Episode 21: Germany’s Hydrogen Highway – A new grid for the transition to clean energy

Green hydrogen is a key part of Germany’s drive to decarbonize industry and transition to clean energy. To that end, the country is establishing a core network, spanning 10,000 kilometers all across Europe’s largest economy. What are challenges faced by the new distribution grid? How many of the old natural-gas pipelines can be repurposed? How much new construction is needed. Germany’s biggest gas network operator and the German Association for Gas and Water give us some answers.

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Our Guests

Philipp Ginsberg | © Franz Josef

Philipp Ginsberg is Head of Grid and Heating Policy at the DVGW, the German Association for Gas and Water, which currently has around 14,000 members, including 2,000 utility companies. Since its formation more than 150 years ago, it has been the first point of contact for all questions relating to the supply of gas and drinking water in Germany.
 

Niko Bosnjak | © Niko Bosnjak

Niko Bosnjak is Head of Communications & Energy Policy at Open Grid Europe. With around 13,000 kilometers of pipelines, Open Grid Europe is the largest of Germany’s 16 long-distance gas network operators.
 

Transcript of this episode

[Atmospheric sounds] 

Presenter:
You’ve just heard what noise, according to one scientist, hydrogen would make if it emited sound instead of light waves. And now here’s the sound of hydrogen burning. You might remember experimenting with this in chemistry class.

[Plopping noise]

That spacey hum and that cheerful plop are acoustic illustrations of why hydrogen as an energy carrier is so suitable to storing excess renewably generated power for use when it’s needed. And why it’s a lucrative growth sector for a wide variety of businesses.

Philipp Ginsberg, German Association for Gas and Water, DVGW

When it comes to end use applications for example, there's a huge global potential for other companies to develop new technologies that we are going to use. The same is true for hydrogen production. I mean, if we have like a breakthrough technology developed by a third party somewhere else, this can be hugely beneficial to developing this hydrogen industry.

Presenter: 

That was expert Philipp Ginsberg, to whom we’ll be talking in a moment. So, Germany has made H2 a centerpiece of its transition to green energy. But what about the network necessary to get the gas to where it needs to go?

[Plopping noise]

Welcome to INTO Germany, the German business podcast, brought to you by the international business promotion agency Germany Trade and Invest. I’m your host Kelly O’Brien. All of Europe will need not only lots and lots of hydrogen in the future, but also national networks similar to the current ones for natural gas. The European Hydrogen Backbone (EHB), an initiative consisting of a group of 33 infrastructure operators, is driving expansion at that level. The EU Commission recently gave Germany the go-ahead to invest around three billion euros in its national hydrogen infrastructure. So what’s the state of play with Germany’s hydrogen highway? What still needs to happen? And how can international companies benefit?

To get some answers let’s bring in Philipp Ginsberg. He’s from the German Association for Gas and Water or DVGW. It has some 14,000 members and is a major stakeholder in this area. Philipp, before we talk about the DVGW and the association’s job in the hydrogen network expansion, let's talk briefly about the status quo: How is the German natural gas network organized?

Philipp Ginsberg, German Association for Gas and Water, DVGW

It's basically organized on two levels. First of all, we have the so-called transmission system operators. They operate the really, really large pipelines to bring natural gas or biomethane from A to B. And they are also connected with other countries to import gas from the various sources. And then we have so-called distribution system operators, which operate the local gas networks. The transmission system is about 40,000km long. And the distribution system involves almost 600,000km of gas pipelines. And, while the transmission system operators supply 500 large industrial end users directly, the distribution system supplies 20 million households with natural gas and 1.8 million industrial and commercial customers. Like, for example, small and medium sized businesses.

Presenter:
Does Germany differ from other countries?

Philipp Ginsberg, German Association for Gas and Water, DVGW

We have quite a special system in Germany. For example, in France, we have, I think roughly a dozen of distribution system operators. But in Germany, we have 700 gas network operators on the distribution level. And I think roughly 14 transmission system operators. In Germany, it's not uncommon that local communities or local councils are directly involved in their local energy supply. So, like most larger cities have their own utility company and they usually operate the local gas networks, which is different in other countries. So we have like a really, really high number of network operators in Germany and, as you can imagine, it's quite difficult to synchronize them when it comes to the hydrogen transition.

