3rd edition of our newsletter "5 to 12": The role of hydrogen in the power system
From congestion management in the power grid to securing the coal phase-out in 2030 - the possibilities of the role of hydrogen for the power system are manifold. So far, concrete market and tender designs are still lacking, especially for the planned tenders for hydrogen power plants. But project planners should nevertheless start preparing now - cruh21 provides support for holistic project development.
According to the German government's plans, hydrogen is to play a special role in the climate-neutral electricity system. Hydrogen power plants, which are to cover the residual load of fossil-based power plants, are to be highlighted here. What exactly does the Renewable Energy Sources Act (EEG) envisage for the tenders for hydrogen power plants planned for the end of the year? What should project developers pay attention to now and how does cruh21 support project development?
In the desired climate-neutral electricity system of the near future, the output of nuclear, coal and conventional gas-fired power plants must be replaced. In this context, the provision for daily to seasonal "dark lulls" comes to the fore, i.e. phases in which electricity generation from wind energy and PV plants is not sufficient to cover the demand for electricity. Therefore, according to current plans, the German government is planning to build controllable power generation capacity from H2-ready gas (1) and pure hydrogen power plants (2), which can be quickly and flexibly ramped up and down as needed, i.e. they are controllable. On the other hand, potentials for flexibilising the electricity system are to be exploited, including the integration of electrolysers into the grid.(3)
What are the concrete plans behind this and what do project developers need to be prepared for?
The dual role of hydrogen
Hydrogen as an energy carrier can play a role in the climate-neutral electricity system of the future both in its production through the integration of electrolysers into the grid as an electricity consumer when there is a surplus of electricity and in its storage and reconversion function in green electricity shortages (i.e. during "dark slack"). This two-sided role of hydrogen in the electricity system is also confirmed by the traffic light coalition in the current draft of the update of the National Hydrogen Strategy (NWS).
This describes electrolysers as "variable, system-serving stabilisers" of the electricity grid on the electricity consumer side.(4) The intention behind this is to avoid bottlenecks in the electricity grid by providing grid-serving control power from electrolysers and at the same time to reduce the need for expansion of the electricity grid. In addition to electrolysis serving the electricity grid, the term "system serviceability" also refers to the interlinking of electrolysis with the transport and storage infrastructure for hydrogen. (5) According to the draft of the NWS, the requirements for system-serving electrolysis sites and modes of operation are to be examined within the framework of the System Development Strategy (SES) initiated by the Federal Ministry of Economics and Climate Protection (BMWK) and the Platform for a Climate-Neutral Electricity System (PKNS).(6) For project developers of electrolysis plants, this could result in new business models through the provision of negative balancing power. However, the responsible bodies are still in the middle of developing the market design.
On the other hand, according to the NWS draft, hydrogen can be reconverted to electricity on the electricity generation side in times of high electricity demand and low electricity generation from renewable energies.(7) At the same time, this requires possibilities for the intermediate storage of hydrogen. The functions of intermediate storage and reconversion to electricity are addressed by the German government in the tenders planned for the end of this year for the first so-called hydrogen sprinter power plants and RE-hydrogen hybrid power plants under the Renewable Energy Sources Act (§ 28f and § 28g EEG and § 39o and § 39p EEG). (8) The aim of the tenders is to start testing and ramping up hydrogen power plants before 2030, as hydrogen is expected to replace natural gas in electricity generation to cover the residual load in the medium term.(9)
Hydrogen power plants as part of the national power plant strategy
Both tenders are part of the German government's planned power plant strategy (KWS), which is intended to secure the phase-out of coal-fired power generation by 2030. The BMWK is currently preparing a draft for this. Among other things, it provides for the construction of a total of 25 GW of controllable capacities in the electricity system. In addition to the EEG tenders totalling almost 9 GW of capacity, these are to include an as yet undetermined amount of installed capacity of gas-fired power plants that can be converted to hydrogen and combined heat and power plants (CHP).(10) In a report by the German government from the spring on recommendations for action to ensure national security of electricity supply, the EEG tenders already underway for 7 GW of biomass power plants are also added to the controllable capacities. (11) However, the concrete legal basis for the tenders for the planned H2-ready gas-fired power plant and CHP plant capacities has yet to be created, in contrast to the planned tenders for hydrogen power plants under the EEG. So what exactly is planned in the EEG for hydrogen power plants?
