 3,5 – 5 m³/hour; • Conductivity: <0,1 µS/cm; • A buffer tank for one day with a volume of 84 m³ net and foreseen with a CO2 trap.

Two technologies were proposed for the production of ultrapure demiwater as input for water elecrolysers:

• Option 1: based on resins for ion exchange; • Option 2: based on reverse osmosis.

Ion exchange resins Ion exchange is based on specific chemical groups built in resins that can capture the ion impurities remaining in potable water. The ion exchange is a cascade of:

• Weak and strong cation exchangers; • Weak and strong anion exchangers; • Mixed bed exchangers; • CO2 trap.

Reverse Osmosis (RO) and Electrodeionization (EDI) Reverse Osmosis (RO) is the opposite of a natural process called osmosis. Osmosis is the movement of water molecules across a semipermeable membrane. The process naturally moves water from a low ion concentration to a higher ion concentration across a semipermeable membrane.

By applying pressure to the more concentrated (dirtier) side of a semipermeable membrane, water molecules are pushed back across the membrane to the less concentrated (cleaner) side, resulting in purified water. This process is called Reverse Osmosis (RO). RO can typically remove 90-99% of most contaminants. To remove the remaining 1-10% contaminants, another purifying technology needs to be used. This is electrodeionization (EDI).

Deionization filters function by exchanging positive hydrogen and negative hydroxyl molecules for the positive and negative contaminant molecules in the water. Positive chemicals exchange places with the hydrogen molecules, and negative chemicals exchange places with the hydroxyl molecules. Over time, positive and negative contaminants in the water displace all the active hydrogen and hydroxyl molecules on the deionization resin and the filter must be replaced.

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5.5.4 H2 compression: diaphragm vs. reciprocating

Several types of compressors exist on the market. In the frame of this project, diaphragm type compressors and piston type/reciprocating compressors seem best suited for the project (for example: screw type and centrifugal are not relevant).

Piston type compressors can be lubricated or not. Lubrication ensures a better tightness and could allow a higher compressor discharge (up to 300-400 barg). However, lubrication induces some degree of hydrogen contamination which is unlikely to be accepted for most of the H2 applications (mobility, industry). Therefore, lubricated piston type compressors have not been considered for this project.

Depending on the design of the upstream equipment (exit pressure of the electrolyser), one solution or another could be considered. The table below provides a comparison of the H2 reciprocating compressor with dry piston, and the H2 diaphragm compressor:

Reciprocating with dry piston Diaphragm Max discharge pressure Up to 100 barg > 1000 barg Range of flow per machine > 5000 m³/h < 150 m³/h (effective inlet flow) Lifetime/critical part (outage) PFTE piston rings and seals life Diaphragm lifetime (not time: 1 year without stop predictable): 4000 hours Reliability > 95% (could be up to 98%) < 90% (fatigue lifetime of the diaphragm can occur any time)

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Hyoffwind – ETF feasibility study Public version The table here above provides several interesting information for the selection – a.o. :

• For the pressure needed for pipeline injection, reciprocating and diaphragm solution could be possible solutions. Nevertheless, the quantity of diaphragm compressors would be too important to handle the full flow when atmospheric electrolysers are selected. • For the pressure needed for the tube trailers (starting from pipeline injection pressure), diaphragm compressors appear to be the best solution.

Beside this, the proper design of the compressors and selection of machine size is key and it is very important to think about :

- Impact on the availability of the plant (Diaphragm compressor may need a more severe redundant philosophy if we want to guarantee the production services). - The electrical consumption 5.5.5 H2 injection in NG grid There are currently a lot of studies launched in Europe to define the acceptable % of H2 in the European natural gas transportation network. As gas flowing on the high-pressure transportation network may flow nearly everywhere in Europe, it cannot be considered as a national problem.

