The H2Global foundation aims to help create a market for hydrogen products in Germany. In the coming years, the difference between hydrogen production costs and offer prices will be covered by an auction model, in order to give companies more security when investing in hydrogen technology and infrastructure. In this interview, Timo Bollerhey explains exactly how this works.
EEHH: Mr Bollerhey, can you briefly describe H2Global’s remit and explain exactly what the service involves?
Timo Bollerhey: “H2Global was founded as a non-profit consumption foundation and now has over 30 donors along the entire hydrogen value chain. The foundation endeavours to develop models that are intended to enable the sustainable production and use of climate-neutral energy sources. The Hydrogen Intermediary Network Company, HINT.CO for short, is one of the foundation’s key tools and is intended to provide a business model to enable companies to invest in green hydrogen and its derivates today. Currently, we still have a chicken and egg situation, which we want to overcome – there’s no real market for green hydrogen at the moment. There’s currently a huge difference between offer prices and production costs. The latter will fall in future and regulation is still unclear, so we have an uncertain investment landscape for businesses – even though industry would welcome it and politicians are demanding it. We aim to facilitate these investments by providing long-term purchase agreements and solvent buyers.”
EEHH: Which stakeholders can take advantage of your services?
Timo Bollerhey: “Our service not only applies to suppliers and purchasers or a specific industry, but to the whole market. It is intended to provide a stimulus to enable the market to actually become established. So far, hydrogen has only been sold in homeopathic doses.”
EEHH: How do H2Global and HINT.CO interact? Why was a foundation/intermediary structure chosen?
Timo Bollerhey: “The H2Global foundation is the parent company and HINT.CO its subsidiary. It’s the recipient of the funding and acts as a contractual partner in terms of supply and demand. At the German government’s clear request, HINT.CO is a private sector company that buys products on the international market and resells them in Germany and Europe.”
EEHH: When can we expect the first tender for hydrogen products?
Timo Bollerhey: “We’ll probably start the tender process as a competitive dialogue at the end of the second or beginning of the third quarter and expect the first contract to be signed at the end of this year.”
EEHH: Does your procurement focus on green hydrogen?
Timo Bollerhey: “The tool itself is colour-blind, but our procurement complies with the guidelines of the funding body, i.e. the Federal Ministry for Economic Affairs and Climate Action (BMWK). These define which products are purchased and which attributes they should have.”
EEHH: How do you ensure that the stated derivates are sustainably produced? Which criteria/certifications are used as the basis for this?
Timo Bollerhey: “The criteria are initially specified by the BMWK. We intend to work with established partners to create a standard that complies with the guidelines using certificates that will have to be presented. We hope this will set an example when it comes to standardisation.”
EEHH: How much domestic demand for hydrogen products do you believe there is; are there any forecasts for this?
Timo Bollerhey: “We’re pretty relaxed about this, because we’re not buying pure hydrogen, but three of its derivates: methanol, ammonia and jet fuel, for which there’s already a liquid market. Even if demand for green products isn’t that high, we can still sell these on the existing grey market. We won’t be stuck with them.”
EEHH: Do you already have an idea of the quantities involved?
Timo Bollerhey: “That’s a very good question. We’ve received EUR 900 million of funding and will auction this amount. However, we won’t auction the price, but the quantity. It’s not yet possible to estimate the products’ final price for delivery over an extended period, however.”
EEHH: How long will H2Global be operational; is there an end point?
Timo Bollerhey: “From HINT.CO’s perspective, I always say: “HINT.CO is Germany’s most idiotic company – it will probably never make a profit, plans to generate losses of up to EUR 900 million and aims to close itself down after ten years”. Hint.Co will be wound up at the end of the final sales contracts. It remains to be seen whether the foundation will continue to exist. The foundation’s primary purpose is to make an active contribution to environmental and climate protection, so hopefully we’ll develop and implement additional approaches.”
EEHH: During the ramp-up phase, H2Global will only buy from countries outside of the EU/EFTA region – how was this decision made? Is the plan to extend this to other countries?
Timo Bollerhey: “H2Global is essentially based on a modular principle. The sponsor, in this case the BMWK, defines which products with which attributes can be purchased and from which countries worldwide. There could be other auctions with other products and countries of origin in future. An internal European market model is also possible, for example.”
EEHH: How did H2Global decide to establish its HQ here in Hamburg?
Timo Bollerhey: “The five coastal federal states campaigned for H2Global to be based in Hamburg. One of our partners is also here in Hamburg, which is why the foundation chose to establish its HQ in the city. There were, however, strenuous efforts by some ministers in the southern and eastern federal states to locate our intermediary there. So there was a Solomon-style peace agreement and Leipzig was chosen as the home of HINT.CO. This has no impact on our operation, however – we work for the whole of Germany and can purchase hydrogen products throughout Europe. In future, H2Global will be expanded within Europe.”
EEHH: How can H2Global help the market ramp-up of the hydrogen economy in the metropolitan region of Hamburg?
Timo Bollerhey: “The market stimulus includes Hamburg. Stakeholders can also participate in the dialogue. So they can use us as a neutral platform to share information with the German government, in order to see how such models can be developed. However, donors have no influence over the auctions. We’re also impressed with the enormous support we received from Hamburg and northern Germany when setting up H2Global. The port could also subsequently play a role in the arrival process.”