The results of the first bidding round for the import of green hydrogen under the H2Global programme are now available: between 2027 and 2033, at least 259 thousand tonnes of green ammonia will be exported to Germany. In total, this is more than ten percent of Germany’s annual production of ammonia. The production costs are EUR 811 per tonne of ammonia, i.e. costs of less than EUR 4.50 per kg of green hydrogen.

When compared to current estimates and other initial auction results, it is clear that these are lower costs for green hydrogen derivatives. In addition, unlike other auctions, the prices under H2Global are based on binding purchase contracts. It is vital for the ramp-up of the hydrogen market that binding prices for green hydrogen are communicated in a transparent manner, as this creates price security. It further facilitates investment decisions to set up the production of green hydrogen as well as investment decisions on the buyers’ side to use green hydrogen or its derivatives.

Federal Minister for Economic Affairs and Climate Action, Robert Habeck, said: “The conclusion of the first purchase agreements for green hydrogen products is an important step towards transforming Germany as an industrial base, achieving our climate targets and safeguarding sustainable jobs in our country. The import of green hydrogen products significantly advances the ramp-up of the hydrogen market in Germany. German industry needs large quantities of green hydrogen and its derivatives for the decarbonisation of the economy, which requires imports from within and outside of Europe as well as domestic hydrogen production. The availability of affordable green energy, now also in the form of hydrogen, will continue to be an important factor for safeguarding our industry’s future. The successful auction within the scope of H2Global is the first step in this direction, and further steps will follow soon.”

The H2Global programme makes an important contribution to global climate action. The contract in the first bidding window for ammonia has been awarded to the company Fertiglobe, which is based in the United Arab Emirates. The green ammonia to be imported under H2Global will be produced in Egypt. To this end, 273 megawatts of renewable energy production capacity are being installed in Egypt. This will bring annual energy savings of 93 thousand tonnes of carbon emissions.

Background:

In December 2021, the Federal Ministry for Economic Affairs and Climate Action approved up to EUR 900 million in the form of a “Zuwendungsbescheid” (funding approval decision) for a first call for bids under the H2Global funding instrument. The programme works by buying green hydrogen products at a low price on the global market and selling them to the highest bidder in Germany or the EU. The cost of difference between the (expected higher) purchase price and the (lower) sales price are offset by the funding assistance provided under H2Global (Contracts for Difference Approach, CfD).

Long-term purchase agreements provide investment security for hydrogen exporters and give buyers access to green derivatives. To enable this, HINTCO, a subsidiary of the H2Global Foundation, acts as a trader and purchases hydrogen derivatives through a market-based bidding process for a 10-year period at the lowest available price. The large-volume purchase contracts stimulate investment in renewable energy and in the production of hydrogen-based ammonia and methanol. In the first round, production must take place outside the EU and EFTA states – as a third pillar alongside domestic production and hydrogen imports from European countries.

The Federal Ministry for Economic Affairs and Climate Action is working on another round of imports worth EUR 3.5 billion. This builds on the experience gained from the results published here. Part of the second funding window is a joint import of green hydrogen products to the tune of EUR 600 million, which will be financed together with the Netherlands.