Hydrogen imports: Consider risks as well as costs

When importing green hydrogen and its derivatives, it is not only the costs that matter, but also the economic, political, and social conditions in the exporting country. These factors primarily influence security of supply and, consequently, the risk of import dependency. To address this, EWI has developed the EWI Future Energy Score (EFES): a country-specific score that goes beyond supply costs to evaluate potential exporters of green fuels. The results show that imports of green hydrogen from EU countries have relatively low delivery costs and a high score, particularly when pipeline infrastructure is already in place. In contrast, the lowest global import costs are often accompanied by a lower score.

The analysis “Supply Security of Green Hydrogen and Ammonia Imports to Germany – Assessing Export Countries’ Supply Costs and Performance” by the Institute of Energy Economics at the University of Cologne (EWI) evaluates the risks associated with imports of green hydrogen and ammonia from selected countries worldwide with which Germany already maintains hydrogen partnerships. Securing strategic partners both within and outside the EU is of crucial importance for Germany’s hydrogen import strategy. The analysis compares the production and transport costs for hydrogen and ammonia in 2030, based on the EWI Global PtX Cost Tool, with the EFES of these countries. While procurement costs determine economic efficiency, the political, social, and economic stability of the exporting country is crucial for security of supply. The analysis was conducted with financial support from the Research Program Hydrogen and Molecules of the Gesellschaft zur Förderung des Energiewirtschaftlichen Instituts an der Universität zu Köln e.V.

Limited domestic production capacity makes EU hydrogen imports necessary

Domestic production in Germany itself emerges as a strong option for meeting domestic hydrogen demand in this comparison, as it combines a high score with low costs. “Domestic production thus represents a sensible option for self-sufficiency and enhances security of supply,” says Dr. Ann-Kathrin Klaas, who conducted the analysis together with Nada Fadl and Carina Schmidt. However, due to limited domestic potential, additional hydrogen imports are likely to be necessary in the future. The National Hydrogen Strategy projects that imports will account for up to 70 percent of total supply by 2045. EU countries such as Spain and Finland have low costs and high scores. Nevertheless, their supply potential for Germany remains limited, as part of their production is expected to be needed to meet domestic demand. Imports from Morocco or Turkey could be somewhat more cost-effective, but due to a lower score, they carry higher risks.

Green ammonia makes imports by ship more attractive

The cost of importing ammonia is more heavily influenced by production costs, as the specific transportation costs are lower than those for hydrogen. Consequently, even long transport distances could be accepted if production potential is high. Countries such as Australia and Canada could thus become viable import options. However, a global market for green ammonia could emerge, placing Germany in international competition for ammonia imports.

“At the start of the market ramp-up, Germany could draw on cost-effective hydrogen potential from domestic production or through imports from countries with a high score. However, growing hydrogen demand could exceed this production potential. When it comes to large-scale imports, it may be necessary to weigh the country’s economic, political, and social conditions against the delivery costs. It may make sense to accept higher import costs in order to increase security of supply,” says Klaas.