Green hydrogen as a key to energy sovereignty in Germany and Europe: five measures to scale the market

Geopolitical uncertainties highlight the structural dependence on fossil energy imports in Europe and Germany: Nearly 60 percent of Europe’s energy demand is covered by imports, primarily in the form of oil and natural gas, and largely from geopolitically sensitive regions. This dependence significantly reduces the resilience of European energy systems and makes them vulnerable to political conflicts, market disruptions, and price shocks. As a result of Russia’s invasion of Ukraine, additional costs of around 930 billion euros for fossil fuel imports were incurred in Europe between 2021 and 2024.

“The past years have made it clear how vulnerable Europe’s energy system is due to external dependencies. Energy policy is also security policy,” emphasised Michael Meister, CEO of Quest One. “A sustainable solution can only be to generate more energy within Europe and retain value creation here.”

At the same time, challenges within the energy system itself are intensifying. The growing share of fluctuating renewable energy sources meets a power grid that is increasingly under pressure due to rising redispatch costs, regional bottlenecks, and an unclear role of conventional power plants.

Green hydrogen offers several levers to reduce energy dependence and strengthen security of supply. At the national level, every country can produce green hydrogen itself and thus advance the integration of renewable energies. For example, using surplus electricity for electrolysis, and the associated reduction in redispatch efforts, can lower system costs. Between 2023 and 2025, these costs amounted to €400 - 600 million. Regions with favorable renewable resources can supply hydrogen on the intra-European market to industrial centers in other EU countries, thereby building a stable internal market. New exporting countries such as Canada, India, Morocco, and Chile are entering the global energy market and thus contribute to diversification and the reduction of one-sided dependencies.

“Green hydrogen is more than just an energy carrier – it is a strategic instrument for greater sovereignty, competitiveness, and stability,” underlines Michael Meister. “Those who create the right framework conditions today will secure Europe an independent and resilient energy supply in the long term.”

The adoption of the greenhouse gas (GHG) quota under the EU Renewable Energy Directive III (RED III) was an important first step, but further signals are now needed. An ambitious and coordinated ramp-up of the hydrogen economy is a central task of energy and industrial policy. Quest One derives concrete action requirements for policymakers and regulators from this:

Clear direction for grid fees

Even after 2029, electrolysers should not only remain relieved from grid fees but should also be remunerated when they operate in a grid-supportive manner, as this can substantially reduce system costs.

Maintain monthly instead of hourly correlation

The hourly correlation between renewable energy generation and electrolysis (hourly matching), which is set to apply at the European level from 2030, is too restrictive and leads to electrolysers being operated with significantly lower capacity factors. As a result, hydrogen production volumes decrease, making projects economically unviable in most cases. Continuing the monthly correlation beyond 2030 would provide the right incentive for investment and the associated positive effects on resilience and climate.

Relaxation of the additionality criterion

This requirement stipulates that, from 2028 onwards, only renewable electricity from newly built renewable energy installations may be used for electrolysis, with the aim of preventing the use of existing green electricity already available in the grid. However, this measure significantly hampers the necessary expansion of renewable energy capacity. It drives up costs and planning timelines for new projects while simultaneously preventing operational flexibility of electrolysers during peak electricity periods. In the current phase of scaling the hydrogen economy, this criterion should remain suspended, allowing existing renewable energy sources to be used for electrolysis. In particular, older existing plants that are increasingly phasing out of subsidy schemes after 20 years could find a lucrative new market in supplying electrolysers.

‘Made in EU’

The goal of securing local value creation for climate-friendly technologies under the Net Zero Industry Act should be further expanded for green hydrogen and anchored in other regulatory frameworks such as the planned Industrial Accelerator Act (IAA). At the national level as well, for example in public funding instruments, “Made in EU” should be systematically considered. Technological sovereignty reduces dependencies on geopolitically uncertain supply chains and protects against potential external interference in critical infrastructure, particularly in key technologies such as electrolysers. In this way, “Made in EU” sustainably strengthens the resilience of Europe’s energy and industrial landscape.

Investment security through standards and innovation

Trust and investment security are not based solely on economic factors, but also on technological reliability. Issues such as stack permeability, gas purity, or the safe design of O2 separators must be transparently addressed and further developed technologically. Proactively addressing technological hurdles helps redefine the state of the art. Clear standards provide guidance, strengthen trust, and serve as a foundation for robust investment and operational decisions.

Thinking holistically to set the course for scaling the hydrogen economy

Europe has all the prerequisites to take a leading role in green hydrogen – technologically, industrially, and strategically. Modern electrolyser platforms are efficient and scalable. However, the European market is under increasing international competitive and price pressure. What is currently missing is a regulatory framework that strengthens innovation, quality standards, and fair market conditions in order to maintain Europe’s technological leadership. This is how European member states can safeguard their energy independence and strengthen the resilience of their energy infrastructure in a global environment marked by instability.

Read the article online at: https://www.globalhydrogenreview.com/special-reports/14072026/green-hydrogen-as-a-key-to-energy-sovereignty-in-germany-and-europe-five-measures-to-scale-the-market/