This is a complex question as there are :

- Technical constraints : o All piping material used shall be compatible with the gas composition. o All equipment shall be compatible with the gas composition (ex: turbine, burner, compressor) o All installation shall be compatible with the gas composition (storage installation shall remain permeable), o … - Legal constraints : o European directives o Local regulation

It is commonly agreed that up to 2 % of H2 can be injected in the natural gas infrastructure, while respecting the technical constraints.

The total volume of green hydrogen produced by the project can be injected into the natural gas grid in Zeebrugge, without exceeding 2% of H2 in the resulting blend.

The injection shall have the following main functionalities (with the necessary instrumentation and insulation valve for maintenance) :

- Letdown system - to letdown the pressure from 85-90 bar (coming from the discharge of the compression) to the actual pressure of the pipeline. (max 80 bar in normal operation and system security put @ 88 bar) - Measuring system – to measure the quantity of H2 injected on the pipeline (this is important for the invoicing such as for the control). - Quality measurement of H2 to measure the quality of H2 injected on the pipeline. - An ESD valve – to stop the injection in case of abnormal situation (insufficient flow on main pipeline, problem of quality of H2,…).

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Hyoffwind – ETF feasibility study Public version 5.5.6 I&C

The plant shall be equipped with a complete microprocessor based control system for centralized automatic and safe control and monitoring of the plant.

The plant will be automated such that all normal operations (start-up, shut-down and load variations/transients) can be done without the need of an operator intervention in the plant, and shall not require more than one person (excluding daily maintenance and visual inspection inside the plant).

The control system will allow to offer ancillary services based on ELIA setpoints.

5.5.7 Safety

A screening of the main safety requirements that should be followed for the development and operation of the plant has been performed (based on literature and discussions with suppliers/owners of electrolysers).

The following safety aspects are briefly discussed below:

• Hazardous area classification; • Risk assessment: QRA/HAZOP/SIL; • Passive protection system (compartment, spillage collection); • F&G detection/extinguishing system; • Fire water system.

Note: the last three aspects have already been introduced to and discussed with the local fire brigade.

The design principles for an H2 production plant are very similar to the design of Natural Gas installations owned and operated by Fluxys. However, the specificities of H2 have to be considered:

• Explosion limit is larger; • Energy necessary to ignite is smaller; • H2 molecules are smaller than CH4 molecules, therefore the risk of leakage is higher; • Flame of pure hydrogen is almost invisible (explained in ISO/TR 15916); • Ignition of H2 creates limited radiation to surroundings compared to CH4 (explained in ISO/TR 15916).

The below table compares the properties of H2 and CH4:

Hydrogen (H2) Methane (CH4) Molecular weight (g/mol) 2 16 Absolute density (kg/m³) 0,09 0,71 Relative density gas/vapor compared to air (air = 1) 0,07 0,6 Relative density of liquid compared to water (water = 1) - 0,5 Boiling point -253 -161 State of matter at atmospheric conditions (gas, liquid, solid) Gas Gas Explosion limits (% vol) 4 – 76 4,4 - 16 Flash point (°C) br. gas -187 Auto-ignition temperature (°C) 560 537 Minimal energy necessary to ignite (mJ) 0,011 0,28

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Hazardous area classification Special attention will have to be taken to design the installation and select the equipment as per standard and legal good practice according to:

• AREI; • ATEX European directive 2014/34/UE; • NBN 60079 – Explosive atmospheres

The area classification risk analysis and layout will have to be developed and will provide basis for selection of protection methods of equipment, maximum allowable surface temperature of equipment, piping, ventilation requirements, location of relevant equipment…

Risk assessment: QRA/HAZOP/SIL HAZOP is a well-known risk analysis method used to ascertain whether a given design/installation is safe and whether it complies with operational requirements.

This is a general method of HAZARD and OPERABILITY keyword based study with formal minutes covering both the process and the utility systems. This study will be done during detail engineering in the presence of all major actors of the project (owner, contractor, and main suppliers). The results will produce corrective actions which must all be completed.

