Germany not hydrogen-ready, set to fall short of 2030 production target: E.ON

Germany is on track to fall significantly short of its 2030 hydrogen production target of 10 GW, with projects announced for the timeline totaling just 5.6 GW so far, E.ON said in a statement Nov. 9.

The country's import ambitions are also well off track, with a gap of 50.5 TWh of hydrogen by 2030, compared with hydrogen demand of 66 TWh, E.ON said.

"Germany is not 'hydrogen ready'," E.ON said.

The company carried out an analysis of data from the Energy Economics Institute at the University of Cologne.

The country was not "sufficiently prepared for the ramp-up of the hydrogen economy," E.ON said, citing a need to develop infrastructure and to finalize the rules governing renewable hydrogen criteria in the EU.

"There is no infrastructure to transport hydrogen from the state's borders, in particular from ports, to the customers who depend on it for their transition to green technologies," E.ON said, adding that the 417 km of hydrogen pipelines accounted for less than 0.1% of Germany's gas network.

"We need a market for green hydrogen -- for sustainable decarbonization and for the diversification of energy sources," Board Member Patrick Lammers said in the statement. "The global competition for investment in the hydrogen industry has now begun. Our competitiveness and the success of the hydrogen ramp-up depend on whether the right course is now swiftly set in politics and regulation."

Policy uncertainty

Uncertainty over EU definitions of green hydrogen had hampered investment decisions, E.ON said, reflecting a theme at the S&P Global Commodity Insights European Hydrogen Markets conference in Amsterdam in September.

"Plant operators do not know whether their current plans will meet the criteria," E.ON said.

Uncertainty had also hindered the development of a hydrogen pipeline network. The European Commission's unbundling proposal does not allow natural gas network operators to also manage hydrogen networks in the long term, leaving gas operators without a strong incentive to convert networks to hydrogen, E.ON said.

The company said in 2021 it was in discussions with multiple offtakers for its planned hydrogen distribution network in Germany.

The market ramp-up also required a "pragmatic funding framework" for investments, and the approval processes for hydrogen production and imports should be "massively accelerated," the company added.

However, there were signs of momentum building, with Bavaria's Economics and Energy Minister Hubert Aiwanger announcing Nov. 7 a Eur500 million ($503 million) energy and hydrogen budget for 2023. Bavaria would invest Eur270 million on hydrogen, with Eur150 million going to electrolysis projects, and Eur100 million for infrastructure.

German hydrogen imports

In March, E.ON said it was partnering with Tree Energy Solutions on renewable hydrogen imports to Germany.

E.ON and Fortescue Future Industries also plan to supply 5 million mt/year of renewable hydrogen to Europe from Australia by 2030.

TES is developing a "green energy hub" in the German port of Wilhelmshaven, including an import terminal, storage facilities and an oxy-fuel combustion power plant. The company is also developing renewable hydrogen production in solar-rich countries.

Platts, part of S&P Global Commodity Insights, assessed the cost of green hydrogen production via alkaline electrolysis in Europe at Eur16.14/kg ($15.84/kg) Nov. 7 (Netherlands, including capex), based on month-ahead power prices. This compares with $3.39/kg in Western Australia.

Germany is planning a series of imports of green hydrogen and its derivatives, with the German government approving a first tender for 10-year offtake contracts for green ammonia.

Chancellor Olaf Scholz told the 2022 UN Climate Change Conference in Egypt Nov. 8 that "green hydrogen is happening now."

Berlin raised the budget for the government-funded H2Global hydrogen import scheme to over Eur4 billion ($4 billion), Scholz told a COP27 meeting co-chaired with Egypt's President Abdel Fattah El-Sisi.

The German scheme covers the price difference between dual auctions for 10-year import offtake agreements with non-EU countries and annual domestic sales auctions.

The first tender for green ammonia is to start straight after COP27, Scholz said, with supply side contracts to be awarded in 2023.

First cargo could arrive as early as 2024 to a German, Dutch or Belgian port.