Special funding for the transformation process of small- and medium-sized businesses has been lacking so far.

The installation of around 20 gigawatts (GW) of electrolysis power is planned in Germany by 2030. This is according to an analysis by BBH Consulting Group, among others, based on data from the International Energy Agency. However, only approx. 0,63 GW of this has received a final investment decision to date. This means Germany lies far below the set target of 10 GW realised capacity in 2030, as stated in the National Hydrogen Strategy (NHS). A closer inspection shows that the planned projects that already have received an investment decision are mainly for large industry’s own consumption, e.g. in steelworks. This implies that without suitable funding architecture, a hydrogen transformation process will not be possible for small- and medium-sized businesses (SMEs) as well as the transport sector. In the worst case scenario, the transformation of entire sectors could be delayed, which in turn could result in higher energy costs as well as in higher costs for emissions trading, emissions-based levies and fines.

To counteract this, the National Hydrogen Regions Association (BdWR – Bund der Wasserstoffregionen) is using its H2Regional concept to foster discussion with the federal government about a special funding architecture for regional hydrogen economies. BdWR spokesperson Dr. Stefan Kerth, District Administrator of Vorpommern-Rügen, Jürgen Müller, District Administrator of Herford, Bernd Lütjen, District Administrator of Osterholz as well as Dr. Stefanie Schwarz, Head of Science Communication, presented a corresponding position paper yesterday to Federal Minister for Digital and Transport, Dr. Volker Wissing.

H2Regional is divided into a concept for investment costs (CAPEX)-dominated sectors (primarily the transport sector) and a concept for operational costs (OPEX)-dominated sectors (mainly H2 generation and process heat supply). The targeted impetus of H2Regional will enable regional economic actors to make their own investments in the transformation. Regional hydrogen generation thus contributes to regional added value and safeguarding the location. Furthermore, synergies for the purposes of system stability (e.g. reduction of local feed-in management through controllable loads, higher resilience of the entire system and fewer compressor systems in the core network) can be increased.

Dr. Stefan Kerth, District Administrator of Vorpommern-Rügen, emphasised: “The SMEs rooted in the regions are not only the often-cited ‘backbone of the German economy’, they also remain a decisive engine for growth. It is also the responsibility of the federal government to enable these actors to participate in the ramp-up of the hydrogen economy in a way that is economically feasible. The pragmatic concept devised by the BdWR called ‘H2Regional’ points us in the right direction.”

Prof. Dr. Gerald Linke, Chairman of DVGW and BdWR spokesperson also explained: “The ramp-up of the hydrogen economy in Germany can only succeed if it takes place in the regions. Around 1,800 companies are connected to the gas distribution network. The technical requirements for drawing hydrogen from it in future as a process energy for high-temperature processes are already defined in the DVGW regulations. Now these companies urgently need a tailor-made funding framework. The National Hydrogen Regions Association has developed a suitable proposition for this together with H2Regional and is available as a partner for the interdepartmental discussion with the federal government. This must happen as quickly as possible. The whole country benefits from strengthening the regional players.”

In the transport sector, the federal government has pushed for the procurement of a large number of fuel cell buses and commercial vehicles in Germany by 2030 through initiatives such as the procurement of clean road vehicles law, the CO2 toll and the EU Fleet Regulation. By law, approx. 950 and from 2026, up to 1,350 emission-free buses must be procured in public transport annually. These investments will frequently be supported by municipal companies.

In industry, the National Hydrogen Strategy focusses particularly on chemical and steel manufacturing. With approx. 52 per cent of employees and approx. 33 per cent of the entire German turnover however, SMEs represent the backbone of the German economy. The decarbonisation of process heat with hydrogen now presents large challenges to many of these companies. However, these industrial companies are hardly taken into consideration in the planning of the national hydrogen economy, for example in terms of hydrogen infrastructure or funding possibilities.

Download the position paper, long and short version

About the BdWR

The National Hydrogen Regions Association (Bund der Wasserstoffregionen (BdWR)) is a competence platform for the political actors involved in regional hydrogen concepts. Mayors and District Administrators from now over 30 hydrogen regions and the German Gas and Water Association (DVGW) come together to learn from experiences with regional hydrogen concepts and as a result, make specific policy conclusions. The German Association of Counties (Deutsche Landkreistag) also provides support in its role as leading municipal association.


Image: l-r: District Administrator Bernd Lütjen, Federal Minister Dr. Volker Wissing, District Administrator Dr. Stefan Kerth, Dr. Stefanie Schwarz (DVGW)
© Franz Josef, Berlin

Source of original release: German Gas and Water Association (Deutscher Verein des Gas- und Wasserfaches (DVGW))