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<pre>10273701
         IPCEI Project:       NortH2
                                                                                     NortH,
            1. What is the project?
            a. Description of the project:
               Introduction
               The NortH2 project aims to establish          a large-scale green hydrogen value chain, supplying 4
               GW around 2030       (0,3 million  ton/year)   and ultimately 10+ GW (2040, 0,8 million ton/year)) of
               green hydrogen to Northwest European industrial clusters as well as to the heavy-duty
               mobility sector.
               Project type    & value chain components
               The project involves the       integral development of all aspects of the green hydrogen value
               chain: offshore wind and       electrolysis capacity on a gigawatt scale, transportation to shore of
               electricity (first phase) and hydrogen (later phases), as well as the necessary hydrogen
               transport and storage infrastructure development and green hydrogen market development.
               Short   description of the value chain and linkage to the projects The description below is
               based   on current thinking, which, given the nature of the development process, may change
               over  time.
               The  integrated green hydrogen value chain         to be developed  in the NortH2  project consists of
               four major steps.
                    1)   Offshore Production, which includes offshore wind turbines to be installed in          large
                         wind farms in the North Sea and related offshore infrastructure. In the first      phase of
                        the project, the     electricity  will be  transported  from the wind farm to shore. The
                         required   offshore infrastructure comprises of        electricity cables and stations. In
                         subsequent phases (post 2030), hydrogen might be produced offshore and
                        transported to shore by pipeline.
                    2) Onshore Conversion, in the first phase onshore electrolysers will convert green
                         electricity to green hydrogen.
                    3) Hydrogen Transportation and Storage, encompasses a dedicated green hydrogen
                         pipeline infrastructure. The pipeline infrastructure is partly a stand-alone project in
                         which existing natural gas pipelines will be repurposed to dedicated green hydrogen
                         pipelines to facilitate several green hydrogen initiatives. In order to ensure the
                         integrated NortH2 system allows for sufficient flexibility, the flexibility requirements
                         will be met by storing the hydrogen underground. In the first phase salt caverns will
                         be developed to dedicated green hydrogen storage facilities.
                    4) Market development. For details see next section.
               Envisaged market
               Currently, there is    no  liquid market for    hydrogen  and  hydrogen application is limited to the
               chemical sector. The project has the ambition to contribute to developing a liquid market for
               hydrogen. In the first phases of the project the emphasis will be on creating demand in
               selected industrial segments who have limited other decarbonization options. The potential
               largest green hydrogen end-users are in industrial clusters in the Netherlands (Delfzijl,
               lJmuiden, Rotterdam, Zeeland and Chemelot), Germany (Ruhr area) and selected inland
               industries. Green hydrogen produced by NortH2 might also be supplied to the mobility sector.
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<pre>10273701
            1. Offshore                    2. Onshore Conversion (Electrolysis) |   3. Transport& Storage      | 4. Market
         Project dimensions
         In the first    phase of the project (until 2030),              the aim is to     develop 4 GW offshore wind with
         dedicated +80 km HVAC cables to Eemshaven where the                                  annually 0,3 million ton green
         hydrogen will be produced using large-scale electrolyser units. The hydrogen will be locally
         compressed and fed into the pipeline transportation system. Four to six salt caverns will be
         developed for hydrogen storage, to ensure adequate security of supply.
         In the second       phase of the project (post 2030), it is envisaged that an additional 0,5 million
         ton/year green hydrogen will be produced offshore using electricity dedicated wind parks (6+
         GW) and transported to shore via pipeline, to be transported to customers via (extension of)
         the hydrogen transport infrastructure (backbone), established in the first phase.
         Technology
         The project’s objectives require a large scale-up of equipment production as well as
         technology development across the entire green hydrogen value chain. The large-scale
         development is expected to facilitate the required production upscaling and technology
         development, in order to bring the cost to competitive levels. Examples are: increases in
         turbine size (12-15 MW) and turbine installation equipment, large-scale electrolysis
         manufacturing, upscaling and standardization of the electrolysis units, improvement of
         electrolyser efficiency and operations and maintenance, de-risking of emerging electrolysis
         technologies, development of dedicated power electronics equipmentetc. Technology
         developments are also required on the client side, e.g. hydrogen / hybrid burners, fuel cell
         development, etc. In preparation for subsequent phases offshore electrolysis needs to be de-
         risked.
