Germany’s KfW to Provide $25 Billion Loan for Hydrogen Network
KfW will provide a 24 billion euro ($25 billion) loan to help develop a future hydrogen network in Germany, the state lender told Reuters, at a time when companies have warned that the technology will take longer than expected to take off.
Germany is betting on hydrogen, which can be used in part to replace natural gas, as it seeks to decarbonise the economy and find ways to absorb intermittent renewable supplies into the power grid.
A core 9,040-kilometer network for hydrogen, to be built by 2032, is an essential part of the planned shift to the fuel.
While existing natural gas pipelines will make up 60% of the network — connecting ports, industry, storage facilities and power plants — their operators and owners will still have to shoulder billions of euros in investments to either retrofit lines for hydrogen or build new ones.
In order to keep user fees for the network at an acceptable level, KfW will compensate operators via a so-called amortization account, with plans to have the costs paid back by 2055, KfW said.
As revenue from network fees increase in the future, surplus income will be redirected to the amortization account, facilitating gradual repayment of the loan, KfW added.
If the amortization account is not balanced by the planned end of the hydrogen ramp-up in 2055, the federal government will assume 76% of the risk with the remaining 24% to be borne by the core network operators.
KfW’s announcement comes amid growing scepticism among German companies about whether Berlin’s plans to rely more heavily on hydrogen to cut emissions are realistic and affordable.
In September, Norway’s Equinor scrapped plans to export hydrogen to Germany, citing high costs and insufficient demand.
Earlier in November 2024, German state-owned utility Uniper warned it was likely to slow down a planned 8 billion-euro investment in cleaner fuels amid slower than expected demand for hydrogen from industry.
Stations for Green Hydrogen built with Cross-Laminated Timber from Södra
Hydri has chosen cross-laminated timber (CLT) from Södra for the construction of several new hydrogen stations, including in Värnamo, Hallandsåsen, and Ödeshög. On December 4th, the station in Håby is being inaugurated. The hydrogen stations are part of a nationwide initiative that will make it possible to refuel trucks, buses, and cars with fossil-free fuel at around 30 locations across the country. This creates a joint business that drives the transition to renewable solutions on commercial grounds.
“At Hydri, we are very optimistic about the development of infrastructure for renewable fuels, where hydrogen plays a key role. By building stations with sustainable materials like CLT, we strengthen our ambition to contribute to the green transition and create long-term climate solutions for both national and international traffic”, says Peter Enå, Chief Executive Officer at Hydri.
“We have a very exciting partnership with Hydri, whose values align in many ways with Södra’s. We are creating a joint business that drives the transition to renewable solutions on commercial grounds. We also show that standardization with a focus on optimized material utilization creates competitive solutions from an economic perspective”, says Andreas Berge, Business Area Manager at Södra Building Systems.
CLT from Södra is a locally produced building material that offers several advantages. Thanks to its low weight, fewer transports are required, allowing more panels to be loaded per transport. The assembly is quick and easy, providing a safe working environment while being cost-effective. Additionally, the total carbon dioxide emissions associated with the building are reduced, as the wood continues to store carbon dioxide throughout its lifespan.
“It feels important to collaborate with actors who contribute to the green transition in society. In our own operations as a producer and supplier of CLT, it is the transports that account for the largest amount of fossil emissions. Hydri’s expansion of infrastructure for green hydrogen aligns with our own climate goals of halving our fossil emissions by 2030”, says Ola Landqvist, Business Developer at Södra Building Systems.
Hydri is a subsidiary of Qarlbo Energy, co-owned by Qarlbo and FAM, and focuses on creating tomorrow’s energy systems. The project is co-financed by Hydri AB and Klimatklivet. By focusing on the entire value chain, Hydri aims to drive industries and communities towards a carbon-free future.
Södra was founded in 1938 on the idea that we are stronger together. Today, Södra is Sweden’s largest forest owner association with more than 50,000 family forest owners as members. Together, the members of Södra own a world-leading industry that refines forest raw materials into renewable products in pulp, wood, building systems, liquid bio-products, and energy.