Hydrogen hybrid and hydrogen sprinter power plants
For the possibility of hydrogen-based intermediate electricity storage and reconversion, the EEG provides for the tendering of a total of 4.4 GW (§ 28f) for "innovative concepts with hydrogen-based electricity storage" (§ 39o) by 2028. The NWS draft refers to the planned plants as "RE hybrid power plants".(12) According to the law, these are plant combinations of onshore wind turbines and/or (13) solar plants with a hydrogen storage and reconversion plant. In this case, generation, storage and reconversion plants are spatially coupled. The funding concept thus responds to the current lack of a hydrogen grid that could transport the hydrogen required for intermediate storage and reconversion over spatial distances. The technology for reconversion is not specified by the legislator, so it can be either gas and steam turbines or fuel cells. More detailed requirements for the specific capacity of the generation, storage and reconversion plants could follow in the tender design, which is not yet available. According to the law, however, the plant concept is already very restrictive and excludes possible flexibility options from the outset, which is criticised by electricity transmission system operators (TSOs) and transmission system operators (TSOs).(14) Thus, the use of the hydrogen produced in other sectors is excluded, as is the purchase of electricity for the electrolyser via the electricity grid (para. 2 § 39o). TSOs also assume that the planned hybrid power plants can only compensate for fluctuations in electricity generation and consumption on an hourly basis. Long-term storage is necessary to counteract dark periods of days and weeks.(15) In their design (direct coupling with RE plants), the planned tenders promise to be particularly interesting for small and medium-sized project developers in the field of onshore wind and PV.
For the possibility of direct reconversion, the EEG also provides for the tendering of a total of 4.4 GW (§ 28g) for "plants for the generation of electricity from green hydrogen" by 2026 (§ 39p). The NWS draft speaks here of "hydrogen sprinter" power plants, which are to convert pure hydrogen or ammonia into electricity.(16) According to the technology, these power plants can be, for example, gas and steam turbine power plants as well as fuel cells. Here, too, the law does not define the reconversion technology. The locations of the future Sprinter power plants will be cornerstones of a future hydrogen grid plan,(17) since the location of hydrogen production - unlike in the case of hydrogen hybrid power plants - will differ spatially from that of reconversion. These tenders will be of more interest to large power plant operators.
Tender and market design are a long time coming
According to the plans of the BMWK, the exact tender designs and remuneration models for the hydrogen Sprinter and hybrid power plants should actually be in place by the summer of this year, so that the tenders for the first 400 MW of hybrid and first 800 MW of Sprinter power plant capacities can start as planned at the end of the year. However, this is considered increasingly unrealistic by the industry, as the EU Commission is said to have recently rejected the German government's draft KWS for reasons of state aid law. Reservations were, on the one hand, that the plans of the German government so far mainly provide for the promotion of H2-ready gas power plants, but not for the technology-open promotion of other providers of controllable power, such as all types of storage. On the other hand, the Commission wanted to prevent the introduction of a capacity market through the back door into an electricity market that has so far functioned according to the "energy-only" principle by means of remuneration for reserved capacity (18).
However, both the German government and the industry see remuneration per KWh as a misguided incentive, since the planned power plant capacities, as described, are only intended to feed electricity in or out as a "back-up" in times of high residual load or daily and seasonal "dark slack periods" or impending grid bottlenecks.
Only when the German government meets the EU Commission's concerns under state aid law can the Federal Network Agency (§ 88e/f EEG), which is responsible for designing the concrete tender designs for the hydrogen hybrid and sprinter power plants, take action. In doing so, however, the remuneration models must not collide with the deliberations on reforming the electricity market that are underway both at national level - supported by the PKNS set up by the BMWK - and at European level.
How project developers can prepare now for the EEG tenders for hydrogen power plants
According to industry estimates, the EEG tenders for hydrogen power plants will be delayed into the new year. Nevertheless, project planners should already be dealing with the issue and developing concrete concepts in order to be prepared when the tenders start. cruh21 supports them in holistic project development.
We advise on questions regarding the legal framework and bring you together with the right partners from our networks. We develop and optimise "business cases" and evaluate the technology and infrastructure concept and support and accompany you in preparing the bidding process.
