High costs are slowing down hydrogen imports – Germany is facing challenges

High costs are slowing down hydrogen imports – Germany is facing challenges

A current study led by the Technical University of Munich examined the potential of hydrogen supply from Africa for Europe in more detail. The analysis covers around 10,000 locations in Africa and comes to the conclusion that only 200 of these locations are realistically suitable for an effective hydrogen supply in Europe. A central problem is the high interest rates on the capital invested in hydrogen plants in African countries. While the Cost of Capital (COC) in Europe is between 4% and 8%, the study finds an average COC of over 15%, and in extreme cases even over 26%.

The price comparison with green hydrogen production in Rotterdam shows that the production costs in Africa would be significantly higher. Current forecasts have also called into question the representation of hydrogen requirements. Critics see the assessments as exaggerated and advocate using hydrogen primarily in energy-intensive industrial processes in order to store surplus green electricity.

Import requirements and strategies in Germany

Given the results of the study, Germany's dependence on hydrogen imports cannot be overlooked. According to Thüga, Germany has to cover most of its hydrogen needs through imports. Forecasts for 2030 indicate a hydrogen demand of between 40 and 170 terawatt hours (TWh), with 50 to 85 percent having to be imported. A similar assessment is also expected for 2045.

In July, the federal government presented a comprehensive import strategy for hydrogen. This strategy stipulates that a large part of the hydrogen demand must be covered by imports in the medium to long term. Federal Minister Robert Habeck emphasizes that national demand of 95 to 130 TWh of hydrogen and derivatives is expected by 2030, with between 50 and 70% (45 to 90 TWh) to be imported.

Costs and supplier selection

Import prices vary depending on the type of hydrogen, with a median price of 6.3 ct/kWh for blue hydrogen and 9.8 ct/kWh for green hydrogen in 2030. By 2050, import prices are forecast to increase to around 7.6 ct/kWh for green hydrogen. End customer prices could be 13 ct/kWh for blue hydrogen and 17 ct/kWh for green hydrogen by 2035.

The European Hydrogen Bank is currently holding its first auctions, where the production costs for green hydrogen are between 13.3 ct/kWh and 34 ct/kWh. Denmark, Norway, the Netherlands, Spain, the United Kingdom and a group of Morocco, Tunisia and Algeria have been identified as preferred hydrogen suppliers. Spain in particular is highlighted as a potential supplier of hydrogen derivatives, such as ammonia, before 2030.

Expansion of the import infrastructure

In order to cover the increasing demand for hydrogen, several pipeline-linked import corridors are being planned. These include the North Sea corridor, the Iberian corridor, the Nordic-Baltic corridor and the southern rail through the Adriatic. The North Sea Corridor is intended to connect Norway, Denmark, the United Kingdom, Belgium and the Netherlands, while the Iberian Corridor offers the potential of up to two megatonnes of green hydrogen per year from Portugal, Spain and Morocco.

The federal government is also pursuing the parallel development of import infrastructure for pipeline and ship transport in order to ensure a broad diversification of supply sources. Cooperation with European partners and international actors will be intensified to ensure a sustainable and resilient energy supply. The aim is to establish a reliable supply of green, sustainable hydrogen in order to advance the decarbonization of the German economy and meet climate goals. BMWK emphasizes the importance of a diversified product range, including molecular hydrogen and various derivatives.