Decarbonised industry will use much more electricity, even with intensive hydrogen use - report

German industry demand for electricity will rise steeply during the sector’s decarbonisation even if it opts for intensive use of hydrogen, according to a report by a consortium led by the Fraunhofer Institute for Systems and Innovation Research (ISI) and consulting firm Consentec, which was commissioned by the economy and climate ministry (BMWK).

The researchers looked at two decarbonisation scenarios, one dominated by electricity, and one with a focus on hydrogen technologies. In the hydrogen scenario, they found that demand for the gas would total 442 terawatt-hours (TWh) by 2045, with electricity demand increasing by 40 percent to 300 TWh, up from 214 TWh in 2021, by that date. In a scenario dominated by electrification, electricity demand is set almost double to 425 TWh, while hydrogen demand is projected to increase to 201 TWh, as it will still be used in the steel and chemical industries, for example, where direct electrification is difficult.

“The results show that the transformation to almost greenhouse gas-neutral industrial production in Germany is possible on both of the technology paths analysed,” the report states.

However, electricity and hydrogen remain too expensive for large-scale industry decarbonisation, ISI’s Tobias Fleiter told newsletter Tagesspiegel Background. “The regulatory requirements are still inadequate, and a high level of uncertainty is preventing investment,” he said, adding that hydrogen market ramp-up was still in its infancy. Fleiter said that electrification is already possible in the short term, but that grid connections were often insufficient, and that high electricity prices make many investments uneconomical.

The report found that current investments remain far below what will be needed to make the industry climate-neutral over in the next 21 years, and argues that climate-friendly production processes must be introduced as quickly as possible. According to the paper, all sectors must operate climate-friendly plants on an industrial scale by 2030 so that the entire plant portfolio is converted and thus decarbonised by 2045.

The authors said the decarbonisation path remained unclear in certain sectors such as the chemical industry. Fleiter said it will be decisive if the energy-intensive production of raw materials such as methanol or ammonia will be in Germany or if these products will be imported.