The European Energy Exchange (EEX) is to develop a hydrogen index that will provide a traded price for the fuel to be used in Germany’s Contract for Difference (CfD) auctions.

The exchange is working on the index with participants from various parts of the hydrogen sector who will provide price assessments.

EEX is a member of industry initiative H2Global, which has received €1bn ($1.1bn) from Germany’s Federal Ministry for Economic Affairs and Climate Protection to develop a market for the fuel.

“The trading of green hydrogen and its downstream products such as ammonia on the exchange ensures transparency in prices and trading volumes,” says Tobias Paulun, chief strategy officer at EEX.

“The development of liquid exchange markets for hydrogen and its downstream products is important so that producers and consumers can meet under reliable conditions. The work of H2Global lays the foundation for this,” he adds.

Technology firm Siemens Energy, steel manufacturers Thyssenkrupp and Salzgitter, financial services firm Deutsche Bank and utility Uniper are already members of H2Global.

€1bn – H2Global funding from German government

H2Global was established at the end of last year by the incoming German government. It will set up the Hydrogen Intermediary Company, which will buy the fuel via long-term purchase contracts from suppliers and provide short-term sales contracts on the demand side. The difference in prices will be met by grants from the German government.

“In the interest of the federal government, the German economy and, last but not least, society, we see it as our urgent task to establish a strong and internationally diversified supply chain for green hydrogen—trading on an exchange is absolutely a part of this as an allocation and coordination mechanism,” says H2Global CEO Markus Exenberger. “The expertise of EEX in the establishment and operation of energy trading markets is welcomed.”

The CfD auctions and physical delivery of hydrogen are expected to begin in 2024.

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Author: Tom Young