Two million tons of hydrogen thanks to "H2Med" pipeline: How does German industry benefit?

Now it's official: The H2Med pipeline will be the first green hydrogen corridor to Germany. This was confirmed by representatives of the European Union and the governments of Germany, France and Spain on October 18 at the event "H2Med, an example of European energy cooperation". In addition to the transmission system operators Enagás (Spain), GRTgaz and Teréga (France) and REN (Portugal), the German OGE will now become a new partner in the project. What is the hope pipeline all about, and what opportunities does it offer for German industry?

Few issues affect the industry more than high energy prices. At the same time, the industry continues to strive to decarbonize its processes and become more sustainable. Many see green hydrogen as the energy carrier of the future. But where will the necessary quantities come from? And how much will the green gas cost once it arrives? To avoid getting caught up in another energy price spiral, kilometer-long pipelines are needed that crisscross the whole of Europe and transport the hydrogen quickly and cost-effectively from regions with favorable production conditions to regions with high demand. The "H2Med" pipeline will now very likely become the first example of such a "hydrogen corridor" to Germany.

Europe's first "green corridor

H2Med is to transport green-produced hydrogen in southern Europe, especially Spain and Portugal, and thus supply northwestern European countries. At the Spanish embassy in Berlin, the Essen-based transmission system operator OGE has now signed a letter of intent, according to which it is pushing ahead with the project on the German side. The official press release from the network operators involved said that representatives of the EU and the governments of Germany, France and Spain present at the signing ceremony had also reiterated their support for H2Med. It is Europe's first large-scale "green corridor," it said.

Frank Reiners, CFO of OGE, elaborated, "A hydrogen pipeline connecting Portugal, Spain, France and Germany is more than just an important hydrogen import corridor. It is the bridge to a sustainable future. It connects the most efficient regions for hydrogen production with those where it is needed most, it promotes international cooperation, harnesses the potential of clean energy for progress, and unites our countries in a common endeavor: to achieve the European goal of climate neutrality by 2050."

Up to 2 million tons of hydrogen per year

Estimates put the cost of building the pipeline at €2.5 billion. From 2030, it should be able to transport up to two million tons of hydrogen per year to northwestern Europe - Germany in particular is seen as the beneficiary. The total volume would correspond to around ten percent of the estimated total European demand, which Commission President Ursula von der Leyen put at 20 million tons by 2030 in December 2022. Half of this is to be produced in the European Union, while the rest will be imported from outside Europe.

Hydrogen imports for German industry

Gas has been a hot topic in German energy policy at least since the publication of the National Hydrogen Strategy in summer 2020. The German government assumes that the national hydrogen demand in 2030 will be up to 110 TWh. Electrolyzer plants are to produce part of this domestically; experts estimate the potential at around 14 TWh. According to estimates, between 50 and 80 % of the hydrogen demand will have to be imported. Procurement is made more difficult by the desire to use primarily "green" hydrogen produced in a CO2-neutral manner, which is prevalent in Germany and was widely confirmed in the update of the National Hydrogen Strategy in July 2023.

Estimates put the cost of building the pipeline at €2.5 billion. From 2030, it should be able to transport up to two million tons of hydrogen per year to northwestern Europe - Germany in particular is seen as the beneficiary. The total volume would correspond to around ten percent of the estimated total European demand, which Commission President Ursula von der Leyen put at 20 million tons by 2030 in December 2022. Half of this is to be produced in the European Union, while the rest will be imported from outside Europe.

Hydrogen imports for German industry

The German government assumes that the national demand for hydrogen will be up to 110 TWh in 2030. Electrolyzer plants are expected to produce part of it domestically; experts estimate the potential at around 14 TWh. According to estimates, between 50 and 80 % of the hydrogen demand will have to be imported. Procurement is made more difficult by the desire to use primarily "green" hydrogen produced in a CO2-neutral manner, which is prevalent in Germany and was widely confirmed in the update of the National Hydrogen Strategy in July 2023.

In a dossier on the subject, the BDI writes that in addition to expanding domestic electrolysis capacities, Germany should create a transport network for hydrogen and enter into international energy partnerships. In this respect, the announcement by the network operators is entirely in line with the demands of the industry.

Spanish hydrogen plans

Countries around the world are planning to build large capacities for the production of green hydrogen. Particularly suitable are windy regions such as Scotland and Scandinavia or sunny areas such as those in Australia, Africa or southern Europe.

Spain in particular has been making a name for itself for some time as a future major exporter of hydrogen. At the end of 2022, the company Cepsa announced its intention to commission two new hydrogen plants with a total capacity of 2 GW. They are part of the "Green Hydrogen Valley" in Andalusia, which is to be Europe's largest production site for green hydrogen by 2026.

On the occasion of the announcement, Prime Minister Pedro Sánchez had said that Spain could become "an energy exporting country" with hydrogen. According to estimates by the International Renewable Energy Agency (IRENA), green hydrogen will be cheaper than conventionally produced "gray" hydrogen in Spain from 2026. The reason is the low cost of renewably produced electricity. These are around one cent per kWh.

The hydrogen roadmap is therefore receiving generous investments of up to €8.9 billion from the Spanish government. By 2030, electrolysis capacity is expected to reach 4 GW.

A pipeline project’s history

The H2Med pipeline is an expression of the French ambition to participate in the volumes of green hydrogen produced in Spain and Portugal. At the same time, energy supplies between the southern European countries were, until recently, supposed to be rather reduced.

In 2019, the French government announced its intention to abandon the construction of the 190 km "MidCat" (Midi Catalogne) natural gas pipeline between Barcelona and Carcassonne. The project, which had already begun in 2013, was too expensive and outdated.

With the outbreak of the Ukraine war and the lack of natural gas supplies from Russia, the idea of a Spanish-French pipeline became interesting again. In October 2022, Paris and Madrid announced that they would continue the project under the name "BarMar." However, the new pipeline would not pass through the Pyrenees as originally planned, but would connect Barcelona with Marseille as an undersea pipeline through the Mediterranean.

In December, Spanish President Sánchez and Macron announced that "BarMar" would be renamed "H2Med." The new name is intended to focus on the fact that mainly hydrogen will flow through the pipeline, which will be up to 476 km long. According to the French industrial magazine L'usine nouvelle, construction will begin in 2026.

From 2030, green hydrogen could then flow from the sunny regions of southern Spain via France to the energy-hungry industrial centers of Germany. The fact that it can also benefit from the green corridor's hydrogen was announced in January 2023 during the celebrations for the anniversary of the Élysée Treaty in Paris.

New sales opportunities for German industry

The VDMA points out that the new hydrogen pipeline not only provides a source of raw materials, but also opens up new sales opportunities for process technology. In September 2022, the association had commissioned a study to evaluate the hydrogen economy from the perspective of plant engineering. The conclusion: the market for hydrogen technologies offers "considerable business potential," and entire supply chains are emerging.

Investments in hydrogen-capable plants and components could increase significantly. Sales opportunities arise from the possible sale of equipment along the entire hydrogen value chain: production, transport, storage, distribution and applications, including in the mobility and energy sectors. The European market for electrolyzer equipment alone is expected to be worth €6-10 billion in 2030. The actual volume will depend on how costs develop and how many projects are implemented. The study is available online free of charge.

Against this background, it is a good signal for the industry if capacities for hydrogen imports to Germany are created. The more hydrogen is available, the greater the sales potential for suitable equipment.

You can find out how hydrogen will otherwise change the industry from April 15-19, 2024 at the leading trade fair wire + Tube in Düsseldorf!