First Hydrogen Cargo into Germany to be delivered 2024: H2Global

By June 28, 2021 5   min read  (859 words)

June 28, 2021 |

Fuel cells works, Germany: H2Global Starts and Nordex Becomes a Founding Member
  • $1.1 billion state aid for green hydrogen imports
  • Project readiness key for 500 MW of projects
  • First HPA expected 2022, HSA auction in 2023

Germany’s green hydrogen import initiative H2Global expects physical delivery of a first cargo into Germany by end-2024, Timo Bollerhey from the H2Global Task Force told S&P Global Platts June 24.

Germany’s energy ministry is to provide some Eur900 million ($1.1 billion) to H2Global to support the ramp-up of electrolyzer projects.

The funds are to cover the difference between 10-year hydrogen purchase agreements (HPAs) and annual auctions for the supply of the hydrogen derivatives into Germany.

“We expect first physical delivery of hydrogen, or a hydrogen derivative under H2Global into Germany by the end of 2024,” said Bollerhey, who developed the double-sided CfD-type auctions concept of H2Global with a commission of experts for the ministry.

Bollerhey and Markus Exenberger are to become managing directors of the H2Global foundation.

The foundation was launched June 14. Its intermediary unit HINT.CO is to organize auctions for various product categories such as green ammonia, methanol or sustainable aviation fuel (SAF), Bollerhey said.

A first call for projects with a minimum 100 MW electrolyzer capacity each would be made before the end of the year, he said.

Project readiness

Meanwhile a first contract awarding procedure for a 10-year HPA was expected to start this year in the form of a competitive dialogue.

The pre-qualification process would focus on project readiness for 2024 delivery.

Screening for ESG criteria as well as additionality will be crucial for projects bidding under H2Global, which will focus on green hydrogen and derivates only.

“Project readiness is a very important aspect for pre-qualification as we target 2024 for physical delivery,” Bollerhey said.

HPAs would allow developers of economically viable projects to secure better financing and ramp up projects faster.

“We want to participate in a potential uptake of projects at a price that is achievable for the market,” he said.

On the sales side, HINT.CO would auction annual supply via HSAs (Hydrogen Sales Agreements) for hydrogen physically delivered into Germany until 2034, he said.

The first HSA auction was planned for 2023.

In total, H2Global is to support some 500 MW of electrolyzer projects.

The cost gap is to be bridged with subsidies to accelerate electrolyzer projects and integrate imports at market-reflective prices.

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“We want to start the call as soon as possible this year,” Bollerhey said, adding that the ministry was setting details such as a lists of country for the tender process.

Energy minister Peter Altmaier on June 14 named six potential countries for hydrogen partnerships — Saudi Arabia, Canada, Australia, Russia, Ukraine and Chile.

Australia secured an Australia-only tender, according to an accord signed June 13.

Competitive dialogue

HPAs will be awarded via competitive dialogue following a pre-qualification process.

“At the end of the day, price will decide, the best offer will be awarded,” Bollerhey said.

For the certification of the renewable aspects of the product, H2Global was in talks with companies such as TUV or initiatives like CertifHy.

The modular concept was scalable, with Bollerhey noting very strong interest in German and potential partner countries.

Bollerhey said he expected the gap between HPA values and HSAs to shrink over time as the hydrogen market was developing.

Platts assessed renewable hydrogen (Netherlands power, PEM electrolysis with capex) at Eur5.93/kg on June 22.

Siemens Energy aims to reduce the cost to produce green hydrogen in the best locations to around $2/kg based on a pilot project in Chile.

HPA contracts do not require German content, but were open to all bidders with physical delivery into Germany or Europe and pre-qualification the main criteria, Bollerhey said.

SAF return flight

Transport focus for hydrogen was initially on cargoes of derivatives such as ammonia or methanol as shipping pure hydrogen was currently not economically viable.

Another physical delivery option would be sustainable aviation fuel (SAF), with jets refueling in a partner country for the return flight to Germany.

“Just as a speculative example — and we had talks with Lufthansa and other airlines — a jet refueling with SAF abroad, purchased under the H2Global initiative, would fit well into the scope of the concept for which we are currently verifying the details,” Bollerhey said.

Platts assessed SAF in Northwest Europe (ex-wharf) at $1,629.86/mt on June 22. Northwest European jet fuel cargoes (FOB) were assessed at $612.75/mt

Looking 10 years ahead, Bollerhey said the idea was for HINT.CO to disappear once the hydrogen market was established.

“In an ideal case, once the last HPA has expired perhaps in 2034, HINT.CO can disappear. But at the moment, we don’t have a market offering a business case on the supply side nor do we have a secure regulatory framework, that is the vacuum H2Global is addressing,” Bollerhey said.

The H2Global concept was developed by sustainable development agency GIZ with the German hydrogen and fuel cell association DWV.

The 16 initial founders include Siemens Energy, Thyssenkrupp, VNG, Deutsche Bank, Salzgitter, Uniper, the port of Hamburg, Nordex and Linde.

The Hamburg-based foundation expects to attract up to 70 companies, Bollerhey said.

Source: Platts

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