Hydrogen’s role needs to be clarified in Germany’s future energy system and positive support could spur final investment decisions (FIDs) and tackle climate targets, according to a new International Energy Agency (IEA) report.
Currently FIDs are happening too slowly due to concerns about sufficient supply at affordable prices, while domestic production projects in Germany are failing to materialise as they lack strong commitment from offtakers, the report states.
The German government’s previously planned Power Plant Strategy attempted to address this issue by tendering 12.5 GW of new natural gas-fired power plant capacity that could later run on hydrogen. The new coalition government aims to be in place by Easter.
“In this way, the construction of new hydrogen-ready gas-fired capacity could avoid a fossil fuel lock-in that is not at odds with the electricity generation target, as long as the fuel switch takes place on time,” the report notes.
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