Hydrogen storages enable the decoupling of energy demand and supply and therefore play a central role in a secure energy supply based on renewable energies.

However, there are currently considerable barriers to investment in hydrogen storages in Germany. A comparison of the planned hydrogen storage capacities with the forecast demand shows a significant gap in the near future that urgently needs to be closed. 

In our new study commissioned by the German Association of Energy and Water Industries (‘BDEW’), we analyse the effectiveness of various instruments for incentivising investments in hydrogen storage and recommend a specific financing mechanism. This mechanism consists of revenue-based contracts for difference (CfDs) with an intertemporal financing via a levy. The mechanisms is characterised by four core properties: 

• A sovereign demand planning and a competitive allocation of the financing mechanism to selected hydrogen storage projects; 

• Support of the selected hydrogen storage projects through revenue-based CfDs; 

• Financing with the help of a hydrogen storage levy based on an intertemporal balancing account (equivalent to the amortisation account for the financing of the hydrogen core network in Germany); and 

• A hydrogen storage-specific fee structure that is compatible with the upcoming EU regulation. 

The proposed financing mechanism thus combines the characteristics of revenue-based CfDs with the characteristics of the amortisation account (known from the financing of the hydrogen core network in Germany) and combines the strengths of both approaches. Our study shows that the recommended mechanism is suitable for closing the existing gap between hydrogen storage demand and supply and for driving forward the expansion of hydrogen storage infrastructure in a targeted manner. 

Click here to read Finanzierungsmechanismus für den Aufbau von Wasserstoffspeichern – Study (German)

Click here to read Finanzierungsmechanismus für den Aufbau von Wasserstoffspeichern – Presentation (German)