Berlin has offered €200 million between 2011 and 2014 for research into energy storage, generating strong competition for the funds, and the results are beginning to show.
“Germany may be in a unique position (to transform its energy system) because not only is there a consensus in society but also the technological competency,” Stephan Reimelt, head of GE Energy Germany told an energy conference in Berlin in January.
Last October, in an area 120 kilometers north of Berlin, Enertrag AG began operating one of the country’s first hybrid plants to generate wind power and convert it into hydrogen, with the help of its partners, Vattenfall, Total and Deutsche Bahn.
Their investment has been spurred by EU targets for member states to source 35% of their electricity mixes to renewables by 2020, and 80% by 2050.
“My personal wish is that we help create the energy turning point and that wind power-to-hydrogen will take on a leading role. The politicians are very interested in what we are doing here,” said Werner Diwald, an Enertrag board member.
Enertrag plans to build 10MW of hydrogen conversion capacity from 2015 onwards.
After the Fukushima nuclear disaster in Japan a year ago, Germany closed eight nuclear reactor blocks in one fell swoop, leaving power grids vulnerable to gaps in output from more variable wind and solar power.
A predictable alternative
Hydrogen is a predictable alternative. It can be contained and transported without carbon emissions. It can generate power and heat, fuel cars or fit into natural gas pipelines.
The three turbines at the Enertrag plant generate up to 6MW of power. That energy is then passed through water and split into oxygen and hydrogen via an electrolyser, which is housed in a supersized garage and stored in five tanks.
The technology effectively turns wind into a source of baseload power, the industry's word for 24-hour supply.
The hydrogen can be mixed with biogas made from local corn waste and fed into cogeneration plants, which produce electricity and heat.
It can also fed back into the grid at times when little or no wind is available, and the heat can be siphoned into district heating networks. During periods of low wind, the biogas plant can run on biomass alone.
But while hydrogen could help save on the estimated €10 billion needed to build connecting transmission lines for offshore wind projects, the biggest question mark concerns its profitability.
“Who can fund large-scale electrolysers, what sites are suitable geologically, where is there a lot of wind power and no grid infrastructure, and how will competition between hydrogen for cars and for electricity and heat pan out?” asked Vattenfall spokesman Lutz Wiese.
Figures from the consultancy A.T. Kearney show that producing hydrogen or methane, a gas derived from it in another conversion process, costs two to four times more than Germany pays for imported gas.
“Incentives will be necessary to help the technology reach market maturity," said Kurt Oswald, an A.T. Kearney partner.
Enertrag is pushing for feed-in tariffs, or state subsidies, for hydrogen. Germany has already used this strategy to turn itself a world leader in wind and solar power.
Diwald said that Germany would need investment of between €700 million and €1 billion to create a hydrogen market big enough to incentivize companies and investors.
Other alternatives could be tax waivers or the passing on of additional costs down to consumers via network transmission fees.
Even without subsidies, long-term oil market risks have led oil companies such as Total to look to hydrogen as a hedge, and the company is already operating a few hydrogen pumps at filling stations around Berlin.
The car industry also wants to develop hydrogen-powered cars powered, because they are more energy efficient than electric cars.
Daimler and Toyota are among the car firms planning high-volume production of hydrogen-run cars by the middle of this decade, while the railway operator Deutsche Bahn is also investigating the technology.
This summer, Enertrag will begin feed hydrogen gas into the natural gas grid and Greenpeace Energy, a subsidiary of the environmental group, is already buying some of this ‘windgas’ to sell to households.
Hydrogen and methane have the potential to reduce Germany’s reliance on gas imports from Russia. The country’s underground gas caverns are thought big enough to contain space for around a fifth of annual consumption needs.