Shaping energy security locally Opinion piece by Dr Nima Pegemanyfar, Quest One

The domestic hydrogen economy as a system-relevant enabler for energy security in Germany and for Europe

The current situation on the global energy markets shows how important a robust, independent and resilient energy supply is for Germany and Europe. This is precisely why it is worth taking a look at technologies that can ensure resilience, predictability and innovative strength.

One central building block is the consistent development of a domestic hydrogen economy. Hydrogen is the flexibility platform between electricity, heat and industry. Electrolysers couple electricity markets with molecular requirements and enable load shifting and grid-friendly operation with high proportions of renewables, the storage of surplus electricity as H₂ for later use, and the decarbonisation of processes that are difficult to electrify. This means greater profitability for operators and more stability for the energy system. Now the framework conditions that activate their full potential must be created.

Hurdles for the ramp-up

The manufacturers and operators of the hydrogen economy have made up-front concessions: technology, factories and qualified teams are all in place. But high electricity costs, complex verification rules for renewable hydrogen and sluggish approval processes are slowing down projects even before they begin. The result is economies of scale that fizzle out, consistently high hydrogen costs and the postponement of investments. But it is impossible to implement cost reductions through scaling without reliable demand paths and investment security.

The hydrogen industry still has enormous growth potential – driven by resource independence, climate targets, rising industrial demand and a global race for technological leadership. Even if the industry is currently still falling short of its expectations, there is no way around green hydrogen. Green hydrogen is particularly essential for the decarbonisation of industry and will be needed in very large volumes in the future.

Setting the course for better predictability

The industry now needs reliable framework conditions and guardrails that can be used as a basis for the ramp-up. The German government has recognised this and has developed preliminary strategies with the Hydrogen Acceleration Act. But in many places, the measures adopted fall far short of the mark. It is also clear that individual laws cannot sustain the market ramp-up alone. Cost-effectiveness and scaling depend heavily on the interaction of the framework parameters.

What helps now

In our view, important measures and levers are the further removal of hurdles and accelerated procedures for permits, grid access and verification in the purchase of electricity. A clear course for grid charges is also needed: not only should electrolysers continue to enjoy relief on grid charges after 2029, but they should even be remunerated if they operate in a grid-friendly manner, as this would substantially reduce system costs.

The to-the-hour correlation between renewable energy generation and electrolysis (hourly matching) is also too restrictive, especially in this early phase, and can prevent grid-friendly dynamic response behaviour and storage effects. In contrast, a phased approach (e.g. with flexible but granular verification and grid-oriented criteria) creates climate benefits and investment security. In this context, it would also make sense to abolish the additionality criterion, since the expansion of renewables is taking place in parallel anyway and is made easier and safer precisely through operation that serves the grid and the associated stabilisation of the energy grid.

An ambitious GHG quota of 2.5 percent or more in the industry would also create a reliable anchor of demand and thus planning security for investments. This is the only way for German and European manufacturers to remain competitive and maintain their technological leadership.

Investment security through standards and innovation

Expectation and investment security arise not only from an economic point of view, but also from a technological perspective. Questions about stack permeability, gas purity or the safe design of O₂ separators must be addressed openly and technically refined. New standards create clarity and trust – a foundation on which investors and operators can plan.

A practical example: one or two years ago, the industry realised that stack permeability in PEM electrolysis can lead to hydrogen migration into the oxygen phase. This presented a previously overlooked explosion hazard within the O₂ separator. Quest One sees itself as an innovation driver here and was one of the first companies to systematically analyse and audit the risks posed by stack permeability with comprehensive true-to-life explosion tests. The findings gained from this was directly integrated into the safety system of the plants. Quest One is taking a proactive approach here, helping to redefine the state of the art to make electrolysis competitive.

Technology and practice “Made in Europe”

Europe as a technology location currently has a strong position in the field of electrolysis technology, but at the same time European suppliers are exposed to international competition and increasing price pressure. With initiatives such as Electrolysers for Europe an additional framework is created that supports innovation, quality standards and fair competitive conditions. After all, Europe’s electrolyser manufacturers are technology leaders and this must be maintained: through smart lead markets, fair competitive conditions and innovation-friendly standards.

Another lever would be to make electrolysis plants more tangible for their own target group and thus make the switch easier. Quest One is currently building a demonstration plant based on the MHP large-scale electrolyser in Augsburg. There, potential customers, planners and project planners can obtain important parameters such as construction phases, dimensions, inner workings and infrastructure under real conditions. In addition to intensive testing, the collection of operating data and the training of personnel, the plant is also an important tool to further optimise the performance and operating parameters for industrial solutions.

Many levers for one goal

Germany must decide whether hydrogen should be a strategic element in its energy future – or a technology that is supported in theory but thwarted in practice. The success and effectiveness of hydrogen as a flexibility platform between electricity, heat and industry depends to a large extent on how well market mechanisms, regulation and technological innovation are coordinated. It is only through this interaction that trust in and acceptance of hydrogen technology can be strengthened in the long term.