Graphic of a yellow container-like hydrogen electrolysis platform on high stilts in the North Sea
Jakob Martens / Förderverein AquaVentus

Hydrogen: Serving the system

The market for green hydrogen is set to grow. To produce this energy source in power grids, electrolyzers are required. In order to integrate them efficiently and effectively into the energy system, however, their connection to the balancing power market needs to be made more economically attractive for operators.

By Katja Dombrowski


Editor-in-Chief VDE dialog
Graphic of a planned hydrogen port in the North Sea. Several ships are moored at the pontoon, one ship leaves the harbor
Jakob Martens / Förderverein AquaVentus

Green hydrogen is expected to play a key role in the climate-neutral power system of the future – especially in areas that are difficult or impossible to electrify, such as the steel and chemical industries or aviation and shipping. That said, it’s also viewed as a potential fuel for gas power plants or low-CO2 power generation, or as a way to store power from renewable sources that is not needed immediately. Green hydrogen is not produced on an industrial scale yet. Doing so will require the rapid development of a hydrogen economy, including the necessary infrastructure. This is an idea policy-makers can get behind: according to its coalition agreement, the new federal government aims to make Germany the “leading market for hydrogen technologies” by 2030 by developing an “ambitious update” of the National Hydrogen Strategy that was passed in 2020. Numerous funding programs are already available. The issue is also being promoted at the European level, with the EU Commission having passed its own hydrogen strategy in 2020. In December 2021, it presented a set of regulations to help ramp up the hydrogen market in an institutional and legal context. The plans include setting up a European network of hydrogen network operators to coordinate the cross-border development of infrastructure and technical regulations. “We want to make Europe the pioneer in this area and enable it to define the world’s first market regulations for this important source of power and storage potential,” explained EU Energy Commissioner Kadri Simson.

Hydrogen to decarbonize Heligoland

To facilitate a quick market ramp-up in Germany, the coalition government aims, among other things, to increase electrolyzer output for the production of hydrogen from green power to 10 gigawatts (GW) by 2030 – twice as much as planned in the original hydrogen strategy. To make this happen, the government plans to expand the use of offshore wind power in particular. Electrolyzers connected to major wind parks at sea could produce hydrogen directly on site for subsequent transport by pipeline to the mainland. The largest project of this type is being run by the AquaVentus initiative, which includes over 90 companies, research institutes and organizations. It intends to build an offshore wind power installation capable of generating 10 GW for green hydrogen – along with the infrastructure to transport it to land – in the German North Sea, in areas close to Dogger Bank. According to the plans, the project could produce a million tons of green hydrogen per year. That’s still in the distant future, however; the first prototype is to be built in the port of Mukran on the island of Rügen starting in 2023. “Here, we’ll be testing the operation of an integrated electrolysis-desalination system on an offshore monopile platform under the harsh climatic conditions of a coastal environment for the first time,” explains Jörg Singer, the mayor of Heligoland and chairperson of AquaVentus. This undertaking is also part of the flagship hydrogen project TransHyDE, which is supported by the German Federal Ministry of Education and Research.

Starting in 2025, two pilot systems are to be installed in the sea off Heligoland to produce green hydrogen in a one-year trial before changing over to commercial operation. “This hydrogen will be used to support the decarbonization of Heligoland; we’ll then be able to switch to LOHC waste heat for our heating,” Singer explains. This heat is a byproduct of storing hydrogen in a liquid organic hydrogen carrier (LOHC) by means of a chemical reaction. This is planned on Heligoland so that the product can be used, for example, as CO2-free fuel for ships. AquaVentus aims to achieve the full capacity of 10 GW by 2035 – and then to feed the hydrogen into a corresponding grid on land. “We anticipate that such a network will be built by 2030,” Singer says. The customers have not yet been identified, but he has no doubt that there will be a market for the hydrogen from AquaVentus: “The demand for green hydrogen in Germany and Europe will be many times greater than the volume we can produce.”

More attractive than the fossil competition

As electrolysis is still extremely expensive, it will depend initially on state funding – just like the technologies for generating wind and solar power did at their outset. The various sub-projects being run by AquaVentus are also only feasible because they are being subsidized. Singer is convinced that the profitability will improve in the course of decarbonization. “An increasing CO2 price makes climate-neutral energy sources more attractive, and at some point, fossil products will no longer be able to compete,” he predicts.

Low returns, many restrictions

According to Andrea Appel, a VDE project manager in hydrogen development, new power generation plants that exclusively support the production of hydrogen – as planned by AquaVentus – are not the only solution. “The demand for green power is increasing rapidly, and we already have a problem in terms of the required surface area,” she points out. “It’s debatable whether we can afford exclusive hydrogen wind parks on a large scale.” In addition, she explains that flexible storage units that stabilize the power grid and compensate for fluctuations would be necessary for the required conversion of the power system. “We could use electrolyzers for that,” Appel explains. After all, they can be started up or shut down within seconds.

