Green Hydrogen and Power-to-Gas Technology Mass Energy Storage for the Future Energy Market

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1 Photo: LINDE Fact Sheet Green Hydrogen and Power-to-Gas Technology Mass Energy Storage for the Future Energy Market Green Hydrogen and Power-to-Gas Value Chain Gas-powered cars Fuel-cell cars Chemical site (CO 2 : power plant H 2 : byproduct) PV + Wind (electricity) Biogas plant (biogas) Sewage plant (sewage gas) Biomass gasification (SNG) Electrolyzer Reforming/ Gas cleaning Methanation Hydrogen/Mobile Application Energy Storage/Wind-Hydrogen Power-to-Gas Green Hydrogen from Chemical Site Sewage Gas or Biomass to Hydrogen CO 2 Other Streams Gas grid Power grid Filling station Storage (salt caverns) Domestic heating Chemical use Power plant/ Cogeneration District heating Source: Germany Trade & Invest 2012 Power-to-Gas Mass Energy Storage Solution Power-to-gas is the name given to an energy process and storage technology which allows electricity to be held in reserve in the megawatt range. Existing network infrastructure can be utilized by linking existing power and natural gas grids. This allows seasonally adjusted storage of significant amounts of power and the provision of CO 2 -neutral fuels in the form of the resulting renewable energy source gas. Power-to-gas represents a system solution to the problem of surplus energy reserves. Hydrogen - and synthetic natural gas (SNG) in a second additional methanation process step - is produced from surplus wind energy by a process of electrolyzation. The hydrogen or SNG produced can be fed into the existing natural gas network for further use and replace natural gas on a like-for-like basis. Gas storage is not subject to the same limitations associated with extant energy storage technologies. Moreover, power-to-gas creates investment potential along the entire supply chain: from storage, production and trading to electrolyzer production, gas compression, and smart gas metering amongst other things.

2 Future Energy Market Models and Drivers Model Commercialization Projects: Creating New Markets Power-to-Gas Greenpeace Energy will be the first German energy supplier to provide its customers with green hydrogen energy created in regenerative and climate-neutral fashion from wind power. The prowind gas generated can be used for conventional domestic heating and cooking purposes and even as a fuel for vehicles. Customers connected to the ordinary gas network have been able to take advantage of the prowindgas tariff since October The Hamburg-based concern plans to build its own electrolysis plant in order to gradually increase wind-gas energy production share. Energy Storage/Wind Hydrogen ENERTRAG is a European sustainable energy supplier that specializes in generating electricity solely from renewable sources (predominantly wind energy). The company s hybrid power station which transforms wind energy into hydrogen is the first of its kind in the world. Wind power generated in Prenzlau (Brandenburg) is helping heat and power homes as well as finding its way to gas pumps to fuel H 2 car and bus fleets in Berlin. The company has already successfully deployed its energy storage solution at the world s first CO 2 -neutral filling station at the new Berlin International Airport scheduled to open in summer Green Hydrogen from Chemical Sites Bayer, RWE and Siemens have joined forces with a number of academic partners to research ways of transforming climate-damaging CO 2 into useful base chemicals using renewable energy sources. The focal point of the CO 2 RRECT (CO 2 -Reaction using Regenerative Energies and Catalytic Technologies) project is the long-term use of fluctuating energy from renewable sources for CO 2 conversion. The initiative bundles collective academic and industry know-how to identify ways of deploying surplus energy reserves for chemical production. As well as this, innovative technologies which allow the recovery of quantities of energy for the material use of CO 2 as a carbon building block for chemical by-products (carbon monoxide and formic acid) are being researched. The project represents a new model of interaction between the energy and chemical sectors. Market Drivers Germany s Energy Concept - A Road Map to Renewable Energy Power Supply Germany s Energy Concept is a long-term energy strategy for the period up to 2050 with ambitious goals to address the challenge of sustainable energy provision. Uppermost are an 80 to 95 percent reduction of greenhouse gas emission levels (compared to 1990 levels) and an 80 percent renewable energy share of the power mix, of which a large part will be wind generated (including on- and off-shore production). With an impressive 20 percent renewable energy power mix share today, Germany is already well on the way to meeting the 2020 target of 35 percent. Renewable Energy Supply and Demand The supply of electricity needs to match demand at all times; whether it is a question of responding to short-term fluctuations in supply or long-term storage over a period of months. Yet, renewable energy sources are, by their very nature, subject to fluctuation. Identifying the appropriate renewable energy storage solution is critical, as the current situation demands that power is consumed as soon as it is used. At present, a compensating capacity level of 17 gigawatt is already required to maintain domestic supply and demand balance. This figure is set to rise to 28 gigawatt in To date, balancing power has largely been provided by hydro pumped storage and gas power plants. However, hydro pumped storage is subject to a number of geographical restrictions and capacity limitations which limit universal application. Renewable Mass Energy Storage Efficient storage technologies play a pivotal role in a sustainable energy supply based on renewable energies. A number of studies forecast a significant renewable energy surplus from 2025 onward. Harnessing this renewable energy surplus allows seasonally adjusted wind and solar energy lulls to be addressed. Long-term mass storage can also operate economically in the absence of hydro pumped storage by using gas-based storage technology (e.g. hydrogen).

