Locally produced renewable hydrogen will be cheaper than that shipped in from overseas up to 2030, while it may also be cost-competitive with imports piped in from North Africa and European neighbours. This is according to a recent meta-analysis of 12 studies since 2021, published by the Wuppertal Institute for Climate, Environment and Energy. However, the study contains a caveat — scenarios that predict a higher overall demand for hydrogen also involve a greater dependency on imports.
Germany may have put imports at the heart of its hydrogen strategy, but the country might be shooting itself in the foot by not putting more focus on producing its own green hydrogen.
Hydrogen strategy and imports
Germany is currently in the process of updating its national hydrogen strategy, with leaked drafts indicating that it would meet 50-70% of its renewable hydrogen demand by 2030 through imports, despite a doubled electrolyser installation target of 10GW by that year.
Meanwhile, Vice-Chancellor Robert Habeck, who is also the federal minister for economic affairs and climate action, has spent the past couple of years on a charm offensive, shoring up memorandums of understanding with potential exporters, including Australia, Brazil, Egypt, Namibia and South Africa. The country was also the first to launch a dedicated auction to import green ammonia, methanol and synthetic aviation fuel in its H2Global scheme, which now seems set to be rolled out across the EU.
Cheaper up to 2030
Domestic production of hydrogen is expected to cost €0.07-0.13/kWh in 2030, the Wuppertal Institute’s reports. As 1kg of hydrogen is equivalent to around 33.3kWh at lower heating value, this would work out to around €2.33-4.33/kg or $2.53-4.71/kg. In contrast, the study calculates that hydrogen shipped over long distances, such as from the Americas, will cost €0.09-0.21/kWh (€2.99-6.99/kg) by that year, while piped imports are estimated to cost €0.05-0.15/kWh (€1.67-5.00/kg).
The analysis also indicates that between all 12 studies, the cheapest estimates are for hydrogen piped into Germany from Spain, Eastern and Northern Europe, and North Africa. It also suggests that more recent studies are trending towards more optimistic cost estimates for hydrogen imports. And by 2050, the cost gap between domestic and shipped hydrogen starts to close, while pipeline imports get even cheaper.
The German government should increase efforts towards building out hydrogen capacity closer to home in the short term, argue the report authors. “Strengthening a domestic, green hydrogen economy makes sense, not least because of the associated added value in one’s own country. Importing hydrogen does not necessarily entail cost advantages,” says Prof. Dr.-Ing. Manfred Fischedick, president and scientific director of the Wuppertal Institute.
Demand exploding : sufficient capacity?
Germany plans to use green hydrogen to back up variable renewables (via 17-21GW of new hydrogen-ready gas-fired power plants) and to decarbonise its heavy industries, including steel, but it may be on the verge of banning its use for domestic heating. But while predicted demand by 2030 ranges between 29-101TWh across all sectors — including industry and energy — estimates for 2045 or 2050 indicate that it could rise to between 200-700TWh. As part of its plans, Germany is therefore aiming to build several hydrogen and ammonia terminals on its northwest coast in order to facilitate large-scale imports.
