Feed-in Tariff for Hydrogen?

Recently legislation to further slow down renewable energy in Germany passed Parliament on July 8th (link to the debate in the Bundestag, link to the debate in the Bundesrat).

One of the motives of supporters of the transition to a much slower development of renewable energy seems to be that they are worried about the ability of the grid to cope with rising production. This is most easily understood with offshore wind. If you don’t have a power line in place for your offshore project, it doesn’t seem to make any sense to build wind resources.

One thing to do to solve that problem is to build the necessary reinforcements for the grid infrastructure. But that is not the only alternative.

Even if the grid becomes much stronger, in a future with 100 percent renewable energy (not only electricity, all energy), there will always be time slots where demand can’t keep up with supply.

If you don’t want to turn off the generating capacity in such time slots, the only alternative is to store the energy. The way to do that at scale is power to gas. Make some hydrogen with the excess energy supply and then use that hydrogen as fuel later on.

The first German wind farm with the capacity to do exactly that already opened in October of 2011. I blogged about the opening ceremony at the time.

In the five years since then, power to gas projects have multiplied. The map below (source: dena, Power to Gas system solution, 2015, page 16) shows power to gas projects in Germany. Quite a lot of projects are already operating.


On the other hand, there is clearly still a lot of road ahead until these systems operate at scale.

So I was wondering if there was any way to use a feed-in tariff system to boost the power to gas sector, just as a feed-in tariff system has successfully brought solar to scale up quickly.

One possible approach would be to add power to gas capacity to all offshore projects. Then pay a feed-in tariff out of the normal account for the hydrogen at whatever price is necessary to make operating the whole system profitable. That way, the offshore project can start producing energy in 2021 and get connected to the grid a couple of years later.

Once the grid connection is built, having the power to gas capacity will work to lower costs by enabling the system to sell whenever the market price is highest, as opposed to hoping that people want to consume electricity when the wind happens to blow. This will also add stability to supply and help with getting cars and trucks run on renewable energy.

Anyway, the German policy of slowing down renewable is misguided. If the grid infrastructure has problems keeping up, the answer should be to invest massively in power to gas projects. These will be necessary anyway at higher renewable energy market shares.


Published by kflenz

Professor at Aoyama Gakuin University, Tokyo. Author of Lenz Blog (since 2003, lenzblog.com).

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