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Green hydrogen

One step closer to a Danish hydrogen backbone

Following the new political agreement on the financing framework for a Jutlandic hydrogen backbone, an important step is being taken towards leveraging Denmark's wind energy potential while bolstering European green hydrogen supply security. With this framework in place, the government stands ready to allocate state funding, contingent upon the fulfillment of specific market criteria.

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The Danish government along with a coalition of political parties have written the next chapter in the journey of the Danish Backbone West with a new agreement, establishing the framework for financing and regulating a Jutlandic hydrogen pipeline.

Within this framework, it is a requirement from the government, that the market players lean into the project and fulfil five criteria. These include, among others, that the involved parties must undertake a purchase of 1.4 GW, which corresponds to approximately 44% of the pipe’s capacity, leaving the state with ownership over the hydrogen pipe network.

Building upon 40 years of wind energy pioneering and with the North Sea at its back, Denmark has the potential to produce renewable energy for 30 million households. This energy surplus can be used to produce green hydrogen, assisting i.e., the heavy industry’s green transition and hard-to-electrify sectors.

“Green hydrogen is a key that can unlock enormous climate benefits, green Danish workplaces and new export opportunities – and with this agreement we are taking another important step in order to realise the full potential. At the same time, it is important that we do not gamble with Danes’ money. We must do it responsibly. We are therefore ready to let the state take on part of the risk if the industry also leans into the project. After all, we only have to build the pipe if the industry wants to use it.”

Lars Aagaard, Minister of Climate, Energy, and Utilities.

The Danish Backbone West

The Danish Backbone West is a key hydrogen pipeline project in Denmark connecting to the German Hyperlink 3 at the southern border to Ellund.

In cooperation with German Gasunie, Energinet is working on establishing a cross-border link between hydrogen production, storage, and consumption within European regulations. This infrastructure will provide a pathway for stakeholders and market participants to efficiently meet hydrogen demand and engage in trade within the hydrogen market.

The pipeline is set to integrate into the European Hydrogen Backbone, with potential future connections to Danish distribution systems and offshore pipelines. Utilising a mix of converted natural gas pipelines and new hydrogen infrastructure, the project aims for high capacity by 2030, potentially incorporating compression.

Related news: The worlds longest power cable is switched on connecting Denmark and the UK with green energy 

Project overview

The hydrogen in the Danish hydrogen pipeline must be green. This means that the power for hydrogen production must come from renewable energy sources such as offshore wind farms in the North Sea, onshore energy parks, or other renewable energy facilities.

Danish PtX developers have already announced upcoming projects totalling 9 GW, of which 7 GW are located near the planned Jutlandic hydrogen pipeline.

The principles of the new agreement set the framework for a potential investment decision, which according to the Energy Act will have to be made by Energinet, who must submit an application, which the Danish Ministry of Climate, Energy and Utilities will have to consider. The parties agree to establish five overarching conditions for Energinet’s access to state financing:

  • The booking requirement of 1.4 GW demands that users purchase 44% of the pipeline’s capacity. For comparison, regarding the Baltic Pipe, there was a requirement for 80% of the capacity to be pre-booked. Additionally, users must commit for a minimum of 10-15 years.
  • Before any investment decision, Energinet must enter into a contract with the German Gasunie for a hydrogen pipeline to Germany, mutually obligating both parties regarding the establishment.
  • Energinet must establish a new subsidiary for the expansion and operation of hydrogen infrastructure, ensuring that electricity and gas customers do not pay for the hydrogen infrastructure through their electricity and heating bills.
  • Any state financing contribution must be deemed economically responsible and not result in expenses to the state budget.
  • To ensure a fair distribution of costs between initial and later users of the hydrogen pipeline, Energinet, subject to approval from the Utility Regulator, may levy lower tariffs during the start-up period, meaning that the infrastructure operates at a deficit, which will be recouped as more users connect to the hydrogen system.

Read the original press release at: New Hydrogen agreement paves the way for a green eksport adventure and local growth (Danish article)

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