03 Dec 2020, 13:48
Kerstine Appunn

Germany paves way for electrolyser ramp-up by scrapping renewables fee on hydrogen production

Clean Energy Wire

The German government has decided to free producers of green hydrogen from paying the renewables levy on the electricity they use in the process. Chancellor Angela Merkel’s cabinet agreed that hydrogen producers as electricity intensive industries can be partially exempt from paying the levy. If they are using renewable energy to generate green hydrogen, they can be made fully exempt, the draft law seen by Clean Energy Wire states.

As Germany pursues the aim of becoming a global market leader in hydrogen production and infrastructure, scrapping hurdles such as the renewables levy on power falls in line with its national hydrogen strategy. The strategy also states that Germany wants to focus largely on green hydrogen. Therefore, only companies producing hydrogen with renewable electricity sources and who make sure that their facilities and product contribute to grid stability and the overall sustainable development of the energy supply, are fully exempt from the levy. However, these green hydrogen producers have to use renewable power installations that have not been subsidised via the Renewable Energy Act (EEG), for example those getting renewable electricity under a power purchase agreement (PPA). The renewables levy will amount to 6.5 cents per kilowatt-hour in 2021.

The government estimates that up to 290 hydrogen projects will apply for the partial or complete exemption by 2030. By that time, the market ramp-up phase for hydrogen will be completed and a full exemption from the EEG levy will no longer be necessary, the government reasons. The new rules are part of an ongoing reform of the EEG that is scheduled to enter into effect by 2021 but for which the vote in parliament and the chamber of states (Bundesrat) is still pending.

Industry association BDI said the exemption of hydrogen production from the levy was creating legal certainty for companies and would therefore be “an important first building block for a successful hydrogen market ramp-up in Germany.”

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