The risk matrix used for the HAZOP/SIL assessment will be based on the one provided in IEC 61508/61511 (with safety, environmental and economical loss aspects criteria).

Process design and safety instrumented systems (SIS) will be designed to comply with IEC 61508 and IEC 61511 (including development of a Safety Requirement Specification document).

Passive protection system (compartment, spillage collection) Passive protection will be provided to:

• Prevent fires by avoiding ignition sources, any kind of free ‘fuel’ such as gas leakages or sources; • Avoid fire propagation from one area of the plant to another area, building, or room; • Minimize damage in the immediate area of a fire by provision of distance; minimizing the gas inventory feeding a possible fire by segregating the plant in different fire-zones, segregated by isolation valves; and fire-proofing of main structures (whilst an active fire water system will allow cooling of adjacent equipment and structures).

The plant will be such that it restricts the extent of potential leak by:

• Limiting the volume of the possible accidental spills; • Collecting these spills within defined collecting areas to prevent pollution and their spreading to other areas with eventual adequate ventilation.

If ignition of accidentally released gas or fluid occurs despite safety precautions, collecting premises will sever to minimize fire size to:

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Hyoffwind – ETF feasibility study Public version • Optimize the size of fire protection equipment required for fire control.

Steel structures, main elements, equipment and/or important parts of equipment, of which the failure could involve additional hazard in case of a fire, will be protected, when located within a “fire-hazard zone” (FHZ), by a fire proofing system (protective concrete or fire proof insulation).

Fire water system : This topic has been discussed with the local fire brigade. The local fire brigade seems to consider that a fire water system might not be strictly mandatory. This might however depend on the detailed design of the installation. An option will be required to the contractor in case a water loop appears to be mandatory.

5.5.8 CAPEX

See chapter business economics. 5.5.9 OPEX

See chapter business economics.

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Hyoffwind – ETF feasibility study Public version 5.6 System sizing (CAPEX/OPEX optimization)

5.6.1 Redundancy/availability

The unavailability of the HYOFFWIND plant will be composed of a planned unavailability fraction and an unplanned unavailability fraction.

Causes for unavailability The planned unavailability is due to:

• The maintenance requirements; • The maintenance time that is needed to perform such maintenances.

The unplanned unavailability is due to:

• Sudden defects or failures on components which lead to the outage of a part or the whole of the plant; • Failuring of components is generally characterized by their reliability figure and defined by the mean time to failure (MTTF) of such a component.

Mitigations for unavailability The planned unavailability of the plant can be improved by:

• Selecting as reliable as possible components; • Providing redundancy such that the impact of an outage of component can be taken over by its back-up component (note: this can also reduce the planned unavailability); • By foreseeing multiple trains in parallel such that a defect has impact on just one train and not the entire plant (note: this can also reduce the planned unavailability);

5.6.2 Advantage of modularity

Modularity has several advantages:

• Using multiple trains has a positive impact on redundancy/availability (see previous paragraph); • Standard modules are very well-known to vendors, as they installed these modules all over the world). Vendors may discover problems before the module arrives on our plant, and already know the solution. If the problem is important, the vendor may propose to make an upgrade. • Vendors can offer better prices for standard modules, because (1) the engineering study has already been finalized, and because (2) the vendor can negotiate better prices with sub- vendors (materials, etc.) based on quantities.

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Hyoffwind – ETF feasibility study Public version 5.6.3 Scaling up of existing capacity (phased implementation)

In order to limit the initial CAPEX expense, a phased implementation has been examined. Such a phased implementation can be done on precondition that the plant is composed of multiple trains in parallel and which are installed in different phases.

Due to the fact that part of the plant needs to be realized for the quasi-final capacity (grid connection, civil works (access roads), engineering, …) the specific CAPEX (€/ kWe installed) of the initial phase will be higher than if the plant would be fully constructed in one phase. However, the initial CAPEX can be lowered.

