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The new offshore wind and hydrogen targets: What is their impact on the power sector, and what policies are required to achieve them? – September 2020

We are pleased to present our new strategic insight report. The report was first presented during a group meeting in September 2020 and was subsequently updated to reflect feedback provided by clients.

Key messages to emerge from the analysis are:

  • New offshore wind and hydrogen targets increase power prices by just 2% in 2040, as both measures balance each other out. Impact on offshore wind capture prices is almost neutral, while solar sees an increase of 4% (or 2 EUR/MWh)
  • On the flip side, Germany does not get closer to its renewable target, despite an 10 GW increase in renewable deployment, reaching just 52% of RES as share of gross generation in 2030, 13 p.p. short of target
  • On the supply side the new targets are expected to require 29€bn in support until 2040, four times more than set aside in the COVID package. Additional investments are required in infrastructure and to create H2 demand in industry
  • With Germany’s current power mix, green hydrogen will not be clean. By 2035, it is just on par with grey hydrogen at 265g CO2/kWh. Even by 2040, green hydrogen has more than double the intensity of blue hydrogen, emitting 185g CO2/kWh
  • The main questions for hydrogen policy to address are whether technology neutrality can save cost, how to create transparency on H2 emission intensity and how to incentivise storage and transport infrastructure investments

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