Germany, Europe’s largest economy, is leading the way in developing its green hydrogen sector.
With a commitment to the “Energiewende” (energy transition), the country views green hydrogen as a cornerstone in its efforts to decarbonise industry, transport, and power generation. Thanks to ambitious government targets and substantial incentives, hydrogen is transitioning from a niche solution to a vital component of Germany’s clean energy mix.
This narrative, explored here by Haush, looks at the pivotal elements of Germany’s green hydrogen journey, from government goals and production costs to its adoption in transport and the key market players driving progress.
Ambitious Government Targets and Generous Incentives
Germany’s National Hydrogen Strategy, unveiled in June 2020, serves as the backbone of its hydrogen ambitions. At its core, this strategy is designed to cement Germany’s position as a global leader in the hydrogen economy.
Key targets include:
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Electrolyser Capacity Goals:
By 2030, Germany aims to have at least 5 gigawatts (GW) of electrolyser capacity, expanding to 10 GW by 2040. This would enable the production of approximately 14 terawatt-hours (TWh) of green hydrogen annually.
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Carbon Reduction Milestone:
Hydrogen is instrumental in Germany’s pledge to reduce carbon emissions by 85% by 2050, particularly in sectors like steel, chemicals, and heavy transport that are difficult to decarbonise.
The government has committed €9 billion to accelerate hydrogen technology and infrastructure. These incentives are broadly divided into:
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Production Subsidies:
Financial support for constructing electrolysis plants to produce green hydrogen.
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End-Use Incentives:
Assistance for companies transitioning from fossil fuels to green hydrogen, especially in the transport and industrial sectors.
Expanding Production: Green, Blue, and Grey Hydrogen
Green Hydrogen:
Germany’s primary focus lies in green hydrogen, produced through electrolysis powered by renewable energy. Although most production is still in the pilot phase, several groundbreaking projects are in progress:
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Refhyne Project:
Spearheaded by Shell and ITM Power, this facility in Rhineland is among Europe’s largest hydrogen plants, capable of generating up to 10 megawatts (MW) of green hydrogen. Plans are underway to expand capacity to 100 MW by 2024.
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RWE’s Lingen Facility:
RWE is developing a 300 MW electrolyser in Lower Saxony, set to begin operations by 2025, supplying green hydrogen to local industries and refineries.
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HyPerLink Project:
A collaborative initiative aiming to produce 70,000 tonnes of green hydrogen annually by 2030, harnessing offshore wind energy from the North Sea.
Blue and Grey Hydrogen:
At present, blue hydrogen (natural gas with carbon capture) and grey hydrogen (natural gas without carbon capture) dominate production. However, as green hydrogen capacity increases, reliance on these carbon-intensive methods will decline, with grey hydrogen gradually being phased out.
Hydrogen’s Growing Role in Transport
Transport is a crucial area for hydrogen deployment, especially in applications where battery-electric solutions face challenges, such as heavy-duty and long-distance travel.
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Rail Transport:
Hydrogen-powered trains, such as Alstom’s Coradia iLint, are already operating in Lower Saxony. Plans are underway to expand their use to other regions, replacing diesel-powered locomotives on non-electrified routes.
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Heavy Goods Vehicles:
Companies like Daimler Trucks and MAN are leading the development of hydrogen fuel cell lorries. Daimler plans to launch hydrogen-powered trucks by 2027. Germany is also building hydrogen corridors along key highways with refuelling stations to support logistics fleets.
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Aviation and Shipping:
While still in research stages, hydrogen has significant potential in aviation and maritime transport. Lufthansa is investigating hydrogen-powered flight, while Hamburg’s port is exploring hydrogen use in shipping and logistics.
The Cost of Hydrogen Production
The cost of producing green hydrogen remains a barrier to widespread adoption. Key cost drivers include:
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Renewable Energy Prices:
Electrolysis relies on renewable electricity. Lower energy costs make green hydrogen more competitive. Currently, green hydrogen production costs range between €4 to €7 per kilogram (kg).
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Electrolyser Costs:
The price of electrolysers is gradually falling, with advancements and economies of scale expected to drive costs further down.
For comparison:
- Grey hydrogen costs around €1.50 to €2 per kg,
- Blue hydrogen (with carbon capture) costs between €2 to €3 per kg.
As of 2023, green hydrogen’s average sale price in Germany is €8 to €10 per kg, significantly higher than grey hydrogen. However, government subsidies and rising carbon pricing are projected to narrow the gap, potentially bringing green hydrogen prices to €4 to €6 per kg by 2030.
Comparisons with Other Green Fuels
Hydrogen competes with biofuels and synthetic e-fuels in the race to decarbonise energy systems:
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Biofuels:
Typically costing €1.50 to €2 per litre (about €3 to €4 per kg of hydrogen equivalent), biofuels are more affordable but face scalability and sustainability challenges, such as land and water use.
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E-Fuels:
Produced using renewable electricity and CO₂, e-fuels are even costlier than hydrogen, priced between €10 to €15 per kg. They offer compatibility with existing engines but lag in cost efficiency.
Hydrogen’s advantage lies in its energy density and versatility, making it an ideal choice for industries requiring high energy content by weight, such as aviation and long-haul transport.
Key Market Players: Producers and Users
Germany’s hydrogen market is supported by a mix of energy giants and industrial pioneers:
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Producers:
- RWE: Developing green hydrogen projects, including the Lingen electrolyser plant.
- Uniper: Active in hydrogen production and storage initiatives.
- Siemens Energy: Collaborating with partners to establish hydrogen electrolysis facilities.
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Users:
- Thyssenkrupp Steel: Transitioning to hydrogen-powered direct reduction processes to decarbonise steelmaking.
- BASF: Investing in hydrogen to cut emissions in chemical production.
- Lufthansa: Exploring hydrogen for direct propulsion and as a base for synthetic aviation fuels.
A Promising Future
Germany’s green hydrogen sector is poised for substantial growth, fuelled by bold government policies, technological innovation, and robust industrial participation. While high production costs remain a challenge, investments in electrolyser technology and renewable energy are set to drive prices down.
With major players across utilities, transport, and heavy industry embracing the hydrogen revolution, Germany is well-positioned to lead the global transition to a sustainable, hydrogen-powered future.
Further Relevant Reading from Haush:
Carbon Cost Comparison: Battery Electric Vehicles (BEVs) and Fuel Cell Electric Vehicles (FCEVs)
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