Strong policy backing will be needed to support construction of hydrogen storage sites and speed up planning processes, according to industry association Gas Infrastructure Europe (GIE).

Existing natural gas storage sites are unlikely to be converted to hydrogen in the next few years, as they have become essential to security of supply following Russia’s invasion of Ukraine.

The EU enacted a regulation requiring member states’ to ensure their natural gas storage sites were at least 80pc full before winter 2022–23 and 90pc for the following winters. The regulation has a sunset clause of December 2025.

The regulation will make it challenging for gas-to-hydrogen storage conversions to be online by 2030. It takes 3-5 years to repurpose gas storage facilities for hydrogen, “so really you would need to be seeing FIDs in 2024–25”, says Michael Schmoeltzer of German energy firm Uniper, who leads GIE’s working groups on hydrogen regulation and the value of storage.

And even though natural gas demand is expected to fall sharply this decade, demand for storage is unlikely to decline at the same pace because of the security of supply and flexibility that storage provides, Schmoeltzer adds.

Hydrogen storage need

Europe may already need large amounts of hydrogen storage by 2030 if it meets its targets of 20mn t/yr of hydrogen consumption, including 10mn /tyr of imports.

Assuming a flexibility need of 5–10pc, Europe’s storage need could be around 30–60TWh, says Schmoeltzer.

3–5 years – Time it takes to repurpose gas storage for hydrogen

The high targets for hydrogen imports will also make storage critical for guaranteeing security of supply, as Europe cannot rely on efficient wholesale markets, Schmoeltzer says.

A GIE study last year estimated that Europe and the UK would need 70TWh of hydrogen storage by 2030, rising to 450TWh by 2050.

GIE’s hydrogen infrastructure map contains 40 hydrogen storage developments across the EU, including pilot projects. GIE estimates that all the existing salt cavern capacity in Europe could be converted to just 50TWh of hydrogen storage and that Europe’s existing gas storage capacity could be converted to just 265TWh, due to hydrogen’s lower volumetric density.

New storage sites will clearly be needed. But building a new store can take 5–10 years.

A recent study by Germany’s National Hydrogen Council (NHC) estimated a need for at least 5TWh of hydrogen storage by 2030. Currently announced projects in Germany amount to just 0.5TWh, GIE says.  

Policy

Another potential barrier is that legislation supporting hydrogen storage will take time to be enacted. Countries are waiting for the EU’s hydrogen and decarbonised gas market package to be finalised, but this is not expected until the end of 2024, meaning national laws may not come into effect until 2025.

Swift approval procedures will be critical for getting hydrogen storage assets developed in time, according to Schmoeltzer says. “You can see how fast floating LNG has been built this year. Hydrogen storage may need something similar,” he says.

Financial support will be needed both for initial investments and for ongoing operations. "Storage operators need to be able to earn back the money invested—something we have not always seen in the gas market,” he adds.

Tight summer–winter spreads have meant that storage has not always been remunerated for the value it provides to the system, he notes.

The current draft package proposes regulating third-party access. GIE cites the French revenue reconciliation system for natural gas storage as one that could be instructive for hydrogen. In this system, there are still auctions for capacity, but the operator receives additional income if the difference between market revenues and regulated income is negative.

The NHC has suggested that hydrogen storage be exempted from any entry and exit fees and surcharges applied under future hydrogen networks. It also recommends that green electricity used in storage be exempted from electricity network charges.

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Author: Killian Staines