Challenges and Prospects for Green Hydrogen in Germany Amid Market and Industry Shifts
Quest One operates an electrolyser factory in Hamburg that employs robots and proton exchange membranes. Despite the factory's capacity to significantly increase staffing, recent layoffs totaling 20% in Germany have already taken place due to insufficient demand. The core issue in the German green hydrogen market is demand-driven rather than supply-related.
Green hydrogen, alongside other low-emission hydrogen types, currently constitutes less than 1% of global hydrogen production and remains costly. Quest One aims to reduce the price of green hydrogen to €4 per kilogram, which is approximately half the current price in Germany. However, there is a noted misalignment between where green hydrogen is most critically needed—high-temperature industrial applications—and its present uses, such as heating buildings and powering vehicles, leading some critics to question its efficiency.
Quest One is affiliated with the Volkswagen Group through Everllence. Although Volkswagen has been reported to consider selling Everllence, these plans have not been formally confirmed.
Infrastructure initiatives include plans to develop hydrogen pipelines in northern Germany originating from Hamburg, accompanied by underground storage caverns in Lower Saxony. Yet, these facilities are not expected to become operational until the 2030s.
Globally, the green hydrogen sector has experienced significant volatility including the cancellation of 52 low-carbon or renewable hydrogen projects within 18 months and Statkraft's decision to cease new green hydrogen projects after May 2025. Meanwhile, China dominates about 60% of electrolyser capacity. Industry experts acknowledge an overall growth trend but recognize this period as crunch time for German producers.
