EU sets state support conditions for German H2 plants

1 August 2023

The German economic ministry (BMWK) has released a statement, reports Clean Energy Wire, to the effect that the European Commission has set framework conditions for planned German state support to build and operate about 24 GW of hydrogen power plants and fossil gas units which will later be converted to hydrogen. 

The ministry and the Commission have worked out a ‘common understanding’ for support to build these gas-fired power plants, which the government considers a necessary supplement to intermittent renewables in securing the electricity supply. “The progress made [in the talks] with the European Commission are an important first step, even if this does not mean that the intended measures have already been approved by the European Commission under state aid rules,” said the ministry. 

The official state aid consultation process will continue after the summer break. Over the past few months, Germany and the EU agreed on important legislation to speed up renewable energy expansion, said German economy minister Robert Habeck. “Now it is a matter of initiating the conversion of our power plant fleet to hydrogen and thus set the course to achieve climate neutrality for the entire electricity sector.” Habeck said the results of the talks with the Commission meant that his ministry could now develop the power plant strategy, which it had promised earlier this year to show how to guarantee supply security in the future. Earlier plans suggested that the first auctions would be held this year, but the minister now says these will start in 2024.

The economy ministry has described three different schemes under the joint understanding to cover the proposed state support:

  • Tenders for 15 GW of new and existing gas units which have to be converted to hydrogen by 2035 (10 GW set to be auctioned from 2024-2026, of which up to 6 GW will be new).
  • Tenders to support power production from renewables-based hydrogen at 4.4 GW of ‘hydrogen sprinter power plants’ in regions with early access to the fuel, and auctions in 2024-2028 for new projects or converted gas power plants. 
  • Tenders for 4.4 GW of projects that combine renewable electricity with electrolysers for green hydrogen production, hydrogen storage and hydrogen power plants.

With a planned future energy system based on intermittent renewable electricity generation, Germany will need solutions to guarantee its supply in times of low wind or insolation, such as bioenergy, imports from neighbouring countries, storage systems or the hydrogen power plants. These units would only run when needed, such as during peak demand hours. Last week the German government agreed on an update to its National Hydrogen Strategy with the aim of speeding up the development of a market for the fuel, which it sees as essential for the path to climate neutrality by 2045.

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