Presenter:
I guess that’s where the DVGW comes in. How is your organization helping to facilitate this transformation?

Philipp Ginsberg, German Association for Gas and Water, DVGW

It's basically responsible for securing a safe technical system. We are required to do this by law. And this means that we have to set rules and standards that make it possible for network operators to do the safe transition from gas to hydrogen. And this is why we have lots of research projects and lots of them very practical where we try to find out if the system is hydrogen ready already or if we have to, for example, switch some components to make it hydrogen ready. And what we found out is that the pipelines, the actual pipelines are in most cases 100% hydrogen ready at this point, which means that we only have to make some changes to some components of the gas infrastructure.

Presenter:
Hydrogen-ready means that the existing pipelines can easily be used to transport hydrogen, which would make the construction of the network a lot easier.  In 2020, the German government published its National Hydrogen Strategy, a framework for the future production, transport, use and reuse of hydrogen. An updated, more ambitious version was released in Juli 2023. Philipp, help us understand the government’s plans.

Philipp Ginsberg, German Association for Gas and Water, DVGW

This process basically involves two stages. At first, we're going to build a hydrogen core network, which is going to supply large industrial sites and power plants. And this core network will be approximately 9000km long and go through most parts of the Republic already. And then in the second step, we are going to extend the core network to supply customers at the regional level, for example small and medium sized businesses and also parts of the heating sector. For example by combined heat and power plants. And to make sure that this happens as efficient as possible, the gas transmission system operators are required to draft a so-called integrated network development plan for gas and hydrogen. And in this process, they have to work very closely with the distribution system operators, which have to make their own plans at the local level. And in the end we should have a hydrogen network system that supplies all necessary customers and can also be extended, for example, to the heating sector when we find out at some point that we need hydrogen for heating as well. And this goes hand-in-hand with the so-called heating plans that every community in Germany has to do. And in those plans, the local councils, the local communities have to find out how to decarbonize their heating sectors and their local energy supply infrastructure.

Presenter: 

You were mentioning earlier that you’re participating in research projects and providing rules and standards for your members to help them with the transition from natural gas to hydrogen. Could you give us some examples?

Philipp Ginsberg, German Association for Gas and Water, DVGW

We have literally hundreds of projectsin Germany. I can't give you an exact number. But, for example, we have more than 60 so-called important projects of common European interest. And 24 of them just received the funding permission by the EU. And my organization, for example, is also involved in dozens of hydrogen projects, which in most cases are related to the hydrogen infrastructure. So when we look at the core network, it's heavily regulated because it's basically a political network. The German law says that this network has to be built by 2037 at the very latest. However, the transmission system operators want to finish this core network by 2032 already. So this means that in eight years from now, this network should be operating, so to speak. 

But it's also important to look at the local level. As I've mentioned, the gas transmission system operators, they have their integrated network development plan. But when we look at the local level, we also have to come up with plans to find out what to do in your city or your town with your existing gas network. And this is why we, in my organization, have developed a standardized tool, the so-called gas distribution transformation plan, to enable our network companies to make their own local decarbonization plans. And this involves several analytical steps, most of them by technical nature. It was rolled out to all 700 distribution system operators and almost 250 of them are already participating in this process. And they cover roughly 75% of gas networks in Germany.

Presenter:

Building the network requires a lot of know-how and manpower. Do you see business opportunities for international companies in this sector?

Philipp Ginsberg, German Association for Gas and Water, DVGW

In practice, most of the work is going to be done by existing network operators because they simply have the know how in their companies on how to do this. However, when it comes to enterprise applications for example, there's a huge global potential for other companies to develop new technologies that we are going to use. The same is true for hydrogen production. I mean, if we have like a breakthrough technology developed by a third party somewhere else, this can be hugely beneficial to developing this hydrogen industry. The government has set itself the target that Germany should become a lead producer of hybrid hydrogen applications. We are already leading the world in developing electrolysers for example and other hydrogen production techniques. And we have also developed end use applications for hydrogen. For example, there are now gas boilers that can be fully converted to hydrogen developed by several German companies. So I would say that the potential for German and European companies is really huge, but we obviously need a regulatory framework that enables them to invest in those technologies.