In practical terms, it works like this: the operator receives money – an output price – for providing positive or negative balancing power. There is also a working price when the power is consumed. In Haßfurt, Bavaria, the local public services and Green Planet Energy (formerly Greenpeace Energy) have chosen this model. They have been operating an electrolyzer together since 2016. “The system can provide positive and negative balancing power if we increase or reduce the output as required,” explains Markus Eichhorn, a technical manager with Haßfurt’s public services. For a time, the electrolyzer was integrated into the virtual power plant of the service provider Next Kraftwerke, which claims to have the largest power plant of this kind in Europe. It took over the control of the system and managed the sale of balancing power. However: “The returns were too low and the operational restrictions were too strict,” Eichhorn reveals.

The electrolyzer, which has a capacity of 1.25 MW, now runs exclusively on superfluous wind and solar power from the distribution network of the city’s public services. The majority of the hydrogen produced is fed into the natural gas grid as an admixture and financed by Green Planet Energy via a product it calls “wind gas”. The customers pay a support contribution of 0.40 cents per kilowatt-hour, part of which goes to the public services in Haßfurt. In addition, the latter have been using a small proportion of the hydrogen to operate a combined heat and power plant since 2019. The power generated there (in addition to the main product, heat) is fed into the distribution network. “In this way, the electrolyzer runs economically,” Eichhorn says.

The balancing power market: a small operational component

Right now, Next Kraftwerke claims to have five electrolyzers in its virtual power plant in Germany, and five more in other European countries. However, the company did not want to publicly disclose how many of them provide balancing power output. Its spokesperson, Jan Aengenvoort, explains that he also can’t say in generalized terms whether this is economically viable for the operators. “The prices fluctuate enormously, and they also vary considerably depending on the product,” he reports. This is an experience shared by the public services in Mainz, which sell their own electrolysis output. For them, the balancing power market is just a small component of their operation. “With just that on its own, we couldn’t operate the systems economically,” says Jonas Aichinger, the public services’ head of innovation management. “The output price is rock-bottom.” The three electrolysis systems in Mainz, which achieve a constant load of 4 MW and a peak load of 6 MW, are integrated into the distribution network and run in particular when the neighboring wind park is generating a high level of power. “In balance sheet terms, we purchase conventional electricity, and that’s particularly cheap when there’s a great deal of wind power in the grid,” Aichinger explains. In this way, the electrolyzers make negative balancing power available to the transfer network, but only to “fill in the gaps”.

The hydrogen produced is brought to market in a manner similar to the process in Haßfurt. Part of it is fed into the local natural gas grid and paid for by Green Planet Energy, and another portion is transported by truck to industrial customers in the region and a number of hydrogen gas stations. “The demand for green hydrogen is not very high yet,” Aichinger admits. “But we’re convinced that it will rise.” This is also the hope of a cooperation of several stakeholders in the Moorburg district of Hamburg. They are planning to assemble a much larger electrolyzer on the site of a coal power plant that was shut down in 2021. Its operator, Vattenfall, plans to work with Shell, Mitsubishi Heavy Industries and the municipal company Wärme Hamburg to build a 100-MW plant that will still be scalable. When exactly it will be put into operation depends on how long the demolition of the coal power plant takes; the scheduled date is around 2025. The financing is also not yet secured. The project partners have applied for funding from the EU program “Important Projects of Common European Interest” (IPCEI). “This startup support is crucial to making sure that the project can be implemented,” says Lutz Wiese, press spokesperson at Vattenfall. He expects the official decision to be made in the middle of this year.

The power for operating the mega-electrolyzer is to be obtained from wind and solar plants in the region, and the future operators believe that potential customers for their green hydrogen will also come from the vicinity of the site. According to the plans, the emerging “Green Energy Hub” will also include the necessary logistics chains and storage possibilities for hydrogen. Although marketing the system’s flexibility in the form of balancing power is fundamentally conceivable according to Wiese, “Running the electrolyzer in a manner that suits the network could actually restrict production.” He points out that, because the potential customers rely on the supply of hydrogen, integration into the transfer network would only be possible as long as the demand can be satisfied. “I don’t see that happening,” Wiese states in summary. “If you also want to use hydrogen as a form of long-term storage in our power system, it’s important to remunerate this function so that the systems can be operated profitably,” emphasizes VDE expert Andrea Appel.

Standards and norms still lacking

The higher the proportion of power from fluctuating renewable energies is in the grid, the more intelligent management and flexibility will be required. “For that purpose, it’s necessary to comply with minimum requirements in a uniform manner, and for that we’re going to need standards and norms,” says Appel. Along with a series of national and international stakeholders, the VDE-supported German Commission for Electrical, Electronic & Information Technologies of DIN and VDE (DKE) is dedicated to identifying any loopholes in the standards in order to close them. According to Andrea Appel, this is a comprehensive task: “In terms of the production, integration and use of hydrogen, we’re still far from having adequate standards and norms for all the different aspects.”


is a freelance journalist in Friedberg (Hesse). She specializes in climate protection, sustainability and renewable energies.