Planned German hydrogen storage facilities will not be enough, industry warns

The German Association of Energy and Water Industries (BDEW) has warned that planned German hydrogen storage facilities will not meet expected demand. This could jeopardise Germany’s plans to transition to an energy system based on renewable energy sources. Clean Energy Wire reported.

For hydrogen to play its important role in the energy transition, Germany may need up to 41 TWh of new hydrogen storage capacity. This assumes that all existing natural gas storage facilities suitable for the purpose are also used. These are the findings of a study from mid-2022, commissioned by German gas storage operators’ association INES, oil and gas association BVEG, and the German Technical and Scientific Association for Gas and Water (DVGW).

Complex permitting procedures, uncertainty over planning, financing and project economics are the main obstacles to faster development of hydrogen storage projects. This is according to a study prepared for BDEW by consultancy Frontier Economics.

The study recommends introducing government support mechanisms to encourage the development of hydrogen storage facilities in Germany. A revenue-based contract for difference (CfD) appears to be the best option, guaranteeing operators of these facilities fixed returns for a specified period (for example, 15 years).

“In addition to financial support, the successful development of hydrogen storage facilities will require a regulatory framework and hydrogen quality requirements to be established as quickly as possible,” said Kerstin Andreae, chair of BDEW.

INES also called for support for hydrogen storage facilities last autumn. The association says significant economic risks—particularly those related to how quickly hydrogen use takes off—are deterring investors from undertaking the necessary projects.