From volatility to viability: A stochastic evaluation of electricity-sourcing strategies and policy support for green hydrogen bankability in the Netherlands

Green hydrogen projects in the Netherlands face a critical bankability gap due to high costs and volatile energy markets. This study evaluates a 200-MW alkaline electrolyzer located in the Port of Rotterdam, the Netherlands, comparing three electricity-sourcing strategies: merchant market exposure, baseload green Power Purchase Agreements (PPAs), and hybrid renewable energy sources (RES)-integrated models. By integrating Monte Carlo price uncertainty with risk-adjusted project financing and expert insights, we show that without policy support, all base-case configurations are currently unbankable, with loss probabilities near 100% and mean levelized costs of hydrogen (LCOHs) spanning 6.94–8.67 €/kg H 2 (real, in 2024 values). However, hydrogen Contracts for Difference (CfDs) significantly improve project economics. Full de-risking through 15-year contracts establishes a 90% bankability frontier at strike prices of 6.67–7.34 €/kg H 2 for the RES-integrated configuration and 8.01–8.16 €/kg H 2 for the Baseload Green PPA configuration, substantially reducing downside risk relative to the unsupported baseline. In contrast, partial volume-constrained support remains insufficient to bridge the viability gap, leaving net present values negative. Within the scope of the evaluated configurations, the results suggest that revenue stabilization and downside risk mitigation are important determinants of bankability and may have a greater influence than marginal technical improvements. The results provide a quantitative basis for developers and policymakers to assess sourcing and support mechanisms for large-scale, renewable fuels of non-biological origin (RFNBO)-compliant hydrogen deployment in the Dutch context.