Germany Bets Big On One Energy Hub To Reduce Reliance On Russian Gas

By Robert Rapier of OilPrice.com

The ongoing conflict in Ukraine and the subsequent sanctions against Russia have highlighted Europe’s vulnerability when it comes to energy security. At present, the EU receives around 40% of its gas, 46% of its coal, and 30% of its oil from Russia — and has no easy substitutes if supplies are disrupted. I asked Otto Waterlander, Chief Commercial Officer at TES, how green hydrogen and green gas can both support European energy security in the face of the sanctions on Russia, while also taking a lead to support the EU meet its climate change obligations.

TES is a green hydrogen company that will accelerate the energy transition through its ambitious plans to develop a green hydrogen hub at Wilhelmshaven in Northern Germany. Through this complex, it will supply green hydrogen and green gas to the mobility, industrial and power sectors.

Let’s start with your plans for the clean energy hub at The Wilhelmshaven. What does this entail?

“Our ambition is to build the Wilhelmshaven location into a hub for international hydrogen trading and create the infrastructure accordingly.

The original plan was that by 2045 TES would supply 100% green hydrogen. Clean hydrogen will be utilized as a bridging fuel in the early years. By 2030 there will likely be a 50:50 split between clean and green hydrogen. In the initial phase, 25 terawatt-hours (TWh) per year of green methane, from which more than half a million metric tons of hydrogen can be produced, will be imported into Wilhelmshaven. That will increase to 250 TWh per year and more than five million metric tons of hydrogen in a final stage. The green hydrogen will be produced using exclusively renewable sources, mainly solar and in several cases, wind and/or hydroelectricity.”

In the current volatile situation, I understand that you have brought forward the timelines for the project to help address the security crisis in Europe.

“The TES-Wilhelmshaven project is unique in its ability to achieve Germany’s and Europe’s plans to decarbonize in a sustainable way at an industrial scale whilst carefully and prudently navigating the current energy crisis. By fast tracking this project, it will help provide energy security for Germany and the rest of Europe by accelerating the growth of green gas imports.

Because of the design and scale of the project, it has the potential to replace the Nordstream 1 or 2 pipeline in terms of energy supply. With green hydrogen at its core, the Wilhelmshaven green gas terminal is sustainable, carbon-neutral, and transitional, meeting the German Government’s short-term and long-term energy requirements.   

Given the current situation and immediate crisis of gas supply, this development is now being fast tracked, so that in addition to the green gas envisaged, the location could also accommodate liquefied natural gas (LNG) as an intermediate emergency source of energy supply in large volumes and by as soon as winter 2022/23.”

The EU has many ambitious decarbonization strategies such as Fit For 55 and EU Green Deal. Do they need green gas energy sources such as hydrogen to meet these aims?

“As Europe strives to meet its decarbonization obligations, its energy demand — especially in the industrial and mobility sectors — cannot be met through locally produced renewable energy such as wind, solar or biomass alone. Therefore, imported green gas and hydrogen are a necessity.

In 2020, renewable energy sources made up 37.5% of gross electricity consumption in the EU, up from 34.1% in 2019. Wind and hydro power accounted for more than two-thirds of the total electricity generated from renewable sources (36% and 33%, respectively). The phase-out from coal, natural gas, and nuclear has already started. Aside from the environmental impact of using these fuels, there are also harmful effects from mining and the unsolved storage issue for radioactive waste.

The Hydrogen Council estimates that hydrogen can address 18% of global energy demand and abate one-fifth of carbon emissions. But it will come at a significant economic cost. The council says that scaling up the hydrogen economy will require between $20 billion and $25 billion each year through 2030.

In June 2020, Germany presented its national hydrogen strategy (NHS). It was one of the first countries worldwide to do so, even publishing before the EU. Only a month later, the German Federal Network Agency issued a paper on the regulation of hydrogen grids. Just over a year ago, the new Renewable Energies Sources Act (EEG 2021) entered into force in Germany, which for the first time contained specific provisions to support the production and industrial usage of green hydrogen.

Early in March the European Commission unveiled proposals to further boost renewables and quadruple current 2030 targets for green hydrogen supplies from 5.6 million metric tons to 20.6 million metric tons. This is part of a hastily assembled strategy to cut the EU’s reliance on Russian gas by two-thirds as soon as the end of this year.”

Why is the green hydrogen not produced in Germany or Europe?

“Producing green hydrogen needs renewable energy, which Germany and the wider European zone do not have an abundance of. Therefore, the only sensible option is to produce the feedstock in a location that has abundant and spare renewable energy resources. We intend to set up production sites in countries with abundant renewable energy sources, to ensure diversification of supply and is targeting its first projects in the stable Middle East Gulf region.

For the Wilhelmshaven project, hydrogen will be produced in the Middle East, and we are targeting the development of electrolysis projects at a scale of 1-2 gigawatts (GW) or larger. In the project’s first phase, about 25 TWh of green gas will be imported into our terminal in Germany to produce about half a million metric tons of hydrogen. When all phases are complete 250 TWh green energy corresponding to more than five million metric tons of hydrogen will be made available annually through Wilhelmshaven.”

There are many hues of hydrogen with differing environmental footprints. Will all the hydrogen used in the project be green hydrogen?

The capacity to produce green hydrogen will steadily be increased. If demand is higher than supply, some clean hydrogen will be used as a bridging energy source. However, the aim is that the plant will operate an exclusively green hydrogen cycle as fast as possible. This approach will enable TES to move forward quickly and significantly reduce emissions. In parallel, the industrial and mobility value chains can immediately start upgrading in preparation for the use of clean and green hydrogen.

Can you explain the TES business model which is anchored on the carbon circular economy concept where CO2 is never emitted but systematically recycled?

There are three paths for using green gas: combustion in compatible power plants with carbon capture, direct use in industrial clusters, or mobility. To drive the energy transition and reduce CO2 emission, the energy system will be a closed loop with all CO2 captured and returned into the supply chain or sequestered.

To transform green hydrogen into green methane, we use CO2 captured in European industrial processes. This CO2 is never emitted and serves as a transportation carrier for green hydrogen. This principle also extends to TES – we aim to recycle the CO2 from our downstream operations, plus the CO2 returned from green methane customers.