Transport of H2 is determining in the East of Germany

Eastern Germany could be short 54 terawatt-hours (TWh) of hydrogen in 2045, based on a year-by-year analysis. As usual with forecasts, this is still dependent on many factors, such as the exact H2 demand in the individual sectors. But one thing is clear: H2 infrastructure will be lacking if the future becomes a major energy diversification scenario. In such a case, 48 TWh would then still need to be further distributed via transmission lines to neighboring regions. Prerequisites for this would be conversion of numerous pipelines from natural gas to hydrogen, as well as installation of new pipelines.

This assumption is supported by the study “Wasserstoffmarkthochlauf in Ostdeutschland bis 2045 – Eine Infrastrukturanalyse anhand der regionalen Erzeugungspotenziale und Bedarfe” (hydrogen market ramp-up in eastern Germany up to 2045 – an infrastructure analysis based on the regional production potentials and demands). Scientists from the Energiewirtschaftliches Institut an der Universität zu Köln (EWI), the energy economy institute at the university in Cologne, compiled this on behalf of Gascade Gastransport, the system operator for the German transmission network. The EWI team analyzes in the study two scenarios for the development of demand and supply of hydrogen in eastern Germany. The scenario Diversification supposes that hydrogen will play a much greater role in the substitution of fossil fuels, whereas the scenario Electrification assumes that energy consumption will be strongly electrified and hydrogen is much less significant.


North-South dichotomy

“In eastern Germany, a difference in hydrogen demand is likely to develop between the North and the South, with the South being higher,” says Dr. Eren Çam. He heads the energy raw materials division of EWI and had put together the study along with three colleagues. This differentiation is especially visible from the blue and red regions in Figures 2 and 3 for the year 2045. “The regional differences and the increasing potential for H2 transits through the East of Germany could become decisive drivers of the growing hydrogen infrastructure.”

The calculated H2 deficits, or surpluses, provided in the study, together with the possible import and export demand in eastern Germany, give a picture of the future transport requirement. According to this, a strong domination of electricity-based energy usage shows a deficit in hydrogen capacity of only 2 TWh in year 2045. Hydrogen transits would then hardly be necessary.

H2 production has great potential in eastern Germany. In addition to green electricity-based H2 production, natural gas reforming or methane pyrolysis with capture of CO2 emissions could also be climate-neutral alternatives. This would make the region a net exporter of hydrogen by 2030. The researchers from EWI estimate the production potential at up to 366 TWh annually for year 2045. So an even greater need for pipelines would result.

Create incentives for investors

How the future hydrogen network should look is currently a matter of debate and depends decisively on how supply and demand develop. Among other things, this influences the technology and cost developments as well as possible funding and support mechanisms. These uncertainties make investments in hydrogen networks risky. On top of that, the production of green hydrogen via green power stations is, at this time, generally uneconomical.

Visions of the future network therefore range from individual islands to a comprehensive and highly meshed network. It is imaginable that it will be much like today’s natural gas network. “With the recently confirmed Opt-in-Erklärung (voluntary agreement by operators of hydrogen networks to be regulated), lawmakers have taken a step to increase the safety for investments and to ensure an expansion of future hydrogen networks in line with demand,” stated Çam. Accordingly, in a transitional phase, operators of hydrogen pipelines will be free to choose whether or not to be subject to network regulation.

Use of natural gas pipelines

In the study “Wasserstoffinfrastruktur – tragende Säule der Energiewende” (hydrogen infrastructure – backbone of the clean energy transition), Siemens Energy, Gascade and Nowega looked at the actual conversion of gas transmission networks to hydrogen in practice. “Contrary to a frequently held view, the transportable amount of energy with hydrogen is only slightly lower than that with natural gas,” it is stated in the paper. In summary, “the conversion from natural gas to hydrogen would therefore have only a minor impact on the transmission capacity of a pipeline.”

