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Out-Law Analysis 3 min. read

Germany prepares for green hydrogen production at sea

The German federal government wants Germany to take a global lead in the production and use of hydrogen. In this context areas for offshore wind farms exclusively for hydrogen production are earmarked in both the North Sea and the Baltic Sea. There are also plans to change the tendering procedure.

In the course of the presently proposed reform of the German Wind Energy at Sea Act (Windenergie-auf-See Gesetz/WindSeeG) the draft of an updated zoning plan was published by the Federal Maritime and Hydrographic Agency (BSH). It introduces the planned areas for offshore wind farms and for other kinds of energy generation plants from 2026 onwards. For the first time there are also two areas available for offshore hydrogen production with the use of offshore wind power.  

The planned area in the North Sea is 7,116 acres. It will not be connected to land via pipelines to transport the hydrogen, instead the hydrogen will be transported in pressure tanks on ships. The planned area in the Baltic Sea is much smaller, 1,927 acres, and could be connected by pipelines; however, first environmental objections must be assessed given the various birds of passage encountered in the Baltic Sea.  Authorities and the public can comment on the draft until November.

With the planned revision of the WindSeeG, the legal framework for offshore hydrogen production would soon be changed. Until now, energy production at sea falls under the Marine Rigs Act (Seeanlagengesetz/SeeAnlG) which provides that areas without connection to the network are awarded on the principle of first come first served.  This will change with the revision of the WindSeeG, which will integrate energy production at sea without connection to the network into the WindSeeG. Afterwards these areas could be awarded and approved only via a competitive tender procedure. This could push the economical expansion of hydrogen production and thus strengthen innovation and accelerate the development of new technologies.

Hydrogen production at sea is an important part of managing the transition to low carbon energy. Hydrogen is produced in big saltwater electrolysers. They require energy, which can be produced by the surrounding offshore wind plants. Where the hydrogen is produced only with renewable energy it is called 'green hydrogen'.

Hydrogen provides an alternative to battery storage: energy generated by constantly high wind speeds at sea can be stored in hydrogen and consumed only when needed. Also, hydrogen is comparatively easy to transport so can be useful as an energy carrier, helping to solve one of the bottlenecks for a more rapid increase of offshore wind generation – the availability of electricity grid and transmission capacities. .

Ships can carry the hydrogen to shore or directly to the customer. If there are existing gas pipelines, they can also be used to transport hydrogen to shore, which makes the new technology also relevant for abandoned offshore gas fields. Electrolysers can be installed on old platforms and run with wind from surrounding offshore wind farms. Transport by ship or by old pipeline are potentially cheaper alternatives to expensive submarine cable networks.  

In the German national hydrogen strategy published by the German federal government in June this year, offshore hydrogen production is introduced as one way to strengthen the general production of hydrogen. On the whole, the strategy comprises 38 measures, all set out to achieve two goals: to raise the demand for hydrogen in the industry, the private sector and with individual consumers, and to significantly raise the hydrogen production. The government, thus, gives hydrogen a central role in the context of the country's energy transition (Energiewende) and achieving CO2 neutrality by 2050.

Apart from the use of offshore wind and hydrogen production at sea, the strategy paper also provides for:

  • inclusion of hydrogen in national emission trading
  • hydrogen rates for energy intensive industries such as steel or chemistry
  • inclusion of green hydrogen in the transport sector's greenhouse gas quota, on the long run also the introduction of a hydrogen quota for the aviation sector
  • support of green hydrogen generation capacities by "carbon contracts for difference" steered by co2-pricing
  • lower costs for green hydrogen production in the context of the renewable energy levy

It remains to be seen how the industry will react to these changes. Pilot projects are already in development across Europe: next year a plant for offshore hydrogen production shall be put in operation at the Dutch North Sea coast. It would be the first offshore hydrogen factory in the world.

In Germany there are also plans for hydrogen facilities with offshore wind energy: In the 'real-world laboratory' (Reallabor) Westküste 100, at the west coast of Schleswig-Holstein, green hydrogen will be produced with offshore wind power and then fed into the local gas network. It will even be used as a climate-friendly fuel for airplanes. Waste heat and oxygen created in the production of hydrogen will also be used. The aim is to research and establish a holistic hydrogen economy. However, the electrolyser itself will be located on the coast, not offshore. With the proposed new legal framework, Germany now creates adequate conditions so that first pilot projects for real hydrogen production at sea could be implemented.

Co-written by Franziska Graf of Pinsent Masons.

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