Germany’s green hydrogen ramp-up reliant on public money, E.ON says

FRANKFURT (Reuters) – The development of a green hydrogen market in Germany still depends to a large extent on public spending, utility E.ON said on Friday.

The share of projects under construction or equipped with final investment decisions has risen to 9% from 3% of the 2030 target of 11.3 gigawatts (GW) of electrolysis capacity, E.ON said.

But the only factor speeding the process was support pledged under government schemes, it said in results of research it conducted with the EWI energy research institute.

WHY DOES IT MATTER?

Germany wants to build up electrolysis capacity to produce its own green hydrogen from wind and solar power to clean up the carbon footprint of industries such as steelmaking and cement and replace fossil fuels.

E.ON said rigid or missing hydrogen regulation means would-be investors lack visibility over the new value chain.

High electricity prices also make future hydrogen costs look prohibitively expensive, it added.

If Germany does not manage the move to hydrogen, its industry may miss chances to compete successfully with the likes of the United States and China in global markets.

BY THE NUMBERS

Domestic electrolysis capacity has risen around 68% from the spring to 111 megawatts (MW), the six-monthly research showed.

E.ON also said that the Berlin government’s targets for sufficient import facilities may be achievable.

The government expects hydrogen demand of 95-130 terawatt hours (TWh) per year by 2030, of which 50%-70% will be imported.

Plans for a core hydrogen pipeline grid, complementing those for seaborne imports, have attracted a 24 billion euro ($25.31 billion) loan from state lender KfW.

KEY QUOTES

“The run-up of the hydrogen economy remains weak,” E.ON said.

“Only the support pledges under the Important Projects of Common European Interest (IPCEI) are boosting increases in production capacity and in investment decisions.”

($1 = 0.9481 euros)

(Reporting by Vera Eckert, editing by Kirsten Donovan)