Germany is one of a handful of countries globally aiming to reach carbon neutrality before 2050. Despite cost and regulatory pressures, hydrogen produced through electrolysis powered by renewable energy sources will play a significant role in reducing Germany’s emissions to net-zero by 2045.

If the domestic share of hydrogen production reaches 90%, it is estimated that the German economy will create up to €30bn in added value in 2050 and 800,000 additional direct and indirect jobs, according to a joint study by the Wuppertal Institute for Climate, Environment and Energy and the German Economic Research Institute. 


In the state of Saxony-Anhalt, businesses and researchers are collaborating on several green hydrogen projects to leverage this opportunity. The German state’s regional hydrogen strategy aims to build a gigawatt (GW) of electrolyser capacity for hydrogen production by 2030, requiring additional wind and solar energy facilities with an output of 5GW.

“Hydrogen has been produced and used here for over 100 years,” says Patrice Heine, the CEO of Bitterfeld-Wolfen chemical park, one of five such parks across Saxony-Anhalt. “Due to its historically strong chemical industry, Saxony-Anhalt has very good chances of benefiting from the megatrends of the coming decades.”

Hydrogen heritage

Since 2010, Saxony-Anhalt’s chemical industry has attracted more than $1.6bn of foreign greenfield investment — more than other German regions and the sixth highest across Europe, according to investment tracker fDi Markets.

Being home to one of Europe’s largest chemical industry clusters, roughly 100,000 standard cubic metres of hydrogen is used in Saxony-Anhalt per hour for processes such as ammonia production and refining. Experts say this hydrogen heritage gives the state an advantage thanks to expertise in everything from safety to process engineering.

“Existing demand allows for a gradual transition rather than a step-change, with a lower risk and investment costs for green technologies [compared to other locations],” says Moritz Kühnel, head of H2 Technologies at the Fraunhofer Institute for Microstructure of Materials and Systems (IMWS).

Infrastructure for hydrogen transport, distribution and storage already in operation across Saxony-Anhalt adds to this allure. This includes one of only two regional hydrogen pipelines in Germany, which stretches 150 kilometres and connects the major chemical and industry parks in Bitterfeld-Wolfen, Leune, Schkopau, Böhlen-Lippendorf and Zeitz.

Both Mr Kühnel and Mr Heine say that existing industrial hydrogen customers mean the German state does not have a “chicken-and-egg problem”, where no one wants to produce hydrogen without users, and no one will use hydrogen without suppliers. 

Established chemical demand and supply value chains mean Saxony-Anhalt is well positioned to benefit from the transition to clean hydrogen production. “The lowest hanging fruit in the hydrogen economy is not mobility, but the chemical industry, where hydrogen is already used at present,” says Mr Kühnel. 

“Large-scale centralised hydrogen production for direct use without needing new transportation infrastructure is likely a much more promising target than, for example, hydrogen fuel stations that need small-scale decentralised production of long-distance distribution,” he adds.

Industrial projects

In Bad Lauchstädt, a small town near Halle, a large-scale storage facility for hydrogen is being built in natural salt caverns, alongside a wind farm and 35-megawatt electrolyser to produce hydrogen.

“The energy region in Bad Lauchstädt is one of the most prominent hydrogen projects in Saxony-Anhalt,” says Stefan Bergander, the programme director of Hypos, a research network that has promoted the development of a hydrogen network in Central Germany since 2012. 

Built at a depth of 700–900 metres, the underground storage will hold up to 4500 tonnes of green hydrogen — enough to supply electricity to an estimated 64,000 two-person households for a year. Mr Bergander adds that the project demonstrates the state’s “shift from research and development (R&D) to industrial processes” for hydrogen production.

At Leuna chemical park, more than €10m has been invested into a Fraunhofer Hydrogen Lab and Hy2Chem platform aimed at accelerating the mass production of hydrogen from renewable energy sources. It includes Germany’s first electrolysis test facility that is fully integrated into a material flow network of the chemical industry.

“We can use it to systematically test electrolysers and gain valuable experience in feeding hydrogen into the pipeline system of our co-operation partner Linda,” Sylvia Schattauer, the deputy director of Fraunhofer IMWS, said in a statement.

Multinational industrial gas firm Linda is also building the world’s largest electrolyser in Leuna chemical park, while mineral oil company TotalEnergies intends to produce climate-neutral methanol at its site, where it currently produces about 700,000 tonnes of methanol from fossil fuels each year.

Several other power-to-X technology projects, which aim to produce green hydrogen for use as a fuel, are underway elsewhere in Saxony-Anhalt. These include a wind-powered green hydrogen plant being developed in the town of Staßfurt and a pilot research project run by the Fraunhofer Institute for Factory Operation and Automation in Magdeburg to develop the “hydrogen factory of the future”.

Regulatory and cost challenges

As a relatively young and multifaceted field, green hydrogen still faces significant hurdles to become economically viable due to currently higher production costs compared with grey hydrogen, which is produced from fossil fuels. 

“The problem is that the benchmark for green hydrogen is grey hydrogen, which is produced using natural gas and is much cheaper in energy content than electricity,” explains Mr Bergander. 

To counteract this cost differential, the German government has exempted green hydrogen producers from the EEG-Umlage, a surcharge used to finance the expansion of renewable energy. But Mr Bergander notes that other issues remain, such as complicated regulations, difficulty in sourcing materials in the value chain and inadequate knowledge.

As green hydrogen is a specialised field, Mr Kühnel says that most employers globally struggle to find qualified personnel. But Fraunhofer IMWS, together with other Fraunhofer institutes, aims to ameliorate the situation in Saxony-Anhalt by working to enhance knowledge transfer and competencies.

“We are also working closely with universities such as the Otto-von-Guericke University Magdeburg and the Merseburg University of Applied Sciences towards establishing new degrees and training programmes tailored to the industry needs,” adds Mr Kühnel.

In association with the Investment and Marketing Corporation Saxony-Anhalt. Writing and editing were carried out independently by fDi Intelligence.

This article first appeared in the October/November print edition of fDi Intelligence. View a digital edition of the magazine here.