German energy company EWE has defied the challenges facing the green hydrogen sector in northern Europe by starting construction of one of the continent’s largest production plants and securing EU backing for its plans to develop storage capacity by converting salt caverns.

The 320MW ‘Electrolysis East Frisia’ facility at Emden on Germany’s northwest coast—a key hub for incoming gas imports—is expected to start producing in 2027.

It forms part of a wider Clean Hydrogen Coastline project in the region, which also includes large-scale storage capacity in converted salt caverns and a regional pipeline network.

“The ramp-up will only succeed if regulation and funding are further developed in a targeted manner” Doehler, EWE

"With the start of construction, we are taking a decisive step from planning to implementation," said Stefan Doehler, CEO of EWE. “This creates the basis for sufficient planning security for us to start actively marketing green hydrogen. We are thus sending a strong signal for the industrial market ramp-up."

In a further breakthrough for EWE, the European Commission has granted Project of Common Interest (PCI) status to its three planned salt cavern storage projects, which are among the largest in Germany. The projects are Huntorf at Wesermarsch, Jemgum in East Frisia, and the Ruedersdorf sites near Berlin.

Inclusion in the PCI project brings benefits including accelerated approval and planning procedures, and possible funding options through the EU’s Connecting Europe Facility (CEF) programme. Inclusion in the list also raises projects’ profile among potential investors.

“PCI status gives us tailwind to move permits and planning processes forward more efficiently,” said Peter Schmidt, managing director of EWE Gasspeicher, the firm’s storage unit.

“However, this does not involve an investment decision. This is because hydrogen storage projects need a clear funding and financing framework so that investments are incentivised and do not become the missing link of the future hydrogen system."

Ramp-up at risk

Despite its recent progress, EWE warned the German government that the ramp-up of clean hydrogen will require an overhaul of current policies.

“In order for hydrogen to play a major role in climate protection and competitiveness, we need reliable and practical framework conditions,” said Doehler. “The ramp-up will only succeed if regulation and funding are further developed in a targeted manner.”

He referred to a recent report on the hydrogen sector by the German Federal Audit Office "In our view, the report confirms that the market ramp-up must be significantly accelerated and made more economical,” Doehler said.

Doehler also called on the government to press for reform of the EU’s Renewable Fuels of Non-Biological Origin (RFNBO) definition, echoing the view of other German hydrogen developers. “EWE is calling for a reform of the RFNBO rules so that electrolysers can be operated more flexibly and cost-efficiently,” he said.

Green hydrogen project developers in Germany argue the rules governing RFNBO, including those around the matching up of specific renewable power generation with electrolysers, hamper efforts to reduce operating costs in some cases.

320MW – Plant capacity

Recent analysis commissioned by the German government described the RFNBO definition of green hydrogen, compliance with which is a prerequisite for producers bidding for EU funding, as “overly complex”.

Christine Falken-Grosser, head of hydrogen coordination at the Federal Ministry for Economic Affairs and Climate Action, acknowledged the industry has called on the government to seek changes to the RFNBO. However, the government is also aware that renegotiating the details of the RFNBO could undermine efforts to maintain the policy predictability that industry and investors need, she told Hydrogen Economist in a recent interview.

“There is a big discussion in the ministry about how far we want to go, and what signal [renegotiating the RFNBO] sends to the market,” she said.

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Author: Stuart Penson