2024-10-28 20:00:00
Germany is investing 19 billion in building a hydrogen network. An energy carrier that is considered necessary to green the industry. With the decision, Germany is sending an ‘important signal’ to the parties involved, says energy expert René Peters of TNO. “This is how a market can be created. Once those pipelines are in place, the hydrogen can actually be transported from supplier to customer.”
It was high time that such a signal came. Because all the cheerfulness had pretty much disappeared from the conversation about the ‘hydrogen economy’. Companies canceled or postponed their hydrogen plans. Mainly because of high costs.
For that reason, Peters also thinks that Germany’s signal is not sufficient to achieve a hydrogen breakthrough. Sustainably generated electricity is required to produce green hydrogen. The price for this has risen sharply since the Ukraine war. In the Netherlands, hydrogen factories also have to pay connection costs to network operator Tennet in order to be supplied with power at all. That causes extra costs.
Everyone is waiting for prices to fall
The electrolysers, which are needed to split water into hydrogen and oxygen, are also still too expensive for many companies. A chicken-and-egg story, says Peters. The manufacturers of these machines say that they will become cheaper if more customers order them. But those potential buyers first wait until the price of the machines goes down.
All interested parties feel held hostage by the promise of falling prices. Potential hydrogen manufacturers do not invest in factories, because the required electricity and electrolysers must first become cheaper. Potential customers do not enter into long-term contracts because the hydrogen they want to purchase may be much cheaper in a few years.
There are solutions in sight. For example, the Netherlands and Germany are both investing 300 million euros in a fund that should remove the financial risks for customers. Interested customers can then receive a subsidy to reduce the purchase price of hydrogen. This German initiative is called H2 Global.
In Germany, hydrogen manufacturers do not pay connection costs for the power grid. The idea is that they can help absorb power peaks by producing more hydrogen when the power grid is overloaded.
The Netherlands becomes Germany’s main supplier
The network that Germany wants to build is more than 9,000 kilometers long and connects all federal countries and the most important industrial areas. The Netherlands is an important supplier of hydrogen in the plans. About 20 percent of German imports must be delivered via the Netherlands.
To this end, Gasunie is building four so-called interconnectors, which are pipelines that cross the border, together with the Germans. These will be located at Oude Statenzijl (province of Groningen), Vlieghuis (Drenthe), Winterswijk and Zevenaar (both in Gelderland). Gasunie wants to make the same kind of agreements with the Belgians.
The German plan provides for a total of thirteen interconnectors, which in addition to the Netherlands will also go to Denmark, France, Austria and the Czech Republic, among others.
The German hydrogen network will be put into use in parts and should be completely completed in 2032. Gasunie has reserved 2 to 2.5 billion euros for the construction of the Dutch hydrogen network. In both countries, the hydrogen network will largely consist of old natural gas pipelines.
Also read:
Major plans for hydrogen are going wrong
Energy companies that announced green hydrogen plants are backing down. Their plans turn out to be too expensive and complicated. Despite this setback, the hydrogen economy will eventually have to happen.
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**Interview with René Peters: Insights on Germany’s 19 Billion Euro Hydrogen Investment**
**Editor:** Good evening, René. Thank you for joining us today. Germany has just announced a substantial investment of 19 billion euros to build a hydrogen network. What does this mean for the hydrogen economy in Europe?
**René Peters:** Thank you for having me. This investment is indeed a significant step forward. By developing a robust hydrogen network, Germany is sending a clear signal to investors and industry players. It creates the infrastructure necessary for transporting hydrogen from suppliers to consumers, which is crucial for establishing a functioning market.
**Editor:** You mentioned that the enthusiasm around the hydrogen economy had waned recently. What were some of the reasons behind this decline?
**René Peters:** Yes, the initial excitement around hydrogen was dampened by rising costs and uncertainties. Many companies postponed or canceled their projects due to the high expenses associated with hydrogen production and infrastructure development. The costs for sustainably generated electricity, vital for green hydrogen production, have surged, especially following the Ukraine war. These factors have made businesses hesitant to invest.
**Editor:** Given these challenges, do you believe that Germany’s investment will be enough to spark a hydrogen breakthrough?
**René Peters:** While the investment is a positive move, I don’t think it will single-handedly catalyze a breakthrough. The price of electrolysers, which are essential for hydrogen production, remains a significant barrier. Manufacturers claim prices will decrease with higher demand, but potential buyers are hesitant to invest in production without seeing those price reductions first.
**Editor:** It seems like a classic chicken-and-egg situation. What steps are being taken to resolve this dilemma?
**René Peters:** That’s exactly right. To address this, both Germany and the Netherlands are investing 300 million euros in a new fund designed to mitigate financial risks for customers. This initiative, known as H2 Global, provides subsidies to lower the purchase price of hydrogen, which is a step in the right direction.
**Editor:** That sounds promising. Are there any specific advantages for hydrogen manufacturers in Germany that might encourage investment?
**René Peters:** Definitely. One significant benefit is that hydrogen producers in Germany won’t have to pay connection costs to the power grid. This is crucial because it enables them to participate more actively in managing electricity peaks by producing hydrogen when the grid is under stress. It opens up new operational possibilities for manufacturers.
**Editor:** Thank you, René. This investment seems to present both challenges and opportunities for the hydrogen sector. It’ll be interesting to see how this evolves in the coming years.
**René Peters:** I agree. The hydrogen economy is at a pivotal stage, and while there are hurdles to overcome, initiatives like these could lay the groundwork for a sustainable energy future. Thank you for having me!
Hicken-and-egg situation. What solutions are being proposed to overcome these financial hurdles and encourage investment in hydrogen infrastructure?
**René Peters:** Absolutely, it is a classic dilemma. However, there are promising solutions emerging. For instance, both the Netherlands and Germany are investing 300 million euros into a fund designed to mitigate financial risks for customers. This initiative, known as H2 Global, will provide subsidies to lower the purchase price of hydrogen, making it more attractive for businesses. Additionally, the German initiative has removed grid connection costs for hydrogen manufacturers, which can help them manage peak power demands by producing hydrogen when the grid is overloaded.
**Editor:** That sounds like a step in the right direction. How do you see the role of the Netherlands in this hydrogen network?
**René Peters:** The Netherlands is poised to be a key player in Germany’s hydrogen strategy. It is projected that around 20 percent of Germany’s hydrogen imports will come from the Netherlands. To facilitate this, Gasunie is building four interconnectors to enhance the pipeline infrastructure. This collaborative effort will ensure that hydrogen can flow efficiently between our nations, helping both economies and the wider European market.
**Editor:** Looking long-term, how does this all fit into the broader picture of a fully functioning hydrogen economy in Europe?
**René Peters:** The vision is ambitious, with the German hydrogen network set to cover over 9,000 kilometers by 2032. It’s crucial to understand that while infrastructure development is vital, we also need sustainable production methods and competitive pricing to truly harness the potential of hydrogen. Without addressing these elements, we risk stalling progress in the hydrogen economy. Ultimately, collaboration and investment across the board will be essential to bring this vision to fruition.
**Editor:** Thank you for your insights, René. The developments in hydrogen infrastructure certainly present both challenges and opportunities for Europe.
**René Peters:** Thank you for having me. It’s an exciting time for the energy sector, and I look forward to seeing how these plans unfold.