5.6.4 Fixed power input/fixed hydrogen output

The below table gives a simplified comparison between the design of a “constant power” versus “constant hydrogen” plant.

Parameter Unit Constant power Constant Hydrogen Comparison Assumptions Grid connection MWe 24.6 24.6 = Plant efficiency @ BOL % 70,4 70,4 = Plant efficiency @ EOL % 64,3 64,3 = Internal reserve taken on grid MWe 1 1 = connection for future customers Resulting plant design Plant load @ BOL MWe = 23.6 = 23.6x0,643/0,704 > = 21.6 Plant load @ EOL MWe = 23.6 = 23.6 = Hydrogen @ BOL MW = 32x0,704 = 21.6x0,704 > = 16.6 = 15.2 Hydrogen @ EOL MW = 23.6x0,643 = 23.6x0,643 = = 15.2 = 15.2 Cooling load @ BOL MW = 23.6x(1-0,704) = 21.6x(1-0,704) > = 7.0 = 6.4 Cooling load @ EOL MW = 23.6x(1-0,643) = 23.6x(1-0,643) = = 8.4 = 8.4 Gas purification/compressor MW = 16.6 = 15.2 > capacity

The above reasoning is simplified/indicative:

• In practice, the electrolyser stack of different suppliers do not have the same efficiencies at beginning of life and at end of life. • The cooling installation has to be able to evacuate the maximum cooling load at the maximum ambient air temperature which is specified in the basis of design. If the maximum ambient air temperature in the basis of design is increased, the cooling equipment size will also increase.

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Hyoffwind – ETF feasibility study Public version (=0.704/0.643) bigger initial design / investment in gas purification and compression for the “constant power” plant option. All other equipment has to be identically sized.

5.7 Operating principles 5.7.1 Link with offshore wind production

Offshore wind production is characterized by its intermittent and fluctuating character as illustrated in the year profile hereunder.

H2 electrolyser load linked with offshore wind production 240 230 220 210 200 190 180 170 160 150 140 130 120 110 100 90

80 shore wind production (MWe)

- 70 60 Off 50 40 30 20 10

1/01/2016 0:00 9/08/2016 1:00 3/03/2016 3:45 4/05/2016 8:30 2/08/2016 3:15 3/10/2016 7:00

4/02/2016 12:45 18/02/2016 8:15 6/04/2016 17:30 11/05/2016 6:15 5/07/2016 12:15 19/07/2016 7:45 26/09/2016 9:15 10/10/2016 4:45 4/12/2016 10:45 18/12/2016 6:15 7/01/2016 21:45 25/02/2016 6:00 10/03/2016 1:30 18/05/2016 4:00 25/05/2016 1:45 7/06/2016 21:15 26/07/2016 5:30 5/09/2016 16:00 17/10/2016 2:30 24/10/2016 0:15 6/11/2016 19:45 11/12/2016 8:30 25/12/2016 4:00

14/01/2016 19:30 23/03/2016 21:00 27/04/2016 10:45 31/05/2016 23:30 14/06/2016 19:00 22/08/2016 20:30 30/10/2016 22:00 13/11/2016 17:30 21/01/2016 17:15 28/01/2016 15:00 11/02/2016 10:30 16/03/2016 23:15 30/03/2016 19:45 13/04/2016 15:15 20/04/2016 13:00 21/06/2016 16:45 28/06/2016 14:30 12/07/2016 10:00 15/08/2016 22:45 29/08/2016 18:15 12/09/2016 13:45 19/09/2016 11:30 20/11/2016 15:15 27/11/2016 13:00

Total

Typically, the capacity factor of the offshore wind energy production in the Belgian North Sea reaches up to 40 – 45%, i.e. the amount of equivalent full load hours ranges from to 3500 – 3900. The offshore wind production profile can also be characterized in a histogram: the probability that an off-shore wind park is producing a certain load is much higher than the probability that it runs at full load. In other words, low powers are appearing much more frequent than full load of the wind park.

