About halfway between Montreal and Quebec City, the small town of Bécancour on the Saint Lawrence River has 13,000 inhabitants. The current world record holder in membrane electrolysis is located in the industrial park, between medium-sized chemical and refinery operations. With a capacity of 20 MW, fed by abundantly available hydropower, the PEM electrolyser supplies 8.2 t of hydrogen per day to part of the local industry.
Seen from the outside, a lot has already happened recently in the development towards a global hydrogen economy. More than 20 countries have adopted national hydrogen strategies between 2017 and today. Big announcements have also been made by the industry; the Hydrogen Council now estimates the global investment pipeline at 500 billion dollars.
But the example of Bécancour also shows: Only where climate ambition, the cheapest electricity prices and year-round availability of renewable energies coincide will larger green hydrogen plants be built. After several years of trend-setting strategies on the part of policy-makers and major announcements on the part of industry, there is accordingly still a gap between what is wanted and what is economically feasible today.
The federal government wants to address this gap via the H2Global funding programme and fund at least five larger, non-European projects via ten-year purchase agreements. In each case, 100 MW of electrolysis capacity is to be put out to tender. 900 million euros in funding is available for this from the National Hydrogen Strategy.
In the design of the funding programmes, lessons were learned from past experience, because the purchase subsidy ensures predictable and guaranteed income. Unlike the usual capital funding of individual projects, continuous purchase is guaranteed for the contractually defined periods and quantities. The experience of two decades of EEG subsidies has also taught us that the development of volumes can be controlled politically, but that pricing must also be thought out from the perspective of the market.
H2Global therefore relies on a double auction system instead of fixed feed-in tariffs. An intermediary (broker) is to tender the provision of fixed quantities of H2 at prices determined competitively and thus as cheaply as possible and then sell it to the highest bidder. This creates a contract for difference and thus an H2 market. It is assumed that the necessary financial balance between the willingness to pay on the demand side and the cost structure of the supply decreases over time until the intermediary – and thus the need for state promotion – eventually becomes obsolete.
With a first round of tenders later this year, a foundation is to establish international hydrogen supply chains with funding, but crucial questions are still open.
A say for the federal government
The basic mechanism of H2Global is thus simple and effective. This construct receives equal praise from the Federation of German Engineers (BDI) and the Federal Economics Minister, […]
… Read this article to the end in the latest H2-International
Authors: Kilian Crone & Friederike Altgelt – both from German Energy Agency (dena), Berlin