The upper heating value of natural gas is about three times that of hydrogen. However, when comparing the energy current or flux of two different gases sent through a pipeline, it is not only the volume that plays a role, but the three parameters density, flow velocity and pressure, according to the authors. They state, “Since hydrogen exhibits one-ninth the density and three times the flow velocity of natural gas, almost three times as much hydrogen as natural gas can be transported in the pipeline at the same pressure and in the same time.“ As a result, the energy density is hardly reduced. So modifying the natural gas pipelines for use with H2 makes perfect sense.

The chicken-and-egg problem

Who takes the first risk? At present, attempts are being made to resolve the chicken-and-egg problem via pilot and demonstration projects with the larger aim of achieving a greater scaling as well as a cost reduction of the technology. The findings of the EWI study indicate that H2-Startnetz, the starter hydrogen transmission grid to be developed by 2030 as an IPCEI project (Important Projects of Common European Interest), will cover a majority of the transport demand in 2030 and will be needed for the two hydrogen demand scenarios.

Medium-term, the sole financing of pilot and demo projects will not, however, be sufficient to stimulate sustained supply and demand of hydrogen and to drive forward commercialization, the EWI researchers concluded. Additional support for supply and demand is therefore needed.

The costs for the green hydrogen that is to fill natural gas pipelines in the future depend mainly on two components: the electricity costs, including all related taxes and levies, and the investment costs for the electrolyzer. Investment costs could be lowered through targeted support measures such as grants or interest-free loans, the scientists explain. Innovative methods of electrolyzer production could also be promoted. Especially since the expansion of production capacities results in learning and scaling effects. And a higher degree of automation could reduce costs.

Contracts for Difference

On the electricity cost side, legislators have also taken the first steps. H2 producers are exempted from grid use charges under certain conditions. In addition, the levy imposed on electricity consumption by the renewable energy law (EEG-Umlage) is as of July 1, 2022 no longer in effect – the operators of electrolyzers benefit from this of course as well. More difficult are the actual costs to purchase power. With the recent sharp rise in electricity prices on the stock exchange, the economic viability of green hydrogen is also becoming more difficult.

What will help in the long term is therefore only the expansion of renewable energies. In the short term, targeted support measures, such as Contracts for Difference, can also help to secure a maximum electricity price or a hydrogen purchase price for producers. This is quite a common means of establishing a new technology in a market economy.

It therefore makes sense initially to establish smaller independent networks in industrial centers, such as the chemical production triangle Chemiedreieck Leuna-Buna-Bitterfeld, or in large urban areas, for example Berlin, to connect local demanders, producers and storers. In the next step, these island networks can be connected to each other and to possible import points on the coast or to neighboring regions. In the long span, a Germany-wide network arises that enables trans-regional cooperation and cross-border trade.

On the demand side, green hydrogen can have various potential uses, for example in fuel cell trucks, trains or buses, to reduce greenhouse gas emissions particularly in public transport, to name a few examples from the mobility sector.

Which regions benefit particularly? On the one hand, it is primarily the industrial centers, for example chemicals and steel, which are facing the need to transition to climate-friendly production. On the other hand, regions in which production capacities for electrolyzers are being built. Last but not least, new jobs will be created at these places and additional tax revenue will be generated.

Which players can drive development forward?

In the case of pipeline-based H2 transport, natural gas transmission system and distribution network operators might easily also become future operators of a hydrogen network. They have the capability to convert existing natural gas pipelines to hydrogen pipelines – even if this requires major investments. In addition, they are practiced in the transport of gaseous energy carriers as well as the operation of regulated supply lines.

Analyses of the EWI additionally suggested that energy suppliers could play a central role on the distribution side. Because they have a decisive competitive advantage. Through their core competencies of electricity generation and electricity trading as well as their often broadly diversified power generation portfolios – including green electricity production stations – they have the necessary expertise to couple electrolyzers to power networks.

Author: Niels Hendrik Petersen


Source: Gascade Gastransport

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