German industry is ready to use green hydrogen produced with green electricity, for example in the steel and chemical industries.

But not at any price.

The corporations need reliability in tariffs and availability.

Investment security is also expected by companies that produce or plan to produce green hydrogen and related products.

Christian Geinitz

Business correspondent in Berlin

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This requires large amounts of renewable energies, which is why hopes are pinned on windy and sunny regions of the world, such as Australia, Latin America or North Africa.

Germany itself does not have the right weather and does not have enough land to generate the green electricity needed for the electrification of transport, heat and industry.

This is especially true if (Russian) natural gas is to be replaced by climate-friendly hydrogen (H2).

Funding program worth millions

To ensure that purchasing abroad is successful, that the banks play along and that investments pay off, but that prices do not get out of hand, the federal government launched a new funding program called H2-Global last year as part of its national hydrogen strategy.

After the European Commission had given the go-ahead, Federal Economics Minister Robert Habeck (Greens) issued a lavish grant of 900 million euros on December 23.

The money for this Christmas present for climate protection comes from the Corona economic stimulus.

The Hamburg H2 Global Foundation coordinates the funding programme: The non-profit foundation under civil law was founded in June 2021 and is supported by more than thirty industrial donors such as Siemens Energy, Uniper, RWE, Nordex, Thyssenkrupp, Linde, VNG, Deutsche Bank and Hamburger Port and Salzgitter AG.

By the end of the year there should be at least 50 groups, which should also include international companies.

The foundation is the sole shareholder of a company called Hint Co GmbH.

The abbreviation stands for Hydrogen Intermediary Network.

In the industry, it is briefly referred to as an "intermediary".

This special-purpose company appears on the market with an excellent credit rating, as it is backed by the federal government's financing guarantee.

Through auctions, Hint Co is looking for consortia made up of producers, operators, transport companies, plant manufacturers and other players who want to deliver hydrogen or derivatives (Power-to-X) to Germany;

The latter can be green fuels (e-fuels), for example.

In these auctions, the cheapest supplier is awarded the contract for long-term deliveries to Germany with Hydrogen Purchase Agreements (HPA).

Placing the order includes delivery, mostly to a port.

Domestically, Hint Co is also planning auctions among those companies that want to buy such green products.

Short-term contracts with Hydrogene Service Agreements (HSA) are concluded with the winner.

Although the highest HSA bid is accepted, it is already clear that the market prices that can be achieved will be well below the purchase prices.

The extraction of organic products is still much more expensive than that of the fossil alternatives.

Bidding process will start soon

This is where the state comes into play, which compensates for the difference with its subsidies.

That is why one also speaks of contracts for difference.

For the taxpayer, they are initially a subsidy business.

Over time, however, the construct can become less loss-making or, in the best case, even profitable, for example if the short-term market price rises noticeably with delivery tariffs remaining constant over the long term.