EnBW, which happens to be a German utility, has already pledged a whopping €1 billion, or $1.08 billion, to construct pipelines so as to carry clean hydrogen as part of a plan that comprises a nationwide grid that is going to begin its operations in 2032.
It is well to be noted that Germany is indeed betting pretty high when it comes to green hydrogen, which is produced by way of electrolysis that’s driven by solar as well as wind power being an alternative to fossil fuels.
There are some who take it as a gamble while there are others who think it is a world-leading example. This is the kind of progress that has been attained as of now.
What makes Germany an epicenter of the EU’s hydrogen production plans?
It is well to be noted that Germany happens to be spearheading the EU transition to cleaner energy due to being the bloc’s biggest economy as well as exporter with a dependence on the sector for one-fourth of its GNP.
Some advocates of the fuel go on to say that all this is going to help German products like steel or cars to go ahead and compete in a much more effective way as pressure happens to mount from customers as well as investors pertaining to goods that massively decreased carbon footprints. The energy shift in Germany became all the more immediate post its relatively inexpensive gas supply coming from Russia ended due to the Ukraine war. Germany’s research and development has gone on to come up with numerous hydrogen patents across the last decade.
What happens to be its broader usage?
The transport grid happens to be just another element across a strategy that ranges 10 GW of the domestic production capability and also a strategy on imports that will have supply from somewhere else in Europe and also overseas. The new gas-to-power generation plants, which can go on to switch to hydrogen, are going to be put to tender by the end of 2024 or in 2025. Industry players when it comes to steelmaking and also chemicals happen to have plans to replace hydrogen with that of green hydrogen, and also utilities are adding electrolysis along with import facilities to their investment portfolios.
Who happen to be the protagonists?
Apparently, some of the biggest players – ArcelorMittal, Thyssenkrupp, and Salzgitter, who plan to invest billions of euros in decarbonizing steel production – are indeed betting on the availability of hydrogen.
RWE plans 2 GW of electrolysis as well as 3 GW pertaining to hydrogen-ready gas to power capacity by the end of this decade. Of the total investment of €55 billion by the same period, 25% when it comes to hydrogen, flexible power, and battery production.
Uniper also has a deal with Salzgitter so as to provide it with hydrogen coming from ammonia cracker.
What happen to be the costs when it comes to consumers as well as taxpayers?
The overall cost for the hydrogen network, which includes 9666 km of pipelines, happens to be estimated at almost €20 billion. Inclusive of that, as well as adding up electrolysis plants, as well as renewable capacity to feed electrolysers along with storage. PwC offered an overall €65 billion to €80 billion of costs till the end of the decade.
Most of the money in this case would have to come from the balance sheet of the utility companies, from the fees pertaining to the network usage that’s borne by the consumers, and also from tax revenues.
Why is there a dependence on the imports?
Germany, due to the dearth of fossil fuel reserves, has always been an energy importer and happens to have its own set of network partners.
When it comes to hydrogen, Germany can very well draw on its existing bond with Norway, Britain, and the Netherlands and is establishing novel alliances with southern Europe and even North Africa, besides Canada, Chile, and Australia. A McKinsey data showcase shows that the cost of hydrogen production in Germany can as well be $10 per kg by the end of the decade, which is higher than $3 to $8 per kg of imports, since some countries with cheap renewables and also low labor costs can go on to make green hydrogen comparatively cheaper. Grey hydrogen that happens to be made from gas out of which Germany makes use of 42 tW hr every year goes on to cost almost $3 per kg, as shown by the indices.
What about other countries?
Britain, Norway, as well as Denmark are anticipated to supply Germany with green or blue hydrogen, wherein the latter is produced by way of using natural gas within a process in which the carbon dioxide that’s released in production gets captured as well as stored. Italy, the Netherlands, and also Spain happen to have extended strategies when it comes to their own consumption and even the neighboring markets.