If you have any questions, please feel free to contact us here or via our website.
----------------------------------------------------------------------------
[1] „H2-“ oder „wasserstoff-ready“ meint, dass eine Komponente oder ein technisches System für die zukünftige Verwendung von Wasserstoff geeignet ist, vgl. TÜV Süd, „H2-Readiness Zertifizierung für Werkstoffe, Komponenten und Kraftwerke“ 2023, unter: https://www.tuvsud.com/de-de/branchen/energie/erneuerbare-energien/brennstoffzellen-wasserstoffzellen/h2-ready.
[2] Darunter fallen nach den Plänen der Bundesregierung sogenannte EE-Wasserstoff-Hybrid-Kraftwerke, wobei Wasserstoff in einer Anlagenkombination erzeugt, zwischengespeichert und wieder rückverstromt werden kann, als auch sogenannte Wasserstoff-Sprinterkraftwerke, die Wasserstoff oder Ammoniak rückverstromen. Siehe dazu den Abschnitt „Wasserstoff-Hybrid und Wasserstoff-Sprinterkraftwerke“. Für die Rückverstromung können beispielsweise Gas- und Dampftrubinen sowie Brennstoffzellen in Frage kommen. Das Gesetz definiert die Rückverstromungstechnologie nicht.
[3] Siehe den Bericht „Handlungsempfehlungen der Bundesregierung zur Gewährleistung der Versorgungssicherheit mit Elektrizität“, 03.02.2023, S. 5ff. und S. 7, unter: https://dserver.bundestag.de/btd/20/055/2005555.pdf.
[4] Ressortabgestimmte Fassung, Fortschreibung der nationale Wasserstoffstrategie, Berlin 10.07.2023, S. 17.
[5] Ebd., S. 6. Zum Begriff der Systemdienlichkeit vgl. auch VDE Impulspapier, Netzdienliche Integration von Elektrolyseuren (2022), unter: https://www.vde.com/resource/blob/2226594/279eeea65a48407ecbd2227be6f190e9/netzdienliche-integration-von-elektrolyseuren-data.pdf.
[6] Entwurf zur NWS-Fortschreibung, S. 21.
[7] Siehe ebd., S. 17.
[8] Siehe ebd., S. 21f.
[9] Siehe Handlungsempfehlungen, S. 6, unter: https://dserver.bundestag.de/btd/20/055/2005555.pdf.
[10] Vgl. die Auskünfte des Ministeriums auf Mediennachfrage, in Tagesspiegel Background, Zeitplan für die Kraftwerksstrategie wackelt, 07.06.23, unter: https://background.tagesspiegel.de/energie-klima/zeitplan-fuer-die-kraftwerksstrategie-wackelt.
[11] Handlungsempfehlungen, S. 5, unter: https://dserver.bundestag.de/btd/20/055/2005555.pdf.
[12] Siehe vorhergien Abschnitt und den Verweis in Anm. 7.
[13] Hierbei können Onshore-WEA und PV nach bisherigem Stand auch miteinander kombiniert werden (siehe Abs. 1 § 39o EEG). Die genauen Anforderungen an die Ausschreibungen sind allerdings in einer noch zu erlassenden Verordnung zu konkretisieren (siehe ebd.).
[14] Siehe bayernet et al., „Quo vadis Wasserstoffkraftwerke?“, 2023, S. 38f.
[15] Siehe ebd., S. 44.
[16] Entwurf zur NWS-Fortschreibung, S. 21.
[17] Beachte dazu auch Abs. 3 § 39p EEG.
[18] Siehe die Berichterstattung in Tagesspiegel Background Klima & Energie, „Kraftwerksstrategie verspätet sich“, 06.07.23, unter: https://background.tagesspiegel.de/energie-klima/kraftwerksstrategie-verspaetet-sich.
The author: Benita Stalmann has worked for cruh21 since its inception. Before that, she was part of the AquaVentus coordination office, from which cruh21 emerged. A graduate in history and political science, she has worked for the Federal Association of Offshore Wind Farm Operators (BWO), among others. She is also part of the Coordination and Communication Office of the TransHyDE hydrogen lead project funded by the BMBF and plays a key role in shaping external political communication there.
