Author

Augsburg, Germany

Greg Langley

Corporate Communications

A good investment of energy

Green hydrogen is hailed as an alternative to fossil fuels. A project starting in Etzel could be a vital proof point to a hydrogen-based economy.

Etzel is a speck of a village even on large scale maps of northern Germany, but it plays a role in securing Europe’s energy supply all out of proportion to its size. Located 20 kilometres from the country’s only deep-water port of Wilhelmshaven, the town of 800 inhabitants is one of the largest energy hubs in Europe.

Pipelines that stretch thousands of kilometres from the gas fields of the North Sea and the nearby Netherlands converge in the lush meadows that surround the town. There they link up with supply networks that run the length and breadth of Europe.

But it is not only above ground that Etzel is important for Europe’s energy. The manmade caverns that stretch far deep below the surface store up to 10 million tonnes of crude-oil – part of the 90-day supply held in reserve by countries such as Belgium, Germany and the Netherlands. 

Soon the caverns of Etzel could also play a critical role in the Energiewende, Germany’s ambitious plans to decarbonise the economy. “It is early days yet,” says Boris Richter, Managing Director  of Storag Etzel, “but we are optimistic that a business case for large scale storage of hydrogen can be soon proven.”

Storag Etzel, the only independent supplier of cavern storage facilities in Germany, has launched H2CAST Etzel (H2 CAvern Storage Transition Etzel), a project to examine the feasibility of storing up to 400,000 cubic metres of "green" hydrogen (H2). Partners in the  project include also the industry partner EKB Storage, a consortium consisting of BP, Ørsted from Denmark and Gazprom Germania, and research institutes, such as the University Clausthal, which is renowned for mining.

There are already hydrogen storage projects in Germany planning to store some 500 cubic metres of hydrogen, but, as Richter notes, H2CAST Etzel would place hydrogen storage on an “industrial scale.”

Salt of the earth

With the swing away from nuclear and fossil fuels, Germany needs to find alternative methods of generating energy. Hydrogen is touted as one likely option to replace fossil hydrocarbons. In fact, renewable hydrogen is central to the European Commission’s vision for achieving net-zero carbon emissions by 2050.

The caverns in Etzel are created out of a salt cap that lays deep below the surface.Boosters argue that hydrogen fuel-cell vehicles have a driving range and refuelling time similar to conventional vehicles, and an exhaust that is just water vapour. Buses and lorries can be propelled by hydrogen, and potentially even ships and aircraft. It is also seen as a replacement for natural gas as a source of heat.

More relevant for Etzel is that hydrogen can store the surplus output of solar and wind power stations. Although the wind farms doting the gusty coastlines of northern Germany are generating record amounts of alternative energy, its grid is too weak to transport all the power to the south of the country. So, on days when the energy generated by wind and solar surge beyond what the congested transmission lines can handle, grid operators turn off some renewable generators.

As a solution, excess solar and wind energy can be used to run electrolysers that convert water into hydrogen. This can then be stored in underground caverns as part of a network that can be converted back into electricity to energize industry and back up electric grids on dark or calm days. Or that is the plan to be tested at Etzel.

The location is ideal for this because of a natural salt dome that lays below the surrounding cow-filled meadows. The properties of salt make it ideal for storage of gases and liquids. It can be readily hollowed out and salt rock is impermeable so there is no leakage. The salt dome measures 12 kilometres in length and is 5 kilometres wide. Depths range from 700 to 4,500 metres.

The first caverns were created at Etzel to store German emergency crude oil after the oil shocks of the early 1970s saw supplies fall and prices soar. In the 1990s and from 2006 on, further caverns were developed to store natural gas. Storag Etzel currently has 24 caverns housing oil and 51 holding 4.5 billion cubic metres of gas – around 4% of Germany’s total annual demand. The gas caverns are leased to providers like BP, Électricité de France (EDF), EnBW, Gazprom, OMV and Uniper.

“The upside is that the company has rights for another 25 partially developed caverns,” comments Richter. “This means they can be developed for hydrogen at roughly 50% of the investment costs of caverns created from scratch.”

Most of the Storag Etzel caverns are between 1000 and 1500 metres below ground, some 300 to 500 metres deep and around 60 metres in diameter. “Typically, it takes two to three years to drill and leech out a cavern with sea water, depending on the exact size,” explains Kilian Mahler, who has managed the cavern fund since 2012, “so having some already in the early stages of development will save time as well as money.”

Great ambitions

The caverns – roughly a quarter of all storage caverns in Germany – are valued at nearly €2 billion and are owned by three funds managed by PATRIZIA. The first was set up in 2008, the second in 2013 and the third, which owns the operatin company Storag Etzel, in 2020. Their investors are European insurance companies and pension funds.

 “The leases on our gas caverns run for around 30 years. Twenty leading investors have now placed capital in the three funds, and annual revenues are €160–170 million a year,” says Mahler.

The two cavern funds are the largest infrastructure funds in Germany. Storag Etzel is responsible for operating the caverns. The market value of the oil and natural gas stored at Etzel stands at around €5 billion.

“Stockpiling oil and gas reserves in caverns has proven its worth over the past 40 years, and I think the caverns have plenty of potential for storing vast reserves of hydrogen,” comments Mahler.

After submitting their application to the German government in February, the partners involved in the H2CAST Etzel, including the German Aerospace Center (DLR) and the Technical University of Clausthal, are patiently awaiting approval. If they receive the green light, development on two existing caverns and surface facilities could begin as early as late 2021.

H2CAST Etzel would then become the first project to convert existing gas infrastructure into  scalable, large industrial production. When functioning, more than 10,000 cubic metres of hydrogen per hour could be circulated through the caverns to test the storage cycle and the gas infrastructure.

If successful, H2CAST Etzel would be the precursor of an even more ambitious project known as Hydra (Hydrogen Renewable Assets). As Germany switches to the demands of a hydrogen-based economy, the existing caverns and infrastructure would need to be adapted. Considered an “IPCEI” project – Important Project of Common European Interest – the €100 million Hydra project would be part of backbone of a hydrogen supply running from Hamburg to Paris and embrace four countries.

“Storag Etzel is in a central position with capacity to develop,” says Richter. “We are well integrated into existing pipeline networks, the deep-water port of Wilhelmshaven allows hydrogen to be imported and exported by ship, while more than enough electricity is generated from nearby wind farms that can be converted into hydrogen. Etzel seems predestined to be a central part of the hydrogen future.”