Hydrogen as the hope for climate-neutral energy production

Hydrogen currently plays an important role in the field of energy production. But what is hydrogen, and how can it be obtained? Hydrogen is the most frequent chemical element in the universe. It does not occur on earth on its own, but only in the form of compounds, so it must be split off from a hydrogen-rich starting material with the help of energy. These starting materials are separated using chemical, electrical, thermal or solar energy to produce pure, unbound hydrogen. Current concepts increasingly envisage hydrogen-production with the aid of renewable energies. This makes climate-neutral hydrogen production possible. The chemical element can always be produced locally, because it is so abundant. Moreover, it is clean, safe, and available in almost unlimited quantities. Energy can be stored for months, and hydrogen itself can be easily stored temporarily in pressure vessels or gas caverns. 

The use of hydrogen is very versatile. Thus, hydrogen can be used for many processes in industry, such as the production of ammonia and methanol. Another area of application is in the energy-intensive steel production, certain processes in the chemical industry, operating gas power plants, moreover together with CO2, for example, it can be converted into climate-friendly fuels that power trucks, ships, aircraft, or cars.

Hydrogen in the world

As you can see from the picture, hydrogen is in use all over the world. It can be seen that most hydrogen projects take place in Europe then Australia, Asia, and North America. The projects in Europe are equally distributed between production and usage initiatives, while Korea and Japan focus more on the production side, for both transport and industrial applications. As a contrast, is the Middle East and Australia. Their focus is on the supplier side to position themselves as hydrogen exporters, if applicable. 

A look into the Hydrogen sector opportunities in Germany

The global demand for alternative fuels has propelled hydrogen technology into the spotlight, with Germany leading the charge in Europe with a 20 billion euro hydrogen project portfolio. Currently generating 60 terawatt hours, Germany’s commitment is evident. Supported by initiatives like the National Hydrogen Strategy and a recent update in July 2023, Germany is actively fostering hydrogen expansion. This overview delves into key aspects, from national strategies to European dimensions, shaping the hydrogen landscape.

National Hydrogen Strategy:
– In 2020, the German government implemented the National Hydrogen Strategy to leverage hydrogen
technology for reducing CO2 emissions across industrial, transport, and energy sectors.
– The strategy aims to open new market opportunities and strengthen Germany’s competitiveness.

Strategy Update:
– As of July 2023, the Federal Cabinet updated the National Hydrogen Strategy, reemphasizing the significance of hydrogen in the country.

Support for Initiatives:
-Initiatives focused on cost-effective and efficient production, storage, transport, and utilization of hydrogen receive robust support from the German Federal Ministry of Education and     Research.
-The German government is actively promoting application-oriented basic research in green hydrogen, backed by a fund of 310 million euros from the Energy and Climate Fund.

European Dimension:
– Incentives for the hydrogen sector extend beyond Germany to the European Union.
– The EU aims to achieve greenhouse neutrality by 2050, necessitating a minimum 90% reduction in all CO2 emissions.
– Hydrogen, according to the European Commission, is envisioned to serve diverse purposes in the near future, acting as an energy carrier in transportation, industry, and buildings, as well as a raw material in industrial processes.

Legal situation and opportunities in the German hydrogen sector

There are several laws in Germany that are instrumental in paving the way for hydrogen as a progressive energy source. These legal frameworks present lucrative opportunities for both local and foreign companies. Notably, the Renewable Energy Directive (RED II), the Energy Industry Act (EnWG), and the Federal Emission Control Act (BimSchG) play pivotal roles. In the following, we explore these laws to understand their contributions to fostering the hydrogen economy in Germany and creating new avenues for businesses.

Renewable Energy Directive (RED II):
– EU-wide mandate to increase the share of renewable energy by 2030.
– Targeting a minimum of 14% renewable energy in the transport sector by 2030.
– Positive implications for hydrogen producers due to increased consumption of renewable energy.

Energy Industry Act (EnWG):
– Governs the conversion of existing natural gas pipelines to pure hydrogen.
– Facilitates companies in transitioning to hydrogen, creating new sales opportunities.

Federal Emission Control Act (BimSchG):
– Protects the atmosphere, culture, and environment from harmful impacts.
– Advocates for increased support of green hydrogen in fuel cell vehicles.
– Provides cost advantages for companies and boosts fuel cell research.

In summary, these laws support the proliferation of hydrogen as an energy carrier and open up new prospects for companies in an alternative, sustainable future.

The German Energy Mix

In the evolving energy sector of Germany, 2022 witnessed notable shifts compared to the preceding year. The juxtaposition of key statistics from 2021 and 2022 highlights transformative changes, particularly in the balance between conventional and renewable energy sources.

Energy Sources in Germany (2021 vs. 2022):
– Coal played a significant role, contributing to 33.3% of electricity from coal-fired power plants 2021 (30.2%).
– The share of conventional energy sources decreased from 57.7% (2021) to 53.7% (2022).
– The last coal-fired power plant in Germany is scheduled for decommissioning by 2038 at the latest.

Transition to Renewable Energies (2021 to 2022):
– The share of renewable energies increased from 42.3% (2021) to 46.3% (2022).
– Wind power accounted for 24.1%, marking a 9.4% increase from the previous year 21.6% (2021).
– Electricity generation from photovoltaic systems rose by 19.5%, driven by system expansion and increased
sunlight hours.
– Solar power achieved a 10.6% share 8.7% (2021) .