Below illustrates an extract of 2 days as an example: the first day has a low wind period whereas the second day is a constant high wind period. In the case that a 25 MWe electrolyser plant would be physically linked to the offshore wind production, the electrolyser plant will not always be able to produce hydrogen.

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H2 electrolyser load linked with offshore wind production 240 30 230 220 210 200 25 190 180 170 160 20 150 140 130 120 15 110 100 90

80 10 shore wind production (MWe)

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Topping or baseload operation: if a 25 MWe electrolyser plant starts producing hydrogen as soon as the wind park produces power, the electrolyser plant can achieve about 7000 equivalent full load hours (= baseload). If the electrolyser is only operated during full load of the wind park, the electrolyser will achieve only 1000 equivalent full load hours (= topping).

H2 electrolyser load linked with offshore wind production 240 230 220 210 topping 200 190 180 170 160 150 140 130 120 110 100 90

80 shore wind production (MWe)

- 70 60 Off 50 40 30 20 10 base load

1/01/2016 0:00 9/08/2016 1:00 3/03/2016 3:45 4/05/2016 8:30 2/08/2016 3:15 3/10/2016 7:00

Total

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5.7.2 R2 grid balancing services

The electrolyser plant can be used to offer R2 ancillary services (aFRR) in the load range between MSOL and MCR. The main requirements for providing aFRR:

• Today, the full activation time for the contracted secondary reserve capacity is 7.5 minutes, in the upwards and downwards direction. In the future, the full activation time will be reduced to 5 minutes (expected full activation time in 2025). • The deviation of supplied reserves compared to the signal sent by Elia, should be smaller than 15% of the selected volume at all times. • The dynamic setpoint is updated every 10 seconds and takes into account the maximum slope of the plant.

Remark: R2 grid services will require that the electrolyser plant is operated around a certain load (MSOL, 50% or MCR) depending on the type of R2. In case that the electrolyser plant is linked to an offshore wind park, the requirement of grid services may lead to a must-run during no-wind periods which means that external grid power is required for operating the electrolyser plant.

H2 electrolyser load linked with NW2 offshore wind production 240 30 230 220 210 200 25 190 180 170 160 20 150 140 130 must-run 120 15 110 100 on external 90

80 grid power 10 shore wind production (MWe)

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Average of Production profile off-shore wind [MW] Average of Electrolyser total base load + R2 (MWe) Average of Electrolyser base load band (MWe)

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Hyoffwind – ETF feasibility study Public version 5.7.3 MCR/MSOL

MSOL is defined as the minimum stable operation load. MCR is defined as the maximum continuous rating. MSOL impacts:

• The capacity that can be offered for ancillary services to Elia. The capacity equals the difference between MCR and MSOL. • Compressors loose efficiency when they are operated below 30% of their design flow.

5.7.4 Proposed operational profile

The plant operational profile will be based on the revenue streams.

5.8 Possible offtakes

5.8.1 H2 offtake (NG injection, industry, mobility)

See section 6.5.6 for injection of hydrogen in the natural gas grid.

To make the commercialization of green hydrogen in industry and mobility possible, the green hydrogen needs to be transported to the consumer by means of pipelines or tube trailers. In the beginning, hydrogen will be transported via tube trailers. To achieve this, a minimum of two tube trailers need to be foreseen.

Tube trailers are currently available in different sizes (20 to 40 feet) and at different levels of operating pressure (200 to 500 bar). Our initial assessment is to use 40 ft trailers at 300 bar with type 3 tubes (manufactured in composite/steel). This allows to store 1000kg of green hydrogen per trailer. This allows to transport a net weight of 750kg of green hydrogen, because the tube trailers can’t be emptied completely at consumption side. All tubes in one tube trailer are interconnected to one filling/release point.:

Figure 3: Hydrogen tube trailers 40 ft

To deliver green hydrogen for industrial/mobility applications, two tube trailers and a filling station will be foreseen.