         Location
         The project has chosen the North of the Netherlands                      as   the basis for the value chain because
         of its strategic position. The North of the Netherlands has unique conditions to establish the
         green      hydrogen value chain, from favourable offshore wind conditions, onshore space for
         electrolyses, existing gas infrastructure as well as the potential for underground storage
         facilities. Furthermore, there is a large amount of relevant expertise in the Netherlands and in
         particular in the Northern province Groningen, resulting from the discovery and exploitation
         of the largest European natural gas field in 1959 which supplied Europe for over six decades
         with energy.
         Who      are   the partners for this  project and are there (/could there be) other member
         states involved
         The NortH2 consortium        currently consists of Gasunie, Groningen Seaports and Shell. The
         project development       is co-led  by Shell and Gasunie.
         Exploratory discussions with several potential investment partners (investors in wind and
         electrolysis) are ongoing, aimed for formal entry into the consortium in Q3 2020. The
         anticipated partners reflect the European nature of the opportunity.
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<pre>10273701
         As the  project matures, many more partners are needed along the value chain: suppliers,
         financiers, infrastructure owners, customers, etc. We ultimately envisage a broad
         international    partnership of  many different   parties, along the   entire value chain throughout
         Europe.
         What is the     budget estimation for the project?
         The cost estimate for the entire value chain up to 2030         (including 4 GW offshore wind farm
         and dedicated offshore      infrastructure, electrolyser capacity, compression and hydrogen
         storage) amounts to € 15 billion (type 0 estimate); corresponding operational expenditure is
         estimated to range from € 550 million (2030 level) to € 750 million (2050 level). Revenue and
         corresponding cash flow estimates are highly dependent on the chosen policy scenario and
         largely based on offering sectors the lowest cost decarbonization solutions.
         No estimates     are yet available for the post  2030   development phase.
         What does the      planning look like ? Indicative timing of realization
         FID  (Final Investment     Decision)
         FID for the first    phase is currently planned for the period from 2022 to 2024, with timing
         mostly tied to the ramp up in capital expenditure required to establish the necessary supply
         chains, technology development and long lead procurement.
         RfO   (Ready for Operation)
         RfO will be   phased with the first   GW online   by 2027,  a total of4 GW online in 2030 and     a total
         of 10 GW    online latest by 2040.
         Duration
         The economic life of the overall value chain is       currently set at 25 years from commencement
         of first operation,   some  value chain components will     likely have longer technical lifetimes and
         reinvestment in parts of the value chain will     likely extend the economic life of the overall value
         chain, this  is subject to further evaluation.
         Phasing
         NortH2 aims to deliver 10+ GW          (0,8 million ton/year H2) by 2040. As a first step, a 4 GW
         offshore wind program is      now   being matured, dedicated to produce 0,3 million ton hydrogen
         per year with operation gradually ramping up to 4 GW throughout the 2027-2030 period. A
         second program is being studied to deliver another 6 GW beyond that, fully operational latest
         by 2040 thereby completing the full 10+ GW ambition (0,8 million ton H2 per year).
         Current status of the     project (project phase e.g. feasibility, engineering, etc.)
         A  feasibility study  is currently being conducted with a focus on the first 4 GW program. This
         first 4 GW    programme is planned to commence operation in 2027 and be fully operational
         during   2030.
         What does the project contribute/achieve?
         Contribution towards climate targets:
         Contribution to Climate         Policies, system     efficiencies and energy cost reductions.
         e    Green    hydrogen    is considered    as a  key component       in the realization of the Dutch
              decarbonization targets:     being 49%    reduction of CO2 emissions in 2030 and        (related  to
              the 1990    emissions) being 100% in     2050. There is    an  expressed   ambition  by  the Dutch
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<pre>10273701
            government to      extent the reduction in 2030 to       55%, both in the European Green Deal and
            in the Climate    Agreement.    Green   hydrogen     has the   potential to play an important role in
            a  cost-efficient reduction of the emission in energy                use for  mobility, industry and
            potentially built   environment.