Presenter:

To ensure investment security, the European Commission presented a plan early last year to support the green economy on the continent. It was the EU's response to the Inflation Reduction Act (IRA), passed by the US government in 2022. Apart from investment security, what other challenges exist with regard to hydrogen expansion?

Philipp Ginsberg, German Association for Gas and Water, DVGW

The biggest challenge that I see is to make sure that every end use application in this country is hydrogen ready. As I've mentioned, we have 1.8 million industrial and commercial customers connected to the gas grid. And if we want to make sure that they can run their industrial production with hydrogen we have to support them in making this transition happen. And as you can imagine, this is a big coordination task. But we have started this process and I'm quite optimistic that we can be successful. 

Presenter:

We were talking earlier about the network’s construction requiring a lot of know-how and manpower. What it also required is a lot of money. How is the transformation going to be financed?

Philipp Ginsberg, German Association for Gas and Water, DVGW

There is no general system in place yet. However, the government has announced to come up with financing plans. With respect to the hydrogen core network that I've mentioned, interim financing is ensured via a so-called amortization account and fixed grid charges. But this is a mechanism that only applies to the core network and for all the other pipelines,we are still waiting for the government to come up with a plan. They published a so-called green paper for the gas distribution systems earlier this year. And in this green paper, they have announced that they are going to deal with all these regulatory problems that exist. And one of those problems is to come up with a finance mechanism. So, I would expect them to present a solution in due course.

Presenter:

Philipp, before we say goodbye, I’d like to ask you for your expert opinion: Do you think it’s doable to transform most of the gas network by 2045 – the year Germany aims to become climate neutral?

Philipp Ginsberg, German Association for Gas and Water, DVGW

Technically, it's doable, when it comes to the grid. But there's still the big question if we are going to have enough hydrogen by then. And this is basically a matter for the government to secure these amounts of hydrogen and to bring the costs down. And if this is insured by the government, I'm really optimistic that we are going to have this hydrogen system in place by 2045.

Presenter:
That was Philipp Ginsberg from DVGW, the German association for the gas and water industry. Many thanks, Philipp, for your insights into the country’s hydrogen plans. We’re going to go next to a representative of Germany’s largest gas transmission grid operator. But before that, we’ll have a look at some of the business stories making headlines in Germany. 

NEWS

Football Record

Germany’s professional football league – the Bundesliga - recorded 22 percent annual growth. That’s according to a new study by business consultants Deloitte (duh-LOYT). The Bundesliga had a best-ever turnover of EUR 3.8 billion in the 2022-23 season. That made the league the second largest in the world after the English Premier League but ahead of Spain’s La Liga, Italy’s Serie A and France’s Ligue 1. The figures do not include transfer fees.

New Opportunities

Germany has launched a new 660-million-euro fund for start-ups. The “Opportunity Fonds” of the German government’s public-private venture-capital seed investor, the HighTech Gründerfonds (HTGF), is aimed at giving Germany’s best start-ups access to later-round financing. In exceptional cases, young companies already backed by the HTGF could receive up to EUR 50 million in additional funds. The HGTF focuses on innovative technology start-ups working in key areas for the future.

Joining Forces

Poland’s Elemental Strategic Metals and US company Ascend Elements have formed a joint venture named AE Elemental that will build a state-of-the-art lithium-ion battery recycling plant in the eastern German regional state of Saxony-Anhalt. It will be capable of processing up to 58,000 batteries annually. A site for the project for the project has already been acquired, with construction planned to start in 2025. The new company will also operate a similar facility in Zawiercie (Za-VER-cha), Poland.

