EU report says making green hydrogen in Germany uneconomical, questioning government plans

The production of green hydrogen in Germany will not be financially viable also in the long term, according to a report commissioned by the European Commission. A hydrogen economy set up at the lowest costs for consumers and industry would result in no electrolysis capacity whatsoever in Germany by 2050, says the paper by the Fraunhofer Institute for Systems and Innovation Research (Fraunhofer ISI). Germany plans to install an electrolysis capacity of 10 gigawatts by 2030 alone, according to its national hydrogen strategy, which was updated last month. In a scenario with optimised costs, France and Spain would become Europe’s most important hydrogen producers because they have more favourable conditions for renewable energy generation, according to the report.

Contrary to an often-held assumption, EU states would not have to import most of their hydrogen from other continents as domestic production would be cheaper and sufficient to meet demand, according to the report. "This was also interesting for the Commission," study leader Tobias Fleiter told Table.Media. "It shows how huge and cost-effective the renewables potential still is in the EU,” he added. However, the report also states that "numerous limitations" must be taken into account when interpreting the results. Major barriers to making use of renewables' full potential across Europe included opposition by local communities, inhibitive local policies and regulatory frameworks, bureaucracy, and the shortage of skilled labour and materials. The report also found that if basic hydrogen derivates ammonia, ethylene and sponge iron were no longer produced in Europe but imported, hydrogen demand would drop by a third. "We would almost have a different energy system," Fleiter said.

The Fraunhofer researchers modelled various scenarios for the energy system in 2050, which differ according to the degree of electrification and extend of hydrogen use. Even if Germany did not produce any hydrogen itself, it would be one of the largest consumers in Europe, according to the report. The paper’s scenarios feature renewables as the primary component of energy systems, with approximately 90 percent of overall power production. Wind and solar energy contribute up to around 80 percent of total renewables electricity production, while controllable sources such as biomass, combined-cycle gas turbines with carbon capture and storage, and nuclear all fall below 5 percent in terms of production.