            The ambition from the Dutch Climate Agreement is to                  develop  3 to 4 GW of installed
            capacity of  electrolysers   to  produce green hydrogen          in 2030 in order to create   a market
            incentive to the equipment manufacturers and supply chain for electrolysers and as such
            realise a cost reduction ambition that is needed in view of the envisioned role of hydrogen
            in 2050.
             NortH2 is able to fulfil this ambition with       a  large-scale programmatic approach and will
            also  ensure a   substantial and    secure  supply   in   a multiregional system (including storage)
            based on additional offshore wind power (primarily) dedicated to production of green
            hydrogen. This will ignite significant cost reductions as well as the development ofa broad,
            large and mature green hydrogen market, which needs to be started up in time in order
            to achieve the 2050     targets.
             NortH2 will   initially target at industrial markets and has identified large scale energy
            applications where hydrogen is a cost efficient fully renewable option: in terms of
            conversion costs (compared to electrification for example), in terms of system costs
            (grid/network investments, storage) and in terms of supply costs.
             NortH2 will in the first  phase up to 2030 create system efficiency with onshore pipeline
                                              -              -
            transport and      storage/flexibility of large quantities of renewable energy (molecules)
            throughout the Netherlands and to neighboring industrial clusters at relatively low costs
            (compared to electricity, especially from North NL).
            Additionally, after 2030, NortH2 can significantly contribute towards system efficiency and
            overall system costs by developing large scale offshore hydrogen production, and
            transportation thereof to shore via long distance pipelines.
            The project targets 0,3 million ton/year of green hydrogen production in 2030 -based on
            4 GW OSW- and at 0,8 million ton/year of green hydrogen production in 2040 -based on
             10 GW OSW. When compared to producing hydrogen from natural gas, this will result in
            approximately 3 Megatons of carbon emission reduction in 2030 and 7 Megatons of
            carbon emission reduction by 2040.
         Contribution to the desired        speed-up and scale-up of the hydrogen                economy
             NortH2 is  aiming at breakthroughs with the realisation of a new green hydrogen value
            chain for competitive, firm and efficient supply of green hydrogen to new customers:
            o    By constructing offshore wind parks (additional to current plans) dedicated to the
                 production of green hydrogen, securing defined levels of electricity supply; targeting
                 large cost reductions through economies of scale;
            o    By constructing large scale electrolysers, which will trigger scale-up efficiencies and
                 speed up implementation of innovations in the OEM supply chains;
            o    NortH2 is a trigger for the construction of a backbone (transmission grid) for transport
                 of clean  hydrogen connecting       all industrial clusters in the Netherlands and        adjacent
                 regions  in other EU member states with        hydrogen supply and with      new  (also triggered)
                 large storage of hydrogen.
            o    Alarge number of potential customers will have access to large scale supply of green
                 hydrogen, enabling the development of a yet not existing green hydrogen market.
                                                                    —                  —
            o    The backbone development triggered by NortH2 will provide opportunities for other
                 hydrogen projects to access to these markets.
                      e.g. the backbone allows connection a number of earlier regional initiatives with
                  =
                      supplies and markets at levels of 10's or 100 MW'’s.
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<pre>10273701
             o    NortH2 will    be trigger further        OEM-developments and         innovations  as  well  as
                  significant cost reductions:
                   »
                       The NortH2 demand volume for equipment will             significantly contribute towards
                       upscaling    of  manufacturing    processes, standardization of     products, and enable
                       targeted developments.
             o    The above steps will be essential in      realizing very significant cost reductions as well in
                  de-risking  of  applied technologies in anticipation of the next development phase:
                  application of large-scale electrolysis on offshore platforms, which will enable further
                  system efficiencies after 2030.
         Contribution towards          employment:
         e   The scale of the project will result in substantial         employment effects, especially in the
             North of the Netherlands. The employment effect is subject of an ongoing study, which
             will be finalized around early July 2020.
         Contribute to the overall IPCEI and the EU               objectives Fit with the     current  policy
         framework.
         NortH2 contributes in     a clear and identifiable way to    objectives  of the European Union and to
         realizing the goals  of a  European     H2 IPCEI.
         e   The project aims at     realizing large quantities of CO2-reduction.