3 Future Energy Market Models and Drivers Green Hydrogen and Power-to-Gas Demonstration and Pre-Commercialization Projects Please visit the Germany Trade & Invest website for more model project information: NORTH SEA Schleswig- Holstein BALTIC SEA Bremen Hamburg Mecklenburg-Vorpommern Niedersachsen Brandenburg POLAND Berlin THE NETHERLANDS Saxony-Anhalt North Rhine- Westphalia Saxony BELGIUM Hessen Thuringia LUXEM- BOURG Rheinland-Pfalz CZECH REPUBLIC Saarland Bavaria FRANCE Baden-Württemberg Source: Greenpeace Energy 2011, Fraunhofer IWES 2011, Germany Trade & Invest 2011 Hydrogen/Mobile Application Energy Storage/Wind-Hydrogen Power-to-Gas Green Hydrogen from Chemical Site Sewage Gas or Biomass to Hydrogen Future Power-to-Gas Projects Cartography: roccomontoya istockphoto.com

4 Market and Funding Market Advantages Gas Network Storage Capacity Germany s gas network more than 400,000 km of pipeline connecting natural gas reservoirs with a total storage volume of 23.5 billion cubic meters and a further 15.2 billion cubic meters in planning - allow for provision of approximately one sixth of annual domestic electricity generation. Put another way, Germany s extant gas network provides energy storage capacity of approximately 220 terawatt hours or a three thousandfold capacity increase on Germany s current pumped storage levels (assuming a base efficiency level of 55 percent). Gas Grid Market Opportunities The production of hydrogen and SNG from wind and PV represents a major long-term renewable energy storage opportunity. Power-to-gas allows existing gas network storage capacity to serve both storage and distribution functions, while discharging the burden on the power network. Moreover, it also contributes to its stabilization by providing negative and positive balancing power through targeted on-off switching of electrolyzers and up/down ramping of CHP devices and gas power plants. It also contributes to "greening" the gas that will be increasingly used for power and heat generation and mobile applications in the future. The production of SNG through hydrogen methanation also makes the recovery of CO 2 for material use (e.g. in the chemicals sector) possible. The EU Emission Trading System (EU ETS), CO 2 reduction goals, raw material scarcity, and price considerations are the major drivers for these markets. German Gas Grid Infrastructure Advantages Germany is unique in the fact that hydrogen can be fed into the in-situ gas grid in significant quantities. And just like natural gas, hydrogen and SNG enjoy the same access rights to the gas grid. Hydrogen and SNG created from at least 80 percent renewable sources also have the same priority access to the gas grid as methane from biomass (biomethane). Germany provides another major advantage: the presence of salt caves in wind-intensive regions which are already being used for natural gas storage purposes. Research & Development Funding The German government supports green hydrogen and power-to-gas projects through a number of funding instruments, initiatives and programs. Listed below are just a few of the major energy R&D funding initiatives, instruments and measures available in this growing sector. 6th Energy Research Programme The programme sets out the key focal points of German energy funding policy for the period 2011 to Energy R&D funding in the region of EUR 3.4 billion will be made available, with particular emphasis placed on two areas of major strategic importance: energy efficiency and renewable energies. Foremost among the research focal points are energy storage solutions and grid technology, as well as the integration of renewable energy into the power supply. Energy Storage Funding Initiative The Federal Ministries of Economics and Technology, for the Environment, Nature Conservation and Nuclear Safety, and of Education and Research have launched a joint initiative to promote research and development in the field of energy storage technologies. Part of the 6th Energy Research Programme, the Energy Storage Funding Initiative will make EUR 200 million available to research projects to develop a broad range of storage technologies for electricity, heat and other forms of energy. A first project selection phase has already taken place. A second selection round is scheduled for National Hydrogen and Fuel Cell Technology Innovation Programme The National Hydrogen and Fuel Cell Technology Innovation Programme provides a common framework for a number of hydrogen and fuel cell research projects conducted by academic institutions and industry. Funding of EUR 700 million makes this the biggest R&D and implementation initiative of its kind in Europe with a focus on hydrogen and fuel cell technology. Additional funding is also available at the regional and European level as well as outside the framework of the 6th Energy Programme. For more information please contact: raphael.goldstein@gtai.com