Crossing Borders

Germany tops Europe in terms of people working internationally in the country. The European Commission’s “Annual Report on Intra-EU Labour Mobility 2023” determined that 3.4 million EU and EFTA “movers” worked in Germany. That was far more than Spain, Switzerland and Italy, the only other countries with more than 1 million movers. Germany was clearly the most popular destination for movers from the five largest countries of origin, Romania, Poland, Italy, Portugal and Bulgaria. Experts say movers are key to ensuring adequate labor pools. And finally…

Growth Industry

Environmental protection is big business in Germany. And it’s growing bigger by the year, as new government figures show. Germany’s Federal Statistical Office says that 2022 turnover in goods and services in the sector reached 107.5 billion euros – an annual increase of 16.9 percent. More than half of business in the sector came in climate protection, which generated 61.7 billion euros in business.

Presenter: 

And that brings us back to hydrogen, a key element in Germany climate protection strategy – and one that requires a massive distribution network. As already mentioned, German natural gas  distribution is currently organized by several hundred network operators on a local level – and a handful of transmission grid operators on the national level. 16, to be precise. The largest one is OGE – short for Open Grid Europe. The company is based in the western German town of Essen which has a long history in coal mining and steel production. Hydrogen will, of course, be key to decarbonizing heavy industries like steelmaking. 

We are now joined by Niko Bosnjak, OGE’s head of policy and communications. Niko, let’s start with some hard facts: How large is your network and how does it work? 

Niko Bosnjak, Head of Communications & Energy Policy, OGE 

Our network is about 13,000km long. That is basically just as much as the whole German autobahn grid that we operate. We're a transmission system operator. We’re the company that operates the large pipelines with large volumes. We have pressures in our system of up to 100 bars. We're sort of the pipelines that take the gas from the importers from other European countries and we transport them to the distribution grids. And so our network really stretches through all of Germany except for eastern Germany. Basically, throughout the entire old Bonn Republic, as it is used to be called. 

Presenter:

Germany has set itself very ambitious climate goals and it’s located at the heart of Europe. So I guess, when it comes to hydrogen, there is no getting round the country.

Niko Bosnjak, Head of Communications & Energy Policy, OGE

You can’t reach the climate goals without hydrogen. That's pretty much a fact. We have done a lot of good work in Germany in green electricity generation. Over 50% of electricity generation is green today. The problem with green electricity though, from wind and solar, is that it fluctuates. So, hydrogen offers a bridge to save the electricity that you produce in the summer and make it available in the winter, because gases in general, but hydrogen in particular, they can be stored in very large volumes, but they can also be transported in very large volumes and over long distances. The gas networks are very well integrated across all of Europe. We're really at the heart of Europeat OGE. We have a total of 17 border crossing points.We do a lot of transit, there's a lot of gas coming into our grid that doesn't even stay in Germany, that we just transport to other European countries. And so, we're really a vital part of the whole European gas network.

Presenter:
We were already talking about the German plans for a national hydrogen grid, starting with a core network of nearly 10,000 km. How much of that will consist of existing gas pipelines?

Niko Bosnjak, Head of Communications & Energy Policy, OGE

Basically, the gas grid today runsacross Europe from Portugal to Ukraine, from the southern tip of Italy to the northern tips of Finland and Sweden. So, it is really a fully integrated system. And hydrogen is just another gas, if you will. It's just a different type of gas that has different requirements for us as companies to transport it. But other than that, it will just connect to the already established, very deep integration that the gas networks in Europe have. We're aiming to build 10,000km of hydrogen pipelines by 2032. That network is going to be able to transport 250 terawatt hours of hydrogen. That, again, is about half of the electricity consumption of all of Germany. That's going to cost probably about €20 billion and is going to be 60% repurposed existing natural gas pipelines that we use for hydrogen and about 40% of those pipelines are going to be newly built.

Presenter:

Given that OGE is Germany’s largest transmission grid operator, I assume you’re also playing a leading role in the construction of this new hydrogen network?

