Germany's electricity price brake could present an obstacle to the development of a hydrogen economy, having already brought a 1,350 t/yr renewable hydrogen project in Bavaria to a standstill.
The plant in the town of Wunsiedel, which uses an 8.75MW proton exchange membrane (PEM) electrolyser from Siemens, was completed in September 2022 and regarded as a potential test site for several energy transition projects. But the site has come to a standstill because of specific provisions made under the electricity price brake legislation, which was passed in November and will remain in place until the end of April 2024.
The law is intended to cap electricity prices for households, small and medium-sized enterprises and industrial consumers and is to be financed by a windfall tax on power generators. This windfall tax is the crux for the Wunsiedel hydrogen plant, which was supposed to be fed by solar and wind power from the Wunsiedel Energy Park through a power purchase agreement (PPA). The legislation would require the supplier to pay the windfall tax based on spot prices at the electricity exchanges, even if it delivers the power to the hydrogen plant at lower costs via a PPA. This means that a PPA is financially unviable for the supplier. This in turn makes hydrogen production unviable, as the electrolyser operator would have to resort to buying power at the exchanges at higher cost.
Potential further investments have largely been put on hold as a result, according to Philipp Matthes, managing director at the plant's operating company WUN H2. Siemens had said in September that talks were underway to expand electrolyser capacity to 17.5MW. Siemens' financial arm holds a 45pc stake in WUN H2, with another 45pc owned by industrial gas firm Riessner-Gase and 10pc by local utility Stadtwerke Wunsiedel. The halt presents a challenge, not least because it has been financed by private entities and has not utilised public funds, said Stadtwerke Wunsiedel's managing director Marco Krasser, adding that the project partners will have to repay loans to banks.
The plant's halt has triggered calls to adjust the legislation. Bavaria's economy and energy minister Hubert Aiwanger on 17 January urged German economy minister Robert Habeck to allow exceptions to the windfall tax enabling the facility in Wunsiedel and similar plants to continue operating. "The state ruins the energy transition with this system", Aiwanger said, adding that "this needs to be urgently corrected". A windfall tax should only be calculated based on actual revenues and not on spot prices, according to Aiwanger. "It cannot be that we go around the world trying to import hydrogen, while we are paralysing hydrogen production at home", he said. Habeck has over the past few months struck several agreements with countries that are vying to become key exporters of low-carbon hydrogen, most recently with Norway.
