Hydrogen Roadmap Bavaria
Perspectives and recommended actions for the ramp-up of the Bavarian hydrogen economy
Bavaria has set itself the ambitious goal of being climate-neutral by 2040. In doing so, the Free State is pursuing a more ambitious path than the federal government or the European Union. Evidently, this goal cannot be achieved without the use of hydrogen throughout all sectors. Transitioning to a hydrogen economy involves considerable efforts and must begin immediately due to the sometimes rather lengthy planning and investment cycles.
That means: The right Bavarian course must be set promptly on the one hand, to achieve the climate goals that the State has set for itself and, on the other hand, to take advantage of the economic opportunities presented by the upcoming transformation. The Bavarian Hydrogen Roadmap is intended to highlight perspectives and concrete needs for action and to help accelerate the ramp-up of the Bavarian hydrogen economy.
The strategy process – from the Position Paper to the Hydrogen Roadmap Bavaria
With the publication of the Position Paper of the Hydrogen Alliance Bavaria on the Bavarian hydrogen economy and the Bavarian Hydrogen Strategy in May 2020, an initial perspective for the development and design of a Bavarian hydrogen economy was outlined. The Hydrogen Roadmap Bavaria is intended to pick up on these impulses and to draw both a current and a future picture of Bavaria as a business and science location regarding hydrogen. Furthermore, an estimation of the possible Bavarian hydrogen consumption will be made and – derived from this – important milestones for the rollout of hydrogen technologies will be outlined.
The Position Paper of the Hydrogen Alliance Bavaria on the Bavarian hydrogen economy was a first step on the way to the development of the Bavarian hydrogen strategy, which was published at the same time as the Position Paper. The development of the Position Paper took place in an extensive consultation process with the partners represented in the Hydrogen Alliance Bavaria, coordinated by H2.B.
With the Bavarian Hydrogen Strategy, the Free State of Bavaria wants to bring innovative hydrogen technologies into application quickly. Building on what has already been achieved, the Bavarian Hydrogen Strategy defines clear goals and concrete measures to position Bavaria at the forefront of global competition for the best technological solutions.
April 2022: Hydrogen Roadmap Bavaria
The Hydrogen Roadmap Bavaria was developed from 2021 to 2022 under the leadership of H2.B and with the involvement of the Hydrogen Alliance Bavaria along with other German hydrogen stakeholders. The roadmap is intended to identify perspectives and concrete needs for action and to help accelerate the ramp-up of the Bavarian hydrogen economy.
Brief summary
Hydrogen consumption
Hydrogen demand is expected to increase faster in Bavaria than in other German states due to the ambitious climate targets. The sectors with the greatest demand will be both the mobility and conversion sectors, which include the petrochemical industry (refineries) on the one hand and (central) power and heat generation on the other. However, a significant increase in hydrogen demand is also expected in the heat and industrial sectors. In the industrial sector, hydrogen and its derivatives, such as methane, are mainly used to provide process heat. The use of hydrogen as a raw material, for example in the production of green steel or green basic chemicals such as methanol or ammonia, currently plays a rather small role in Bavaria. Cumulatively, the demand for hydrogen and synthetic energy sources will increase to 33 to 75 TWh by 2040. By 2030, consumption will double from about 5 TWh today to about 10 TWh.
Hydrogen production
The capacities for the production of green hydrogen via electrolysis are rather low due to the low potential of renewable energies in Bavaria. In order to meet the rapidly growing demand for hydrogen, Bavaria will have to rely on imports of hydrogen and hydrogen derivatives in the long term. The significantly more ambitious expansion targets for renewable energies formulated by the new German government in the coalition agreement will also open up new opportunities for the production of green hydrogen in Bavaria. By 2030, at least 1 GW of electrolysis capacity must be installed in Bavaria (2025: 300 MW) to meet the assumed additional hydrogen demand. Especially in the decentralized hydrogen supply, the use of hydrogen from organic residues can also make a decisive contribution. At the same time, it should also be evaluated to what extent blue or turquoise hydrogen can play a role in the ramp-up of the hydrogen economy in a transition phase. In addition to hydrogen production in the Free State itself, Bavaria’s connection to the European hydrogen backbone must be accelerated in order to ensure a base-load-capable supply for the most important consumers from 2030.
Business location
The transformation of global economies towards climate neutrality is associated with great opportunities for the export-oriented Bavarian economy. There are already numerous Bavarian companies that are active in the broad field of hydrogen. Other companies have recognized the transformation of the economy that is already beginning and are looking for ways to contribute their existing know-how to sustainable, future-proof markets. The hydrogen economy offers excellent starting points, e.g. for the industrial sectors of (special) mechanical engineering, energy, process and electrical engineering as well as mobility applications, which are very important in the Free State. These industries, of potential relevance for hydrogen technologies, employ well over 40 percent of Bavaria’s manufacturing workforce – equivalent to about nine percent of the total workforce in Bavaria.
Science location
Bavaria’s universities and colleges are among the most innovative in Europe and rank among the global leaders in many areas of research. This outstanding expertise also extends to the very broad field of hydrogen research. Bavaria is particularly well positioned in the field of electrolysis technology and (chemical) hydrogen storage and conversion. This good position should be further strengthened and expanded.
