Germany may struggle to secure enough supply to meet the targets laid out in its recently updated hydrogen strategy, according to analysts.

The strategy will see the nation’s hydrogen demand rising from 55TWh currently to 95–130TWh (2.4–3.3m t) by 2030, with 50–70% of that demand to be bet by imports.

The smaller tranche of demand to be met by domestic production will require a large expansion of electricity generation from renewable energy, with amendments to the Offshore Wind Energy Act introducing a new 500MW tender for offshore wind-based electrolysis capacity between 2023 and 2028. The updated hydrogen strategy doubles the national expansion target for electrolysis capacity from 5GW to at least 10GW by 2030.

The tranche of demand to be met by imports will require a new import strategy for hydrogen and hydrogen derivatives, which will arrive largely via ship until 2030.

After 2030, the pipeline-based import of green hydrogen from Europe—and possibly neighbouring regions—will be expanded, the new German strategy envisions.

It notes that a hydrogen network of more than 1,800km of converted and newly built hydrogen lines in Germany—and approx 4,500km across Europe—is being funded as part of the EU Important Projects of Common European Interest scheme, and should be in place by 2028.

Maritime possibilities

Imports via ships would be economically viable before 2030, according to analysis by consultancy Aurora Energy Research. Ammonia imports from Australia and Chile would cost €4.84/kg and €4.84/kg of H₂ respectively. Aurora’s levelised forecast cost of producing green hydrogen at feasible locations in Germany in 2030 ranges between €3.90/kg of H₂ and 5/kg of H₂.

But although costs might be acceptable, finding supply may be an issue, according to Dilara Caglayan, research lead for hydrogen at Aurora.

“The federal government should rely on a no-regret strategy that first initiates the ramp-up locally” Peter, BEE

“Availability will be the biggest obstacle to achieving the import target,” she said.

“According to our global electrolyser database, less than 25GW of renewable hydrogen export capacity will be operational in Oceania by 2030, compared with roughly 15GW in the Americas and just 5GW in Africa. The German [strategy] requires around 35GW electrolysers, only 10GW of which is planned to be in Germany.”

However, electroyser forecast figures from other organisations are more bullish. The IEA electrolyser project database suggests the realisation of all projects in Oceania, the Americas and Africa could create more than 90GW of electrolyser capacity by 2030. And calculations based on numbers produced by industry body the Hydrogen Council suggest there could be 100GW of capacity in the same regions by 2030—more than enough to supply Germany. However, both sets of figures are based on all currently announced projects reaching FID, which is unlikely.

Powering through

An analysis of the German hydrogen strategy by information provider Bloomberg New Energy Finance (BNEF) released at the end of July raised a separate issue of where the demand for hydrogen derivatives—rather than the pure hydrogen that would be generated domestically—will come from.

“Hydrogen derivatives like ammonia and methanol play an outsized role in the plan,” said Adithya Bhashyam, head of hydrogen at BNEF.

“By the end of the decade, Germany expects demand for derivative products to be as large as the existing demand for pure hydrogen.”

Germany’s chemicals industry already produces 2.4m t/yr of ammonia, according to government body Germany Trade and Invest, some of which is exported.

BNEF said a large portion of the additional ammonia imports could go into power generation, which would make Germany one of the first countries outside the Asia-Pacific region to use ammonia for power.

German energy minister Robert Habeck said the nation wants to tender for 8.8GW of new hydrogen power plants, 4.4GW of which will be hydrogen-ammonia “sprinter power plants”.

Losing domestic focus

The German strategy is overly focused on imports at the expense of domestic production, according to Simone Peter, president of the German Renewable Energy Federation (BEE), the umbrella group for German renewables associations.

“Instead of taking the second step before the first, the federal government should rely on a no-regret strategy that first initiates the ramp-up locally and covers the remaining demand through imports,” she said.

The BEE notes that 5,817GWh of electricity was curtailed in 2021 that could have been used for hydrogen production.

But under EU rules, electrolyser capacity must be strictly temporally and geographically correlated with renewables capacity, making the use of curtailed renewable electricity for hydrogen production challenging.

A response to the draft plan from German industry body the DIHK noted that sluggish approval procedures and the shortage of skilled workers would make the construction of dedicated renewables capacity to supply the doubled 10GW domestic electrolysis capacity challenging. The DIHK has not updated its position following the release of the final strategy.

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Author: Tom Young