Just recently, the EU Commission approved two dozen German hydrogen projects of European significance, which the federal and state governments intend to support with 4.6 billion euros, with a total investment volume of 8 billion euros. However, a fraction of the German hydrogen subsidies, which are crucial for the energy transition, is now potentially at risk.

Due to suspicions of nepotism in the allocation of funding, the German Federal Ministry of Transport has temporarily halted new hydrogen projects. On Wednesday a ministry spokesperson referred to funding decisions that were on the verge of approval, which are now being re-examined to avoid further errors. Hydrogen initiatives from 2021 are also being scrutinized again. The specific projects affected by the approval freeze and their volume were not disclosed. The decision stemmed from reports concerning the head of the hydrogen department, who allegedly facilitated funding for friendly lobbyists amounting to millions. The department head was relieved of his duties by Minister of Transport Volker Wissing at the end of last week. According to the spokesperson, an internal audit is currently reviewing documents totalling 14 gigabytes in the matter.

A spokesperson for the Federal Ministry of Economics emphasized that hydrogen continues to play a central role in the energy transition. The ramp-up continues unabated. By 2030, the federal government aims to cover an annual hydrogen demand of 95 to 130 terawatt hours (TWh) in Germany to support the decarbonization of the industry.

The European Commission recently approved 24 German projects under the "Important Project of Common European Interest" (IPCEI) for hydrogen production, transportation, and storage. These projects are part of the "Hy2Infra" infrastructure wave of the IPCEI for hydrogen, consisting of 33 projects across various EU countries. Following the EU approval, national funding decisions are expected to be issued promptly. The federal and state governments plan to contribute 4.6 billion euros.

German companies are involved with 3.4 billion euros – including publicly listed firms such as hydrogen producer H2Apex Rostock and real estate investor Patrizia from Augsburg. Including the subsidies, the total investment volume is around 8 billion euros. The federal government provides 70% of the funding, with the respective states contributing 30%.

One of the projects, receiving one-third funding of 30 million euros, aims to test whether caverns, traditionally used as underground gas storage, can be converted into hydrogen storage facilities. The real estate investor Patrizia has entered into option lease agreements for the first large-volume hydrogen storage facility with the operating company Storag Etzel, which it manages, and the state-owned Dutch energy infrastructure company Gasunie. The agreement entails Storag Etzel, which has operated large oil and gas storage in underground caverns in Lower Saxony for over 50 years, developing hydrogen storage caverns. The project, now funded, has been underway by Storag Etzel, Gasunie, and other partners since 2022/2023.

Another example is hydrogen producer H2Apex. Among the Hy2Infra projects to be funded is the 100-megawatt major project H2Ero, for which H2Apex has applied for 167 million euros in funding. The project has an expected investment volume of 213 million euros. Normal operation with a 100-megawatt electrolysis capacity is expected for 2028. According to current plans, the plant will have an annual production capacity of 7,000 to 8,000 tons of green hydrogen. H2Apex plans to generate recurring annual revenues in the mid-double-digit million-euro range as the operator.