Germany’s ambitious goal of achieving 100% climate-neutral power production by 2035 is encountering obstacles as plans for a fleet of hydrogen power plants to complement wind turbines and solar panels face a budgetary squeeze and industry demands for cost-cutting.
In pursuit of its climate targets, the German government initially envisioned a fleet of hydrogen-fired power plants to support the intermittent nature of wind and solar energy. However, this vision is now stumbling amid a prolonged government budgetary crisis, as noted by Sigfried Russwurm, the president of Germany’s powerful industry association BDI.
Despite the hopeful announcement in August 2023 that the European Commission had essentially approved Germany’s plan for subsidized backup power plants, significant challenges have emerged. The plan included 8.8 GW of dedicated hydrogen power plants and 15 GW of natural gas-powered ones, making up about one-third of the German peak power demand of 2023.
The initial enthusiasm was dampened by a ruling from Germany’s top court, limiting the government’s use of credit lines approved during the COVID-19 crisis. The annual €7 billion earmarked for the hydrogen power plant project vanished, leaving a financial void and casting doubts on the feasibility of the proposed solution.
As a result, without state support, these hydrogen plants, crucial for powering periods of sustained low wind and sun, are unlikely to be profitable. The absence of hydrogen plants as backup could lead to a reliance on coal power to fill the energy gap, warned BDI chief Sigfried Russwurm.
This setback comes at a challenging time for German industry, following the completion of the nuclear phase-out and disruptions in the supply of cheap Russian gas due to geopolitical events. Industry groups are urging the government to take prompt action, emphasizing the need for a clear power plant strategy with framework conditions.
In response to budgetary constraints, industry associations are advocating for a reevaluation of priorities. The proposal is to abandon plans for hydrogen-fired power plants and focus on more cost-effective alternatives, particularly natural gas. The associations argue that hydrogen peak and hybrid power plants are costly and have limited impacts on supply security.
BDI Chief Sigfried Russwurm further emphasized the challenges of retrofitting existing power plants to run on “pure” hydrogen, citing the costly process of incorporating ceramics. He underscored the potential high costs associated with these turbines, especially if they operate during periods of low renewable energy generation.
