Delays to the publication of the EU’s Renewable Energy Directive (Red) II represent the biggest hurdle for hydrogen infrastructure projects in Europe, according to Andreas Schierenbeck, co-founder of German developer HH2E and former CEO of energy firm Uniper.

“We need Red II—which has still not been published—to define what green hydrogen is and how it should be produced. At the moment, we have proposals but not European law—that is the main thing that is missing. You have more difficulties declaring FID if you do not have clarity on the regulatory framework,” Schierenbeck tells Hydrogen Economist.

The EU may also have to offer additional financial support to match incentives offered by the US Inflation Reduction Act, as equipment manufacturers may be drawn to projects outside Europe. “That is definitely a risk. We are not so concerned with competition for green hydrogen produced in the US—it will be produced for domestic demand, as transportation to Europe is not cheap—but there is not enough electrolyser manufacturing capacity for both.”

While announced electrolyser projects add up to more than 380GW of capacity, Schierenbeck notes there is less than 500MW of available manufacturing capacity and orders are likely to fill up as more and more projects take FID. “The best and most attractive business cases will be in the US. Who would buy an electrolyser without stability and certainty in regulatory framework?”

Efficiencies

HH2E has to date announced two German green hydrogen projects and aims to install 4GW of capacity in the country by 2030. Schierenbeck confirms that all of HH2E’s projects will follow the same model of electrolysers run with a combination of renewables and a high-capacity battery.

“If you want to build a renewable energy-based network, you need hydrogen, otherwise you cannot handle fluctuations,” Schierenbeck says. He estimates that, for 1MW of baseload power, 8–10MW of solar capacity would need to be installed, necessitating long-term storage for peak power generation. Around 20mn t/yr of green hydrogen will be necessary to provide backup power for a renewables-based grid, he adds.

“You cannot build an electricity network without considering storage, and you cannot decarbonise society only with electrons” Schierenbeck, HH2E

Renewable electricity production, particularly solar, tends to peak for 4–5 hours at midday—a period of low demand, leading to costly curtailment. “We take those electrons and store it in a battery pack to use for our electrolysers. This gives us two big advantages: one, we take in renewable energy at the cheapest possible prices at the peaks, and two, we ensure our machines run on stable supply. We can run our electrolysers at 8,000h/yr, constantly producing green hydrogen.”

“Efficiency is only really a problem if you are running hydrogen production constantly off the grid. But if you shave the peak of renewable electricity generation, that is energy would have been wasted otherwise.”

Schierenbeck also notes that electrification—while necessary for decarbonisation across a wide range of uses—is not a viable solution for hard-to-abate sectors such as steel, aviation, refining and industries that require high-heat processes. “You cannot build an electricity network without considering storage, and you cannot decarbonise society only with electrons.”

Security

“Germany currently imports 78pc of its primary energy. If you close lignite mines, that rises to 82pc. There is always going to be a question of energy security and security of supply, as even if we open new nuclear, we still need to import molecules,” Schierenbeck says. While a significant proportion of Germany’s hydrogen demand over the coming decades is expected to be supplied by piped imports, he notes that there “will always be local production to supply local consumption without the extra cost of transportation”.

“At the moment, imports have to come as green ammonia or methanol, which is a different market to green hydrogen. Green ammonia only contains 18–20pc hydrogen content, and you have to compress it, cool it, ship it, bring it to Europe, crack it back—at which point you have lost tonnes of hydrogen. I would doubt that is cheaper than what can be domestically produced,” he adds.

Schierenbeck is sceptical that shipped hydrogen—even from locations with abundant wind and solar resources—will undercut domestic production. “The cost of solar energy in Europe compared to such areas is not dramatically different,” he says, noting that it depends on capex for solar modules more than resource. Instead, he anticipates energy-intensive industries are more likely to develop facilities co-located with production in these locations.

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Author: Polly Martin