Regulatory framework
The market entry of many hydrogen technologies fails not because of a lack of technological maturity, but because of an unfavorable regulatory framework. For climate-friendly hydrogen to become competitive in a timely manner, the regulatory framework must be adjusted. This includes, for example, making the production of climate-friendly hydrogen cheaper (e.g., by reducing the state-induced components of the electricity price), making climate-damaging behavior more expensive (e.g., through an appropriate CO2 price), and partially offsetting the initially expected differential costs between climate-friendly and climate-damaging technology (e.g., contracts for difference). The room for maneuver for Bavaria in this regard is very small. Nevertheless, the Free State can and will play a constructive role in political decision-making processes at the federal and EU level.
Demonstration projects
Demonstration projects are excellent instruments for introducing hydrogen technologies, which are not economically viable under the current regulatory framework, and at the same time developing them further. Bavaria should continue to invest in the research and development of hydrogen technologies and also position and support Bavarian players in the best possible way in the competition for national and European funding. The targeted support of individual demonstration projects enables regional spill-over effects and can help to further establish hydrogen technologies in Bavaria as well.
Hydrogen consumption
Hydrogen demand is expected to increase faster in Bavaria than in other German states due to the ambitious climate targets. The sectors with the greatest demand will be both the mobility and conversion sectors, which include the petrochemical industry (refineries) on the one hand and (central) power and heat generation on the other. However, a significant increase in hydrogen demand is also expected in the heat and industrial sectors. In the industrial sector, hydrogen and its derivatives, such as methane, are mainly used to provide process heat. The use of hydrogen as a raw material, for example in the production of green steel or green basic chemicals such as methanol or ammonia, currently plays a rather small role in Bavaria. Cumulatively, the demand for hydrogen and synthetic energy sources will increase to 33 to 75 TWh by 2040. By 2030, consumption will double from about 5 TWh today to about 10 TWh.
Hydrogen production
The capacities for the production of green hydrogen via electrolysis are rather low due to the low potential of renewable energies in Bavaria. In order to meet the rapidly growing demand for hydrogen, Bavaria will have to rely on imports of hydrogen and hydrogen derivatives in the long term. The significantly more ambitious expansion targets for renewable energies formulated by the new German government in the coalition agreement will also open up new opportunities for the production of green hydrogen in Bavaria. By 2030, at least 1 GW of electrolysis capacity must be installed in Bavaria (2025: 300 MW) to meet the assumed additional hydrogen demand. Especially in the decentralized hydrogen supply, the use of hydrogen from organic residues can also make a decisive contribution. At the same time, it should also be evaluated to what extent blue or turquoise hydrogen can play a role in the ramp-up of the hydrogen economy in a transition phase. In addition to hydrogen production in the Free State itself, Bavaria’s connection to the European hydrogen backbone must be accelerated in order to ensure a base-load-capable supply for the most important consumers from 2030.
Business location
The transformation of global economies towards climate neutrality is associated with great opportunities for the export-oriented Bavarian economy. There are already numerous Bavarian companies that are active in the broad field of hydrogen. Other companies have recognized the transformation of the economy that is already beginning and are looking for ways to contribute their existing know-how to sustainable, future-proof markets. The hydrogen economy offers excellent starting points, e.g. for the industrial sectors of (special) mechanical engineering, energy, process and electrical engineering as well as mobility applications, which are very important in the Free State. These industries, of potential relevance for hydrogen technologies, employ well over 40 percent of Bavaria’s manufacturing workforce – equivalent to about nine percent of the total workforce in Bavaria.
Science location
Bavaria’s universities and colleges are among the most innovative in Europe and rank among the global leaders in many areas of research. This outstanding expertise also extends to the very broad field of hydrogen research. Bavaria is particularly well positioned in the field of electrolysis technology and (chemical) hydrogen storage and conversion. This good position should be further strengthened and expanded.
Regulatory framework
The market entry of many hydrogen technologies fails not because of a lack of technological maturity, but because of an unfavorable regulatory framework. For climate-friendly hydrogen to become competitive in a timely manner, the regulatory framework must be adjusted. This includes, for example, making the production of climate-friendly hydrogen cheaper (e.g., by reducing the state-induced components of the electricity price), making climate-damaging behavior more expensive (e.g., through an appropriate CO2 price), and partially offsetting the initially expected differential costs between climate-friendly and climate-damaging technology (e.g., contracts for difference). The room for maneuver for Bavaria in this regard is very small. Nevertheless, the Free State can and will play a constructive role in political decision-making processes at the federal and EU level.
Demonstration projects
Demonstration projects are excellent instruments for introducing hydrogen technologies, which are not economically viable under the current regulatory framework, and at the same time developing them further. Bavaria should continue to invest in the research and development of hydrogen technologies and also position and support Bavarian players in the best possible way in the competition for national and European funding. The targeted support of individual demonstration projects enables regional spill-over effects and can help to further establish hydrogen technologies in Bavaria as well.