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Hyoffwind – ETF feasibility study Public version 5.8.2 Waste heat See section 5.4.1.

Waste heat valorisation is not included in the scope of the installation at this point, because of its low value and no customer in the vicinity of the project site. However, a provision will be foreseen so that waste heat can be captured and sold in the future.

Possible applications of the waste heat can be in district heating, aquaculture/fish farms, ORC, …:

• Gassco needs heat at the pressure reduction station, nearby the Hyoffwind site. • at about 8 km away of the Hyoffwind project site, the IVBO plant for household wastes handling of the city of Brugge is located. Since 1985, IVBO operates a district heating network of 11km which is linked to the waste heat from the household incinerator:

Studies have been performed in 2013 for extending this net and for coupling additional waste heat producers but these have not materialised so far. See: (http://pomwvl.be/sites/default/files/uploads/duurzaam_ondernemen/doc/energie/Warmtenet Brugge.pdf).

• Aquaculture or fish farms: Pangasius or scampi is mostly grown in open air fish ponds in warmer countries (South-East Asia); • ORC or organic rankine cycle to generate electricity from the low temperature waste heat (example at company Argex in Zwijndrecht: http://upgrade-energy.com/portfolio- item/argex-orc/). In addition, the “Warmteplan” of the Flemish government (see https://www.vlaanderen.be/nbwa-news-message- document/document/090135578024853c) provides for subsidies when applying ORC. Although ORC could theoretically be feasible, the ORC technology is not well know and it is also not know how it will be able to cope with the flexibility / load variation of the hyoffwind plant.

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Hyoffwind – ETF feasibility study Public version 5.8.3 Oxygen

See section 5.4.2.

Oxygen is not included in the scope of the installation at this point, because of its low value and no customer in the vicinity of the project site. However, a provision will be foreseen so that oxygen can be captured and sold in the future.

Possible application of the oxygen can be in wastewater purification plants (accelerated aeration basins), aquaculture (fish, scampi, …), steel industry …

For example:

• At about 7.3km away of the Hyoffwind project site, the RWZI (wastewater plant) of the city of Brugge is located. This plant uses aeration via ambient air blowers. Possibly, the use of pure oxygen might increase the purification capacity of the RWZI as the oxygen is circa 5x more concentrated compared to ambient air. An oxygen gas duct and boosters between Hyoffwind and RWZI would need to be installed for that purpose. • Air Liquide is building an oxygen pipe between its plant in Temse and the Arcelor Mittal steel mill in Zelzate, in the north of Ghent (https://www.gww-bouw.be/artikel/nieuwe-zuurstofleiding- houdt-dagelijks-150-vrachtwagens-van-vlaamse-wegen/)

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Hyoffwind – ETF feasibility study Public version 5.9 Siting

5.9.1 Possible options for plant location

The provisional location of the project is situated in the inner harbor of Zeebrugge, where Fluxys has a site .

Figure 4: location HyOffWind Project (Source: Google Maps)

This location has been chosen because of the presence of important natural gas infrastructure. Zeebrugge represents 12% of the import capacity of Europe. This gives the possibility to inject large amounts of green hydrogen in the natural gas grid without exceeding 2% of H2 in the blend.

Figure 5: Natural gas infrastructure in Zeebrugge (Source: Fluxys)

In addition, Zeebrugge is the ideal location for power-to-gas because the electrical cables from offshore wind farms arrive on land there. Therefore, the installation will be located near the source of renewable electricity and will be able to facilitate the further integration of renewables in the energy mix.

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Figure 6: Electrical cables from off-shore wind (source: Elia)

5.10 Annexes

On request, several documents (such as orientation study Elia) can be provided.