 

Niko Bosnjak, Head of Communications & Energy Policy, OGE

Absolutely. So of those 10,000km for Germany, OGE is going to construct somewhere about a quarter, 2500km. And, so these 2500 kilometers is going to be, again, a mix of repurposed, existing natural gas pipelines and newly built pipelines. And within these 2500km, we have individual projects where we construct pipelines on a regional basis. One of these projects is what we call “Get H2”. This is one of the very early hydrogen projects that we've been pursuing for a few years now. We're a team together with RWE, with BP, with Evonik. This is going from the southern tip of Lower Saxony. Lingen is the place called, all the way to the Ruhrgebiet, so in the center of North Rhine-Westphalia. Up there in Lingen, RWE is constructing a several hundred-megawatt hydrogen electrolysis. So that's where the hydrogen will be produced. And then we're transporting it south towards the Ruhrgebiet, and it'll bring hydrogen basically to Thyssenkrupp, to BP refineries, and they're going to be using this hydrogen to either make carbon neutral fuels or carbon neutral steel. We have already taken one pipeline that's about 100km long and we've already started converting it at the end of the last year. So we emptied it of natural gas basically. And now it's sitting there empty. And we're doing everything along this 100km stretch to make this pipeline ready for hydrogen. And then we expect this to be done by about next year, early next year. And then the first hydrogen can flow through this project.

Presenter: 

Projects like Get H2 are emerging all over the country. Most are subsidized by the national and regional state governments. Have any projects already been implemented – or, in other words: Is hydrogen already flowing through German pipelines?

Niko Bosnjak, Head of Communications & Energy Policy, OGE

We as gas grid operators, we don't operate any hydrogen pipelines as of today. There are several hydrogen pipelines that are in use right now. Those are industrial closed-circuit pipelines, that for example Air Liquide or Linde are operating. So, this just goes to show: hydrogen pipeline is nothing new. You know, it's not rocket science. It's not a new technology. It's happening right now. It is just not part of public energy supply yet. This is closed private pipelines. And we're going to be offering and building pipelines on a much larger scale that's going to be supplying companies and the general public.

Maybe another project I can talk about, we've constructed the hydrogen training circuit. So basically, on the size of a football field, we've constructed a mini hydrogen network that is going to be inaugurated this summer. And what this training circuit does is, it's a fully incorporated, it's a fully functioning hydrogen grid on a small scale, but with the pipelines the same size that you would usually find in the field, operated at 100 bar pressure. And we will be using this to train our own staff in-house to work with hydrogen pipelines, how to handle all aspects of hydrogen pipelines and hydrogen transport. And we're also going to be offering this to other companies that want to train their staff to handle hydrogen transport.

Presenter:

A term, that keeps coming up is hydrogen ready. The idea is to transform existing pipelines that have been used for natural gas. The advantages are apparent: It saves money, time and spares the companies tedious authorization processes. Niko, tell us: What does hydrogen ready mean in practice?

Niko Bosnjak, Head of Communications & Energy Policy, OGE

We've done a project at OGE, which was going to look at the suitability of our network to convert it to hydrogen. And what we found is that except for maybe 5, 6, 7% of pipelines, the vast majority, over 90% of our pipelines, are hydrogen ready so to say. So, the steel of the pipelines themselves is hydrogen ready, the type of steel that we've used in these pipelines, the type of welding that we've done, all of the technical specifications – they have been used over the decades in a way that we can still use the pipelines today for hydrogen. The thing that's tricky about hydrogen is wherever there is fittings and valves and little pieces along the pipelines, that need to be airtight or tight so that no molecules can slip through. And since hydrogen is a little smaller as a molecule than natural gases, we need to make sure that we exchange all of these fittings and valves. So, it's really just about going every couple of kilometers where we have metering stations where we sort of monitor the flow of the gas through the pipeline. The main cost driver in constructing pipelines, that is digging up a trench and then making hundreds of kilometers of steel pipelines –that’s where the major costs come in. And by just exchanging these valves and fittings, we only spend about 10% of what we would spend on a newly built pipeline.

Presenter:
That indeed sounds fairly easy! What’s the situation with the 30, 40 percent of the hydrogen grid that needs to be newly constructed? 

