Germany is not sufficiently prepared for the ramp-up of the hydrogen economy. This is the conclusion of the “H2-Bilanz” (H2 balance), an analysis by E.ON based on data from the Energy Economics Institute at the University of Cologne (EWI). Looking ahead to 2030, it turns out that neither the domestic generation capacity of green hydrogen is sufficient nor can the German import demand be met. In addition, there is a lack of infrastructure to bring hydrogen to customers.
From now on, E.ON will publish the H2-Bilanz at regular intervals. The goal is clear: to show the current status quo of hydrogen ramp-up in Germany. The analysis includes specific project plans up to 2030 and beyond. Examples for indicators are green hydrogen generation capacity, import volumes, infrastructure and costs. The analysis of the data shows: Germany is not hydrogen-ready.
Taking into account all projects planned to build-up electrolysis capacity, the generation capacity will be 5.6 gigawatts by 2030. This is only slightly more than half of the national generation capacity that the German government says should be achieved by 2030. If the development of national hydrogen production does not proceed more quickly, the existing import demand will increase even further. Here, too, the H2-Bilanz shows a large gap: Based on the German Energy Agency’s lead study, which assumes a hydrogen demand of 66 terawatt hours by 2030, the import gap is 50.5 terawatt hours as of today. This is approximately equivalent to the monthly natural gas consumption in Germany in September 2022.
Furthermore, 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. There are currently only 417 kilometers of hydrogen networks − less than 0.1 percent of Germany’s gas network.
E.ON Board Member Patrick Lammers: “We need a market for green hydrogen – for sustainable decarbonization and for the diversification of energy sources. The global competition for investment in the hydrogen industry has now begun. We are at a crossroads in Germany and Europe: now we will see whether the development of this new market will be successful by 2030. Our competitiveness and the success of the hydrogen ramp-up depend on whether the right course is now swiftly set in politics and regulation.”
E.ON points out that there is still no definition of green hydrogen at EU level. This inhibits investment decisions because plant operators do not know whether their current plans will meet the criteria.
Uncertainty is also slowing down the development of a hydrogen network. The EU Commission’s proposal for unbundling would not allow natural gas and hydrogen networks to be managed within one company in the long term. This would mean that gas network operators would lack the incentive to convert their networks to H2.
In addition, the support environment in Germany is not yet mature enough for a completely new industry to emerge by 2030. The market ramp-up requires a pragmatic funding framework for investments in hydrogen projects. Support for operating costs is needed to encourage companies to switch to green alternatives.
Approval processes for hydrogen production and import need to be massively accelerated. The legal classification as of “of overriding public interest” that is planned for wind energy and photovoltaics must also apply to hydrogen projects. For the construction of new hydrogen pipelines, this regulation has already been included in the current legislation, but only temporarily until the end of 2025. However, the major investment phase will probably not occur until after that. Only if this time limit is lifted will there be long-term planning security.
From now on, the H2-Bilanz will be published every six months. The scientific, data-based approach is intended to help ensure that the right adjustments are made for a successful hydrogen ramp-up.