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Hyoffwind – ETF feasibility study Public version 6 Regulatory 6.1 Introduction In this section we review the current state of the regulation around power-to-gas. 6.2 Overview of current regulation around power-to-gas As power-to-gas is a new activity, there is not much to find about it in the current regulation. The only concept which could capture power-to-gas (although not explicitly) is to be found in the recast version of the Electricity Market Design Directive (directive 2019/944 of 5 June 2019), that defines “energy storage” as following:

'energy storage' means, in the electricity system, deferring the final use of electricity to a later moment than when it was generated or the conversion of electrical energy into a form of energy which can be stored, the storing of that energy, and the subsequent reconversion of that energy back into electrical energy or use as another energy carrier.1

The application of this definition could restrict power-to-gas/power-to-hydrogen to the sole function of storing energy, while, as demonstrated in this report, this technology could play a much broader part in the new decarbonized energy system.

More importantly, the above definition of “energy storage” is only applicable to the electricity sector and not the natural gas sector. This also implies that the conditions set by article 54 of the recast Electricity Market Design Directive to the involvement of electricity TSOs in “energy storage” activities (such as a positive decision of the regulatory authority, the absence of interest of other market players to engage in the activity or their inability to engage at a reasonable cost and in a timely manner) do not apply to gas TSOs. 6.3 Main regulatory barriers for power to gas We focus here on the regulatory barriers (as the other barriers have been tackled in the previous sections). 6.3.1 Need for a network accessible by third parties on a non-discriminatory basis In the case hydrogen becomes an energy carrier and no longer only a feedstock for the industry, a transparent and non-discriminatory open access to the network is essential as it would prevent monopolistic positions. 6.3.2 Injection of H2 in the NG grid: where are we today? There are fundamental legal and administrative barriers however which hinder the injection of hydrogen into the natural gas grid. Hydrogen Europe is coordinating the HyLAW project which identified these hurdles and recommends a way forward.

The need for a common approach at European level on hydrogen admissible concentration and the development of technical and legal legislation from all members of the EU are highly recommended in order to allow the injection of hydrogen into the European Gas Grid. The next European framework will need to focus on the following aspects:

● The framework for permitting Power-to-gas and Power-to-hydrogen plants and grid connection / injection requirements should be included within relevant EU regulatory frameworks;

1 Article 2, (59) of directive 2019/944. 63/67

Hyoffwind – ETF feasibility study Public version ● An EU-wide basis for injection of hydrogen into the gas grid should be a priority to ensure a ‘level playing field’ and the continuing operation of trans-national interconnecting gas pipelines; ● Technical and gas composition rules should be reviewed to establish legal pathways to support Power-to-gas/Power-to-hydrogen operations; ● A framework for permitting and operating of gas reformation units with CCS should be established at EU level, including support schemes for production of low-carbon hydrogen; ● Safety and technical integrity limitations for hydrogen connection and injection into the gas grid should be studied in comprehensive and coordinated manner across the EU; ● Establish pricing principles covering connection fees and charges and remuneration for hydrogen supplied/injected; ● Review billing, measurement and administrative requirements with appropriate legal frameworks to allow increased hydrogen flows in European gas networks; ● An EU wide end user appliance assessment is essential to define the acceptable safety and operational threshold of end-user appliances; ● Develop the implications for CNG refuelling infrastructure and vehicles with a higher hydrogen content gas.

6.4 Conclusion The current legislative framework is not sufficiently fit for power-to-gas and should be adapted in order to allow for its full deployment, in particular by gas TSOs and/or private actors of the energy market and to take into account all externalities.

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Hyoffwind – ETF feasibility study Public version 7 Permitting

All permits must be granted (obtained) before any work or construction can be started.

