German utility Uniper plans to develop vast capacities of hydrogen storage in Germany, it said yesterday (Wednesday), but only if it can secure adequate subsidies — ideally a Contracts for Difference scheme for H2 storage.

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The company wants to develop underground salt-cavern storage for 250-600GWh of hydrogen in northwest Germany. Presuming a lower heating value of 33.33kWh per kilogram of H2, this equates to a volume of 7,500-18,000 tonnes of hydrogen.

Uniper is now exploring existing fossil gas sites and new potential H2 sites in Lower Saxony and North Rhine-Westphalia, along Germany’s so-called 9,700km “core” hydrogen network, with a plan to market the storage by 2030.

The company is already developing the Hydrogen Pilot Cavern (HPC) in Krummhörn, Lower Saxony, and the HyStorage project in Unterreit, Bavaria.

If the full 600GWh were to be realised, it would outstrip Uniper’s fossil gas storage capacity in three of its major markets — Austria, Germany and the UK — by a factor of 7.5 on an energy basis.

When measured on volume that is likely to be a more than 20 times the size of Uniper’s gas storage facilities in those countries, as gas has three times the volumetric energy density of hydrogen.

Proponents say that hydrogen storage will be crucial to allow renewable H2 producers to operate their electrolysers at higher capacities (and therefore more economically), as well as balancing the grid by allowing renewable electricity producers to store power as molecules during times of low demand.

However, the storage of hydrogen, which is notoriously leaky, will be more expensive than methane.

And Uniper warned that the proposal will not happen unless it gets an adequate subsidy programme to bolster its storage business model.

“Investments in the development of hydrogen storage facilities require a regulatory and funding framework in order to achieve workable business models,” said Uniper’s chief operating officer, Holger Kreetz.

“By planning the development of hydrogen storage facilities in the order of up to 600GWh by 2030, we as Uniper are making advanced investments. Whether and how the storage projects can be realised will depend largely on the framework conditions and economic viability.”

So far there has been relatively little financial support for hydrogen storage, although the German government last year granted €28.4m ($31m) to an on-site programme in Brandenburg to test H2 storage with power plant operation.

Ideally, governments will put in place a Contracts for Difference programme for hydrogen storage, said Kreetz, most likely referring to a scheme in which the state makes up the difference between the cost of storing hydrogen and that of storing natural gas.

“We have concrete proposals that ensure a balance between the necessary hedging of investment risks and a competitive market model on the one hand, and security of supply through storage on the other. The principles of Contracts for Difference should be applied to achieve the aims in a cost-efficient and effective manner.”

A market consultation will now be conducted in February and March 2024.