                           e   The project fosters     cross  border cooperation between companies and EU
                                Member States.
         e   The project creates     new   jobs.
         e   The project is   fostering   sustainable   growth   as future customers will be able to grow and
             develop   their business based      on CO2-free feedstocks and fuels.
         e   The project creates        a  competitive advantage for Europe by making             sure  Europe’s
             accessible North Sea and attractive offshore wind          potential is unlocked.
         e   The project   provides    an opportunity for European OEM’s to develop        new technologies   and
             capture   new   markets for sustainable energy       production.
         What    are  the challenges of the project (or sub parts of it)?
         Financial challenges
         Funding gap
         The current reality is characterized      by the following aspects
         e   Current   development of green hydrogen is at MW scale and significant investments are
             required to bring it to GW scale.
         e   There is currently no market for (green) hydrogen. Grey hydrogen is produced from
             natural gas and is predominantly produced on or near the sites of large customers.
         e   |n the absence of     government policies, the market price would be determined by either
             the price of grey  hydrogen or the willingness for customers to pay a premium for a greener
             product,  for  a product produced with green hydrogen.
         e   There is a significant price gap between the price of grey and green hydrogen, ballpark
             estimate is in the order of several €/kg.
         e   Government policies such as ETS, CO2 levies and RED Il reduce the value gap.
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<pre>10273701
         e    The gap is   expected to reduce significantly over time, with the upscaling of wind and
              electrolysis production and innovation the costs of producing green hydrogen can be
              reduced significantly. It takes projects with the scale of NortH2 to achieve this.
         e    Green hydrogen is estimated to be competitive in a number of large industrial segments,
              compared to electrification with 100% green electricity.
         The   resulting conclusion is that for most hydrogen applications, the funding gap is primarily
         determined    by the gap with fossil alternatives. Future government policies are important to
         increase the demand for green hydrogen and close the value gap vis-a-vis fossil and other low-
         carbon alternatives.
         Risks
         There is  a broad range of   challenges  associated with NortH2. Some   key  risks include:
         e
              Availability of additional offshore wind acreage dedicated for hydrogen production
         e    Technical risks associated with the upscaling of electrolysis
         e    Schedule risk arising out of NortH2 project development, permitting or developments           at
              the customer side (change-over to hydrogen)
         e    Price and volume risk
         e
              Supply chain risk associated with upscaling
         e    Government policies affecting the demand for and price of green hydrogen
         Other issues
         Getting the production      green hydrogen to full industrial and commercial level will require
         significant steps in technology, supply chain, market and regulatory development and de-
         risking. As such, NortH2’s first 4GW program will have to be preceded by 100+MW pathfinder
         projects.
         Effective  public-private partnership is a pre-requisite to accommodate speed up and scale up
         of a hydrogen economy towards a fully liquid market for zero/low carbon hydrogen by 2050.
         Government-led orchestration is needed to conceive (a shared vision of) the most optimal and
         reliable energy system that meets the climate goals at lowest cost to society and to facilitate
         the realization of that energy system via comprehensive government policies.
         The first 4GW program          as  part of NortH2’s ambition will significantly contribute         to
         industrialization and standardization of value chain components and      especially  for electrolysis
         development,       offering   a   platform   for  further   cost  reduction    towards     hydrogen
         competitiveness.
         Commercial    viability and investability are heavily reliant on new policy being  created.
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<pre>10273701
         What is the ask of the project?
         Financial and related       support
         We have started      a comprehensive value gap analysis including the effect of possible policy
         measures. We expect to complete this analysis over the coming months. Based on our current
         understanding, a combination of several of following measures would bridge the value gap:
             Offshore     wind   acreage  dedicated    for   hydrogen production and support for the
             development      of offshore infrastructure,  equivalent to current infrastructure support for
             offshore wind projects for the electricity market;
             CAPEX support for large-scale green hydrogen production, including the first mover costs
             for development of efficient large scale production;
             OPEX support for the purchase of green hydrogen by customers and/or climate policies
             which will increase the value of green hydrogen;
             Adequate tariff setting for the transport of hydrogen, such that the full conversion cost of
             the (over-dimensioned) backbone is borne by all future users;
             Support for the first development of -initially over dimensioned- large scale hydrogen
             storage;
             Identification and allocation of offshore wind acreage dedicated to         hydrogen production
             north of the Northern Netherlands
         This list is not exhaustive. We will be  looking  into other, financial as well as non-financial (e.g.
         policy) support    measures.
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