The following permits are required for the realisation of this project:

1. Hyoffwind a. ‘with reservation’: Federal permit (Belgian level): production license i. needs to be clarified with the concerned authority (Federal Government Service, General Division Economy & Energy) if this permit is necessary ii. lead time after introduction: about 8 months iii. editor: consortium Hyoffwind b. Regional permit (Flemish level): integrated environmental permit2 i. lead time after introduction: about 5 months ii. editor: consortium Hyoffwind

2. Fluxys Belgium (pipelines connection) a. Federal permit (Belgian level): transport license or annex at existing transport license i. lead time after introduction: about 8 months ii. editor: Fluxys Belgium b. Regional permit (Flemish level): integrated environmental permit i. lead time after introduction: about 5 months ii. editor: Fluxys Belgium

3. Elia (36 kV cable grid connection) a. Federal permit (Belgian level): road license or annex at existing road license i. lead time after introduction: about 8 months ii. editor: Elia b. Regional permit (Flemish level): integrated environmental permit i. lead time after introduction: about 5 months ii. editor: Elia

In regard to the integrated environmental permit and more specific due to the fact that (the exploitation of) the installation is classified according to Flemish regulation (VLAREM – environmental part of the permit) a high degree of information (as much detail as possible) concerning the installation needs to be delivered upfront by the Contractor.

For the composition of the application for an ‘integrated environmental permit’ the (exact) location of the implantation of the installation is important as well as information about the pressure, the volume, power, … of the different parts of the installation (f.e. heaters, burners, …). This information defines the final classified establishment (class 1 or 2 in this case).

2 ‘integrated environmental permit’ “Omgevingsvergunning” = the previous planning permit or allotment permit (= for urban development related acts) and/or the previous environmental permit (= to exploit a classified establishment) 65/67

Hyoffwind – ETF feasibility study Public version According to the ‘building’ part of the permit, the input of an architect will be necessary, specifically for the construction of the building, as well as for the plans which are submitted following specific norms as stipulated by the Flemish regulation.

With regard to the Environmental Impact Assessment (EIA), this project does not attain the thresholds foreseen in annex I or II of the EIA-decision. Therefore, no other assessment than a screening of the environmental impact must be included in the integrated environmental permit. This assessment focusses on the impact of the activities on the environment, people or nature and can be done by the editor of the application.

This site does not fall within the criteria of the European Directive concerning SEVESO-sites. Nevertheless, it is recommended to execute a safety assessment which can be an important part in obtaining the decision about the permit. This assessment must be done preferably by a specialized advisory bureau and after appointing the supplier/contractor of the electrolyser plant (specific technology).

Before starting the preparation of the applications for the different permits, it is important to organize meetings with several possible stakeholders (f.e. the Federal Government Service, General Division Economy & Energy, the Department of (integrated) Environment of the Flemish Region, the city Bruges, firefighters, …). The goals of these meetings will be to create the necessary support for the project as well as to detect possible objections or difficulties, so enhancements or adaptations can be foreseen in an early stage.

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Hyoffwind – ETF feasibility study Public version Disclaimer: Disclaimer: The information contained in this document (including appendices) is strictly confidential and is only intended for the intended recipient, being Frank Vanvuchelen of the Belgian FOD Economie ("Federale Overheidsdienst Economie") and their staff and advisers who are bound by an equivalent confidentiality obligation (hereafter: the "Recipient"), to use in the context of the granting of the ETF subsidy for the hydrogen project Hyoffwind.

If you are not the Recipient, please do not read this document or copy, use or distribute its contents. Please inform the provider (Eoly NV, Parkwind NV or Fluxys NV) [by email to [email protected] to Stephan Windels] and destroy this document.

Under no circumstances will this document be communicated in whole or in part by the Recipient to third parties, unless the provider of this document has given its explicit prior written permission. The communicated confidential information and copies thereof remain the sole property of the provider.

The figures in this document are based on the (feasibility) study(s) conducted by the provider. The provider offers no guarantee that these figures are complete and accurate and states that they may still be subject to change.

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