Germany will only have half the hydrogen capacity it needs to meet its 2030 domestic production target and has a 1.5 million-tonne hole in its H2 imports strategy, which could have dire consequences for the country’s ambition to become a “hydrogen economy”, according to utility giant E.ON.
And even if enough hydrogen could be found, the country has insufficient infrastructure to transport it to where it is needed, the company added, citing data from the Energy Economics Institute at the University of Cologne (EWI).
In fact, Germany has only 5.6GW of projects in development that could come on line by 2030, just over half Berlin’s ambitious target of 10GW of electrolyser capacity.
This will have a knock-on effect on demand for imports, and here too the situation is precarious. The German Energy Agency predicts import demand of 66TWh by 2030, of which just 15.5TWh is secured. This leaves an import hole of around 50.5TWh, the equivalent to a whopping 1.5 million tonnes of hydrogen.
E.ON’s damning verdict comes as Germany’s chancellor Olaf Scholz announced that Berlin is quadrupling the budget for its pioneering H2Global scheme, which will buy non-EU hydrogen in an auction system, before selling it on to German customers. The scheme will now have a budget of €4bn ($4.1bn).
But hydrogen infrastructure is also not sufficiently developed to carry the volumes of H2 needed, the company said, highlighting the need for pipelines to carry hydrogen to customers from Germany’s borders, especially from ports.
Germany currently has just 417km of hydrogen pipeline, equivalent to 0.1% of the country's gas network.
By contrast, the Netherlands, a country nine times smaller, has over a 1,000km of existing hydrogen pipeline infrastructure and a plan to develop enough hydrogen-ready pipes to transport 10GW of H2.
“The analysis of the data shows: Germany is not hydrogen-ready,” E.ON added.
Perhaps unsurprisingly, E.ON blames the lack of progress on regulatory delays at national and EU level, which the company says is holding up investment. In particular, the utility singles out the EU’s failure to define green hydrogen.
This position is shared by many in the industry, who are frustrated at the continued delay to rules around what constitutes green hydrogen — a situation that has been exacerbated by a lack of consensus among Europe’s hydrogen trade bodies.
Moreover, E.ON calls for the EU to scrap its plans to force Europe’s fossil-gas pipeline operators to unbundle their hydrogen assets, which the company says disincentivises gas companies from investing in hydrogen pipes.
However, such a move would be controversial: the unbundling measure is designed to prevent cross-subsidisation of the gas and hydrogen networks, so that gas consumers don’t end up paying for hydrogen infrastructure they never use.
Finally, E.ON calls for a “pragmatic funding framework” for hydrogen projects that support operating costs, and a permanent accelerated approvals process that mirrors the “overriding public interest” classification that is planned for solar and wind power. Currently, hydrogen pipelines only qualify under this classification until 2025 which is too early to catch the bulk of major investments, the company said.
“The global competition for investment in the hydrogen industry has now begun,” said E.ON’s chief operating officer, Patrick Lammers. “We are at a crossroads in Germany and Europe: now we will see whether the development of this new market will be successful by 2030. Our competitiveness and the success of the hydrogen ramp-up depend on whether the right course is now swiftly set in politics and regulation."
E.ON’s analysis forms part of a new regular report titled H2 Bilanz (H2 Balance) through which the company plans to track several key health indicators of Germany’s hydrogen economy, including green H2 generation capacity, import volumes, infrastructure and costs. The report will be published every six months.
