European Commission approves support for Germany’s backbone hydrogen network

The European Commission has approved state aid for Germany to support its planned backbone hydrogen network. The cost of the measure, in the form of state guarantees, is estimated at three billion euros. The European Commission announced the decision in a press release.

According to the European Commission, the approved measure is intended to support investment in building the planned backbone hydrogen network. Once completed in 2037, it is expected to stretch for 9 700 kilometres and carry hydrogen across Germany while connecting the country’s hydrogen infrastructure with that of neighbouring countries.

The support will take the form of state guarantees, enabling hydrogen network operators to secure more favourable financing terms to cover initial losses caused by the gradual ramp-up in demand for hydrogen transported through their pipelines.

“Germany initially expects only a small number of customers to take hydrogen from the network under construction, while network charges are to be lower than would be needed to cover eligible costs, in order to encourage use of the infrastructure and the gradual uptake of hydrogen,” the European Commission said.

According to the European Commission, the first major section of the planned infrastructure should be operational as early as next year.

Germany’s hydrogen infrastructure is to form part of the so-called European Hydrogen Backbone, which is intended to comprise 28 000 km of dedicated hydrogen infrastructure by 2030. Expansion to as much as 53 000 km is planned by 2040. Around 60% of the hydrogen pipelines are expected to be converted from existing gas pipelines, with the remaining 40% made up of new pipelines.

Industry and transport are expected to drive demand initially

Hydrogen produced using electricity from renewable sources is considered a key element in decarbonising the energy sector and industry. Germany is among the countries placing major bets on this fuel. It plans to use hydrogen in industry and transport, for heat production and, for example, as fuel for backup and peak-load gas-fired power plants.

According to the National Hydrogen Council, hydrogen consumption in Germany is expected to reach 94 to 125 TWh in 2030, before rising to 620 to 1 288 TWh by 2045.

Manufacturing and transport are expected to be the main drivers of hydrogen demand initially. The energy sector is then expected to join them after 2040.

Of the estimated total demand of 620 to 1 288 TWh in 2045, 125 to 500 TWh is expected to come from the heating sector and 80 to 200 TWh from electricity generation. Industrial demand is forecast at 254 to 402 TWh that year, while the transport sector is expected to consume 161 to 186 TWh of hydrogen.

For comparison, natural gas consumption in European Union countries totalled around 3 500 TWh last year.