Innovations in Research and Government-Led Structural Transformation:
– The federal government is supporting structural change in coal regions to facilitate job creation.
Despite successes in wind and solar power, ongoing research is exploring new methods for generating renewable energy.

Energiewende 

In Germany, the ambitious pursuit of a comprehensive transition, known as ‘Energiewende’ or the energy turnaround, is underway to achieve a low-carbon, environmentally sustainable, reliable, and affordable energy supply. The plan sets a clear roadmap, aiming to derive 50% of total electricity from renewable sources and eliminate coal usage entirely by 2038. As a pioneer in offshore wind and solar PV technologies, Germany is targeting 20 GW of offshore wind capacity by 2030 and an even more ambitious goal of 40 GW by 2040, with substantial investments allocated to generate 5 GW of hydrogen by 2030.

The Impact of Energiewende Illustrated:
– The diagram above visually represents the installed power plant capacity in the individual federal states in 2019, showcasing how this energy turnaround has been influencing the country’s development. Renewable energies already predominate in ten of the 16 federal states, with Bayern (Bavaria) leading at 20.1 GW by the end of 2019, driven largely by solar installations (contributing over 65%). Niedersachsen (Lower Saxony) follows with the second-highest installed power capacity in renewable energy, totaling 17.3 GW.

Challenges and Controversies:
– The Energiewende is impacting various sectors and areas of life, sparking controversial discussions. The phased-out approach to Germany’s coal industry (in red) and addressing the legacy of Germany’s nuclear industry (in blue) pose significant challenges. The transition’s repercussions on electricity costs, jobs, industry, mobility, and ongoing research for new methods in renewable energy generation are critical considerations.

Market Opportunities in Germany

The widespread adoption of offshore wind farms, photovoltaic systems, and the increasingly efficient production of green hydrogen is reshaping the landscape of renewable energy generation in Germany. These technological advancements not only signify progress but also unlock diverse business opportunities for both domestic and international companies. These developments are responses not only to climate change but also to the escalating frequency of natural disasters and geopolitical events threatening energy supplies.

Demand for Technological Expertise:
– Beyond advanced technologies, there is a growing demand for industry-specific knowledge to navigate constant changes and challenges.
Focus on Energy Efficiency:
– The imperative to reduce reliance on foreign gas and oil is driving the energy transition, necessitating increased energy efficiency and a comprehensive shift towards renewable energy sources.

Turning Challenges into Opportunities:
– The ongoing transformations present not only challenges but significant business prospects and substantial profit potential.
Differential Potential Across States:
– Business opportunities span the entire country, with some regions, such as North Rhine-Westphalia, standing out due to their higher reliance on non-renewable energies. Consequently, these regions are expected to witness promising decarbonization projects and substantial capital investments.

Examples of international companies that have successfully seized the opportunities of the German market

To summarize entering the German renewable energy sector holds great promise for foreign companies. However, success hinges on careful considerations of the business sector, region, and partnerships. Several noteworthy examples illustrate strategic approaches that have proven successful in the German market:

Gasunie: A Dutch natural gas infrastructure company, Gasunie seized opportunities in Germany’s hydrogen market by initiating the HyPerLink project. This endeavor involves building a 600-kilometer hydrogen backbone network in northern Germany, connecting the Netherlands to key industrial cities. Scheduled for completion between 2025 and 2030, the project boasts an impressive transport capacity of 600 gigawatts.

VoltH2: As the first Dutch hydrogen company with German funding, VoltH2 established its third production site in Germany in 2023. With a portfolio exceeding 500 MW potential production capacity, VoltH2 strategically positioned itself in Wilhelmshaven, Germany’s only deep-sea port and emerging energy hub. These examples underscore the rich potential for foreign companies navigating Germany’s dynamic renewable energy landscape.

On 14 November 2023, the German Minister of Economic Affairs, Mrs. Mona Neubaur (left side of the picture), presented VoltH2 with funding certificates worth 15 million euros in the presence of  His Majesty, King Willem-Alexander of the Netherlands and North Rhine-Westphalia’s Prime Minister, Mr. Hendrik Wüst.

Lastly,the engagement of prominent international players such as Canadian Solar and SunPower further emphasizes the global influence on Germany’s renewable energy landscape.

Canadian Solar: As a major player in solar module manufacturing globally, Canadian Solar has successfully executed several projects in Germany. Their dedication encompasses cutting-edge solar technologies and sustainable contributions to Germany’s energy sector.

SunPower: A notable American solar technology company, SunPower has achieved significant milestones in Germany through its subsidiary, SunPower GmbH. Through successful project execution, the company actively contributes to the provision of renewable energy for households and businesses.

Examining the activities of these international corporations illustrates how their expertise contributes significantly to tangible advancements in Germany’s journey towards a more sustainable energy future.


Sources:
Bundesministerium für Wirtschaft und Energie (BMWi) – Coal Phase-Out
Bundesregierung – Climate Protection and Hydrogen Technology
Clean Energy Wire – Main Stories of Germany’s Energiewende
Deutscher Industrie- und Handelskammertag (DIHK) – Factsheet Hydrogen
Deutscher Wasserstoff- und Brennstoffzellen-Verband (DWV)
Gasunie – Future Projects
IWR – Groundbreaking for the Construction of a Solar Park in Germany by Canadian Solar
PwC – Energy Transition Tracker
Statistisches Bundesamt – Press Release
Toyota – Electromobility and Hydrogen
VoltH2
Wasserstoffinvestment
Wirtschaftswoche – Infographic Hydrogen as the New Oil

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