Investors in Germany’s clean hydrogen sector are on tenterhooks as the country prepares for a snap federal election on 23 February.  

The poll, which comes against a backdrop of stalling economic growth in Germany,  follows the collapse last year of the ruling coalition of the Social Democratic Party (SPD), Free Democratic Party and Greens.

The ‘traffic light’ coalition had overseen the first phase of growth in Germany’s clean hydrogen sector, pursuing an ambitious plan to to position Germany as a European leader in hydrogen and associated technology.

10GW – 2030 target

An updated German hydrogen strategy, published in 2023, called for the deployment of 10GW of electrolyser capacity by 2030, double the previous target. The strategy also set a target for the nation’s hydrogen demand to rise from 55TWh currently to 95–130TWh (2.4–3.3mt) by 2030. The push into hydrogen was billed as a key plank of the government’s plan to shore up energy security while also aiming for net zero by 2045.

Gulf Energy Information’s Global Energy Infrastructure database is tracking more than 600 green hydrogen projects in Germany, representing about 18% of the total European project pipeline.

Policies in play

Polling suggests a potential grand coalition between the centre-right Christian Democratic Union and its Bavarian sister party, the Christian Social Union, together with the centre-left SPD.

The CDU/CSU, which has a substantial lead in the polls, has spoken of “turning energy policy on its head” with a partial reversal of Germany’s nuclear power phase-out and a greater role for carbon markets among the ideas floated in the run-up to the election.

It has also expressed scepticism over a plan to tender for about 10GW of subsidised hydrogen-ready gas-fired power generation capacity—a key plank of the previous coalition’s power sector strategy. It has instead signalled a preference for gas-fired plants with CCS. The CDU has voiced its support for CCS generally, which means a carbon management strategy set out last year is likely to move forward in some form.

That said, the party’s stance on hydrogen also remains broadly positive. Its manifesto pledges to “make hydrogen a success”.  “No regions must be disadvantaged when expanding hydrogen. The hydrogen core network must reach all economic regions. We will produce hydrogen here and secure imports via the EU and international partnerships,” it added.  

This position suggests the new government would be unlikely to tinker with H2Global, a state-backed auction platform designed to secure supplies of hydrogen and derivatives from non-EU producers. H2Global recently secured EU approval to move forward with its second-round auctions with a budget of up to €3b ($3.1b).

Core network

The support for Germany’s plan to develop a core hydrogen network also makes welcome reading for the country’s regional gas pipeline operators and distributors.

In October, the Federal Network Agency approved the construction of the Germany-wide hydrogen “core network”, which is expected to cost close to €20b. The 9,040km network will be Europe’s largest hydrogen pipeline system. About 60% of the network will be created by repurposing existing gas lines, with the rest made up of newly built lines.

The network will connect industrial centres, ports and energy production sites, and enables close links with neighbouring European markets. Construction is expected to start this year, with completion scheduled for 2032.

“Hydrogen is, alongside renewable power, the second pillar of our future energy system and a requirement for the decarbonisation of all sectors,” said industry association FNBGas, which represents 12 regional network operators, in a wish-list for the next government.

Its recommendations for the next administration include the introduction of mandated quotas for use of green gases, an idea that has been gaining traction in Germany for a while.

---

Author: Stuart Penson