Quest One’s Green Hydrogen Ambitions Amidst Weak Demand and Strategic Uncertainty
Quest One, a company based near Hamburg and owned by Everllence under the Volkswagen Group, operates a factory assembling proton exchange membrane electrolysers using robots. Despite having substantial production capacity, global demand for green hydrogen remains weak, leading to layoffs of around 20% of the Germany-based staff earlier this year. This is largely due to green hydrogen being expensive compared to fossil-fuel hydrogen, with low-emissions hydrogen production accounting for under 1% of global hydrogen output.
Quest One aims to reduce green hydrogen production costs to about €4 per kilogram, approximately half of current prices seen in Germany. However, there is a notable mismatch between potential high-temperature demand sectors such as chemicals, steel, and shipping, and lower competitiveness in sectors like heated buildings and cars. Critics argue that using green hydrogen for heating remains inefficient compared with alternatives such as heat pumps and electrification.
Volkswagen Group has indicated it is reviewing strategic options for its Everllence subsidiary but did not confirm specific plans. Infrastructure ambitions include developing a northern Germany hydrogen pipeline network starting from Hamburg, salt cavern storage facilities in Lower Saxony, and planned cross-border transport networks targeting countries including India, Saudi Arabia, Chile, and Namibia. These large-scale storage and transport operations are anticipated to commence in the 2030s.
German government policy remains supportive but cautious: while it acknowledges hydrogen's role in meeting climate targets, ambitions for green hydrogen have been toned down. Industry groups have called for more state support to remain competitive, especially given that China currently holds about 60% of global electrolyser capacity. The evolving landscape suggests challenges ahead for Quest One and the broader hydrogen industry amid stiff international competition and uncertain demand.