Niko Bosnjak, Head of Communications & Energy Policy, OGE

Repurposing pipelines means the we are taking pipelines out of the natural gas system. So, we can really only do this either in an area where the natural gas consumption has been declining or we can do it in an area where we have several pipelines laying in parallel. So, there are areas in Germany where the natural gas demand is so high that we had... like one pipeline was not enough. We had to build sometimes two, sometimes a third pipeline next to each other in order to really satisfy the natural gas demand. And when they are parallel it is today a lot easier to take one of those pipelines and repurpose it to hydrogen because the other two with declining gas demand in the last few years is usually enough to still satisfy the demand so that we can use that third pipeline. And so, in a nutshell, we need to make sure that everybody who needs natural gas still gets it. And so, you have converted pipelines, repurposed pipelines in a lot of areas. But then in between you need the connection from one repurposed pipeline to the next. And that's where we need to build new pipelines and that in the end comes up as about 40% of this total 10,000 kilometer grid that needs to connect the dots between the repurposed pipelines. 

Presenter:

The first pipelines of the core network are scheduled to go into operation in 2025, the other ones following gradually over the next years. Thinking about the necessary construction works – is this realistic?

Niko Bosnjak, Head of Communications & Energy Policy, OGE

A conversion takes about a year, maybe two years depending on how long the pipeline is. What we don't have in the newly constructed pipelines is all the planning and the permitting. When the pipeline's already in the ground, the large part of the construction is done. If you don't have a pipeline in the ground, you first need to do the planning. We have all the permitting, all the people whose backyards we cross, you know, we need to talk to them and make sure that they get compensated. So, it takes four to five years before you even start construction. And the construction of the pipeline really is relatively short. It takes about a year and a half to two years, depending on how long it is. And so, whenever you can convert a pipeline, you're a lot faster and it makes a lot more sense to do that than take 6 to 8 years to construct a new pipeline.

Presenter:
Which companies are involved in this construction process?

Niko Bosnjak, Head of Communications & Energy Policy, OGE

We as a gas operator, we have all the abilities in-house to go through a construction process on our own. But then indeed the individual companies are being tendered. So, you have a Europe wide tender basically. There is not that many companies that are large enough to construct trenches over hundreds of kilometres and have the machinery to lay these pipelines. It's going to be a big market over the next 10 to 15 years. You know, infrastructure in Germany has really not been invested in that heavily over the last decades. And there's really sort of a backstop of investment that needs to happen. And this is all happening at the same time. But we as as infrastructure operators for gas, as gas companies, we have long standing connections with some of the suppliers and construction companies and we're very confident that we're going to be able to secure all of the capacity that we need in order to build this hydrogen grid.

Presenter:

Thanks, Niko, for that assessment. So, like every country, Germany is facing many challenges with its energy transformation – but those challenges also mean lots of business opportunities! As usual, before we say goodbye we’ll take a look at HOW GERMANY WORKS.

When the German government prioritizes an issue, it will very often draw up an official, written national strategy. There are German national strategies on, for instance, defense, drug addiction, sustainability, biological diversity, dementia, space exploration, nutrition and – of course – hydrogen. Germany’s Hydrogen Strategy was conceived under the previous government back in 2020. And it’s been expanded and developed ever since. The strategy sets targets concerning everything from the production and importing of hydrogen to the creation of a hydrogen distribution network. It also specifies the volume of what the government plans to invest in green hydrogen as an energy carrier. Originally, the figure was 9 billion euros, but later addenda to the strategy speak open-endedly of many billions. And that’s how Germany works.

Presenter: 

Many thanks to our guests, Niko Bosnjak from Open Grid Europe and Philipp Ginsberg from the German association for gas and water supply DVGW. If you want to support Germany’s path to climate neutrality, or rather: Europe’s path, don’t hesitate to contact Germany Trade and Invest. We will be happy to advise you on your hydrogen project… all at no cost because we’re a government agency. Get in touch at gtai.com. We’re also keen on your opinions, suggestions and questions. Please leave a comment in your favorite podcast app or drop us a line. You’ll find all the details in our show notes. 

So, till next month, “Auf Wiederhören” and remember:

[plopping noise]

Germany means business. 

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