Just months after Germany agreed at COP28 to transition away from fossil fuels, the government has approved plans to finance a huge expansion of natural gas-fired power plants. Say again?
The German government is touting green reasoning for the move, which will subsidise up to 10 gigawatts of new gas-powered capacity. Its rationale: As more renewables get added to the electricity grid, other energy sources are required to meet demand at times when the sun isn’t shining and the wind isn’t blowing. Currently, those sources are fossil-based. To achieve a 2030 coal phaseout target and emissions-free power production by 2035, Germany will have to replace those sources with green solutions.
Natural gas emits 50 percent less carbon dioxide than coal when it burns, but it’s far from being a so-called climate-neutral fuel option. That’s why Germany has added a condition to the tenders: The new plants must be “hydrogen-ready,” with developers making the upgrades necessary to burn hydrogen between 2035 and 2040. The government will decide in 2032 when the switch to 100 percent hydrogen will happen.
You have to question the wisdom of a country that closed perfectly good nuclear power stations — as recently as 2020, Germany had 8GW of nuclear capacity — making it much more reliant on coal in the recent energy crisis, only to replace them with gas plants, all while claiming to be on a path to climate neutrality.
Given that Europe’s inflation woes have also been exacerbated by over-reliance on Russian gas imports, there are also questions about where the gas for these plants is going to come from and what it means for German energy security.
But back to hydrogen. The fuzzy timeline echoes a certain fuzziness around the strategy for H2. Hydrogen-ready doesn’t mean that plants will be able to switch to H2 immediately. A Siemens Energy AG spokesperson explained to me that a hydrogen-ready power plant is designed so that a retrofit to make it hydrogen-capable can be carried out at lower cost and with less down-time. Because hydrogen burns hotter and with a much faster flame speed than natural gas, changes have to be made in the burners, while operators will also have to make various other alterations regarding pipelines and explosion protection.
It’s similar to so-called hydrogen-ready boilers. No house is capable of heating with 100 percent hydrogen yet — that would require home renovations, including changes to pipes and the addition of fairly large ventilation holes. What hydrogen-ready boilers do commit households to, however, is burning gas for years to come — even when the future of hydrogen for home heating is far from certain (and, in fact, is quite unlikely).
There is a technical case to be made for using hydrogen as a long-term power balancing tool in a renewables-based grid. Though the molecule is always the same, there’s a rainbow of different colors to identify how the gas is produced, including blue, pink and gray. Germany hasn’t specified its desired source of H2, but in a net-zero world it ought to be green, the type made from renewable electricity. Whenever there’s a surplus of clean energy, electrolyzers would be fired up to separate the hydrogen from water, which could then be stored until it’s needed to meet a surge in demand or drop in supply.
The plans deviate from previous announcements. In August, Germany was seeking 24 GW of new capacity, with 8.8 GW earmarked for power plants that would be hydrogen-fueled from the start. It’s unclear whether tenders for those will come later — green hydrogen is simply not currently available — but there have been concerns about the business model from the energy industry.
Hydrogen is expensive and the cost of building, and then later upgrading, power plants to burn a fuel which isn’t yet widely available is also high. Though the gas-fired plants will initially provide baseload — or around-the-clock power — the idea seems to be that they’d eventually become peaking plants to balance intermittent renewables. That raises questions about the economics of using the gas. As Siegfried Russwurm, president of Germany industry association BDI, told news site Euractiv: “If these turbines are only supposed to run when the sun isn’t shining and the wind isn’t blowing, then they will be extremely expensive…I’m not even talking about the cost of hydrogen, which we don’t have, but only the investment costs of these new gas turbines and their new peripherals.”
Hydrogen’s potential has been downgraded in recent years. It was initially touted as the fuel of the future, powering planes, trains and automobiles and heating homes. But when it comes to keeping warm, heat pumps are far safer and more efficient. Hydrogen buses are too prone to failure, while their electric counterparts are now running all over the world. Trains are also being steadily electrified. One German state that spent €93 million ($87 million) on hydrogen trains announced a year later that it wouldn’t buy any more. The list of promises and failures goes on.
Perhaps the move will secure a positive future for hydrogen’s role in the grid, but it’s far from certain. Batteries are improving all the time, and with other energy storage solutions such as pumped hydropower and thermal storage becoming more available, there’s a risk that Germany’s plan simply locks in more than a decade of gas emissions.
Lara Williams is a Bloomberg Opinion columnist. Views do not represent the stand of this publication.
Credit: Bloomberg
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