From coal to gas, from gas to hydrogen

The industrial history of this region in Eastern Germany is unthinkable without coal. The coal from open-cast lignite mines south of Leipzig contributed to the industrial rise of the city starting in the middle of the 19th century. Until recently, 60 percent of the thermal energy for the 600,000 citizens of Leipzig and its industries came from coal-fired power plants.  

But now, as Germany and Europe are in the midst of an energy transition away from coal and towards renewables, the city is breaking with the past and paving the way for the future. In October 2023, Stadtwerke Leipzig, the city-owned utility, opened a gas-fired combined heat and power plant (CHP) that sets a new benchmark—not only with an energy utilization of nearly 94 percent, producing 125 MW of electrical power and 163 MW of thermal power. Its two Siemens Energy SGT-800 gas turbines, each with 62 MW capacity, are H2-ready. Although they are currently fired with natural gas, they are capable of using up to 30 percent hydrogen. With a conversion of the turbine’s burners and some auxiliaries in the future, they can be upgraded to 100% hydrogen operation. 

The idea of having highly flexible and hydrogen-ready gas-fired plants—which reach full generation capacity in just 15 minutes—serve as the backbone of a more volatile power grid aligns with the strategy of German and European lawmakers.  

In 2022, the EU adopted a plan to produce and import 10 million tons of renewable hydrogen by 2030. By 2050, renewable hydrogen is expected to cover about 10% of the EU’s energy needs, significantly decarbonizing energy-intensive industrial processes and the transport sector. 

With several hydrogen production facilities under construction, the hydrogen economy is gaining momentum but still lagging industry expectation. Thus, from a business perspective, natural gas remains the right choice for now, as Karsten Rogall explains. So, when will green or at least low-carbon hydrogen “beat” natural gas? 

“It’s a question of price parity between natural gas plus CO2 price and hydrogen,” says Thomas Neuenhahn. “The gradual increase in the CO2 price and the ramping up of hydrogen production will lead to price parity between natural gas plus CO2 price and green hydrogen around 2040,” Neuenhahn adds, citing a recent analysis. According to the same analysis, price parity with low-carbon or “blue” hydrogen (with carbon capture and storage) will be reached even earlier. 

In his opinion, the development and use of H2 technologies can position Germany and the EU as pioneers in a crucial sector of the future energy industry and create economic and geopolitical advantages. Yet, a variety of puzzle pieces need to be in place for this to happen. For example a coordinated European H2 strategy that promotes cross-border cooperation, harmonizes regulations and supports the development of a competitive European H2 industry, Rogall. 

Furthermore, increased public and private investment in H2 technologies, including electrolysis, storage and transport is needed, as well as significant financial funding for the development of an H2 infrastructure, such as pipelines, electrolyzer plants and refueling stations. 

And last but not least, Rogall stresses the need for international cooperation: “We need to work together to develop global standards for H2 production, quality and safety and promote international partnerships for H2 trading and technology development with countries such as Morocco, Canada and Chile. By taking such steps, policymakers can create an enabling environment and ensure that it contributes to a more sustainable, safer and more prosperous future.”