Equinor, RWE to cooperate on hydrogen for pipeline deliveries from Norway to Germany

Equinor and RWE have agreed on a strategic partnership to develop low-carbon hydrogen projects, eyeing pipeline deliveries from Norway to Germany to supply hydrogen-ready gas turbines for power generation, the companies said in statements Jan. 5.

The memorandum of understanding covers construction of new gas-fired power plants in Germany -- initially running on natural gas before transitioning to hydrogen from 2030 -- low-carbon hydrogen production facilities in Norway with carbon capture facilities, pipeline exports from Norway to Germany and the joint development of offshore wind farms to produce renewable hydrogen.

"The collaboration has the potential to develop Norway into a key supplier of hydrogen to Germany and Europe," Equinor CEO Anders Opedal said.

The companies envisage starting with low-carbon blue hydrogen production via steam reforming of natural gas, before transitioning to green production through electrolysis of water powered by renewables once the technology scales up.

Platts, part of S&P Global Commodity Insights, assessed the cost of producing renewable hydrogen via alkaline electrolysis in Europe at Eur10.84/kg ($11.51/kg) Jan. 4 (Netherlands, including capex), based on month-ahead power prices. Blue hydrogen production by steam methane reforming (including carbon, CCS and capex) was less than half the price, at Eur4.61/kg.

RWE CEO Markus Krebber said there was an urgent need to ramp up hydrogen production to meet Europe's decarbonization goals.

"Blue hydrogen in large quantities can be the start, with subsequent conversion into green hydrogen supply," Krebber said in a statement. "This is exactly what we are driving forward with our partnership -- providing the industries with significant quantities of hydrogen."

Equinor is planning an initial 2 GW of low-carbon hydrogen production capacity in Norway by 2030, and up to 10 GW by 2038, with carbon capture rates of over 95%, it said.

RWE said the investments were "contingent on the construction of a hydrogen pipeline between Norway and Germany" and downstream infrastructure in Germany.

The Equinor production facilities will feed the proposed pipeline to Germany, being assessed by Norwegian pipeline operator Gassco and Equinor.

RWE would purchase the hydrogen for use in gas-fired power plants. The two companies plan to jointly invest in 3 GW of flexible hydrogen-ready combined cycle gas turbines in Germany by 2030.

The CCGTs will be able to run 50% hydrogen at the time of commissioning, in line with German government specifications, with the capability to run on 100% hydrogen by the mid-2030s, RWE said.

However, at first, Equinor will supply natural gas to the facilities. The plan feeds into Germany's strategy to phase out coal-fired generation by 2030, Equinor said.

In parallel, the partners are exploring offshore wind-powered electrolysis to produce hydrogen to feed the pipeline, building on the 300-MW AquaSector project in the North Sea.

German transition

Germany continues to pursue a strategy of direct electrification wherever possible, for instance in transport and heating, federal minister of economic affairs and climate protection Robert Habeck told German television channel ARD Jan. 5.

For applications where molecules are needed, "green hydrogen is the weapon of choice," Habeck said. At the same time, "we are not in a situation where we can be picky," the minister added, making the case for blue hydrogen in the transition.

The planned hydrogen pipeline will run through offshore wind farms coming on stream in the North Sea, and will be constructed in a way that allows future green hydrogen production to be fed into the system, Habeck said.

Speaking of a coal exit "in west Germany" by 2030, Habeck said the new power plants replacing lignite coal will run on clean hydrogen. Agreeing this end of coal use and achieving firm offtake commitment for replacement molecules will cement certainty on the supply side, Habeck said. Coal plants in eastern Germany will not be replaced under this deal, he said.

Environmental group Deutsche Umwelthilfe voiced skepticism over the deal.

"If we want to leave the energy crisis behind us, we need a future-proof green energy supply," CEO Sascha Müller-Kraenner said. "Importing blue hydrogen meanwhile would be a step backwards into the fossil fuel past.

"Blue hydrogen goes along with natural gas production and fossil fuel infrastructure, binding resources that will then be missing for green technologies," Müller-Kraenner said in a Jan. 5 statement.