5 Network Infrastructure Green Hydrogen and Power-to- Gas Network Infrastructure Germany s gas network transports an annual 1,000 billion kwh of energy (approximately double the amount of energy transported by the power grid). Twenty percent of annual gas consumption is stored in underground gas storage facilities this figure is set to rise to 30 percent by Germany s gas network is not only a national and European-wide power distribution system, but also represents a major energy storage solution thanks to its significant storage capacity levels. POLAND THE NETHERLANDS BELGIUM LUXEM- BOURG CZECH REPUBLIC Natural gas storage Natural gas grid > 60 bar H 2 tranport by pipeline (pipeline after 2030 according to GermanHy study) Selected biomethane plants Source: GermanHy 2008, DVGW 2011 AUSTRIA Cartography: roccomontoya istockphoto.com

6 Our Investment Project Consultancy Services About Us Germany Trade & Invest is the foreign trade and inward investment agency of the Federal Republic of Germany. The organization advises and supports foreign companies planning to expand into the German market and assists German companies seeking to enter foreign markets. Investment Location Germany Germany Trade & Invest provides close-to-market information to international companies looking to enter German markets. Our specialist industry teams prepare all of the relevant information essential to business success in Germany. Germany Trade & Invest s comprehensive range of information services includes: Market and industry reports Market entry analyses Business and tax law information Business and labor law information Funding and financing information Business Location Services Germany Trade & Invest supports international companies from market entry to business start-up in Germany. Expert project teams advise and assist in the business establishment phase. Germany Trade & Invest s range of free services includes: Legal and tax-related project support Funding and financing advisory services Site visit organization Local partner and network matchmaking Public and private partner coordination All investment-related services are provided entirely free of charge. Our specialist industry teams have hands-on experience in their respective industries and treat all investor enquiries with the utmost confidentiality. Imprint Publisher Germany Trade and Invest Gesellschaft für Außenwirtschaft und Standortmarketing mbh Friedrichstraße Berlin Germany T. +49 (0) F. +49 (0) invest@gtai.com Chief Executives Dr. Jürgen Friedrich, Michael Pfeiffer Authors Raphael Goldstein, Senior Manager, Energy Storage & Fuel Cell Technologies, Germany Trade & Invest, raphael.goldstein@gtai.com William MacDougall, Senior Manager, Investor Marketing & Creation, Germany Trade & Invest Editor William MacDougall Layout Germany Trade & Invest Print CDS Chudeck Druck Service Support Promoted by the Federal Ministry of Economics and Technology and the Federal Government Commissioner for the New Federal States in accordance with a German Parliament resolution. Notes Germany Trade & Invest, May 2012 All market data provided is based on the most current market information available at the time of publication. Germany Trade & Invest accepts no liability for the actuality, accuracy, or completeness of the information provided. Order Number 16812