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diciembre 26, 2024

Regulation and infrastructure: Germany’s challenges in achieving green hydrogen targets

Germany has committed to doubling its green hydrogen production, aiming to reach 10 GW by 2030. However, significant obstacles remain in regulation, infrastructure, and international collaboration. Juan F. Zurbarán shared insights with Energía Estratégica España about the role of the European Hydrogen Bank and the IF24 auction in meeting these objectives.
By Lucia Colaluce

By Lucia Colaluce

diciembre 26, 2024
Germany

Germany has taken a decisive step in its energy transition by doubling its green hydrogen production target to 10 GW by 2030, solidifying its position as a leader in the hydrogen economy. However, achieving this ambitious goal presents multiple challenges, ranging from complex regulations to ensuring a reliable renewable supply. According to Juan F. Zurbarán, director at the strategic consultancy Octant Solutions, “Germany has realised it will not meet its 2030 targets if it continues executing as it has so far.”

Challenges in Regulation and Energy Supply

One of the main hurdles is decentralised regulation, as each Bundesland operates under its own rules. «This complicates standardising processes for renewable energy projects,» Zurbarán notes. However, regions like Lower Saxony are simplifying their regulatory frameworks and making land available to accelerate the construction of wind and solar farms.

Germany also relies on agreements with third countries to import renewable energy, a key factor in ensuring a consistent hydrogen supply for industry. «Although there are agreements with countries like Denmark and Norway, progress has been slower than anticipated,» the consultancy adds. This highlights Germany’s need to diversify and secure its renewable energy sources.

Infrastructure and Technological Conversion

The infrastructure required to support the hydrogen economy also faces significant challenges. These include the repowering of wind turbines with extended service hours—a sector expected to see significant activity in the coming years—and the development of a robust network for hydrogen transport and storage. Additionally, the installation of electrolyzers still encounters regulatory barriers, although a recent amendment to the “Ordinance on Installations Requiring Authorisation” in May 2024 exempts equipment below 5 MW from the obligation to obtain approval under the Federal Immission Control Act, referenced in European Directive 2010/75/EU.

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“The biggest technical challenge we foresee is converting 60% of the current gas transmission network into hydrogen pipelines,” explains Zurbarán. This conversion requires technology and procedures that are still in their early stages. Projects like GET H2 Nukleus, which involve repurposing several kilometres of gas pipelines, are working to understand the practical challenges of this conversion, but no significant lessons have been learned yet. Moreover, coordinating multiple stakeholders and ensuring uninterrupted gas supply during winter adds complexity to the project.

European Collaboration and the European Hydrogen Bank

Germany’s participation in European initiatives like the European Hydrogen Bank (EHB) is crucial to achieving its goals. Zurbarán highlights, “The EHB supports planning specific hydrogen infrastructure and facilitates imports from third countries, something vital for Germany as the largest consumer of this energy vector.” Furthermore, the bank helps attract international investments, mitigating financial risks and strengthening private-sector confidence.

The IF24 Auction and Strategic Opportunities

The European IF24 auction, with a €1.2 billion budget, presents unique opportunities for German projects. According to Zurbarán, «The maritime sector could benefit the most, as it has several projects underway, proven applications, and clear targets for sector transformation.» Additionally, the auction criteria indirectly favour European technologies, reinforcing Germany’s position as a technological leader in hydrogen.

Financial Risks and Mitigation Strategies

To finance its 9,700 km hydrogen backbone, the state-owned KfW bank has approved €24 billion, including €5 billion reserved for contingencies. Zurbarán explains that revenue from network tariffs will gradually repay this debt by 2057. “Moreover, the government assumes 76% of the financial risk, incentivising private investment,” he adds.

Stimulating Demand: A Key to Viability

Ensuring sufficient hydrogen demand is critical to justify these investments. Germany is promoting its use in the steel and chemical industries, decarbonising heavy transport, and developing hydrogen stations. Projects like the H2Med corridor also ensure imports from renewable-rich regions such as the Iberian Peninsula.
“The new Hydrogen Acceleration Act prioritises permits and streamlines procedures,” concludes Zurbarán, underscoring Germany’s commitment to energy transition and its leadership in the hydrogen economy.

Green Hydrogen Goals in Germany’s NECP

Germany’s National Energy and Climate Plan (NECP) establishes hydrogen as a cornerstone for achieving climate neutrality by 2045. Within this framework, the 10 GW of electrolyzer capacity projected for 2030 is a crucial step toward a sustainable, decarbonised economy.

This goal aims not only to reduce greenhouse gas emissions but also to enhance the country’s energy autonomy in the face of geopolitical and climate challenges. According to the NECP, hydrogen will be a key energy vector for hard-to-electrify sectors such as heavy industry and maritime transport.

However, the plan’s objectives are also conditioned by the need to import green hydrogen from regions with surplus renewable energy. «Germany plans to produce 30% to 50% of its hydrogen domestically, with the remainder imported,» Zurbarán notes. This underscores the importance of strategic alliances and projects like the H2Med corridor for Germany’s hydrogen strategy.

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