Start-up to Gain Momentum with Billions in Aid

October 20, 2026

Source: E & M powernews

The Federal Ministry for Economic Affairs plans to strengthen the hydrogen market with ten measures. Among other things, 1.5 billion euros in funding for industrial projects is planned.

The Federal Ministry for Economic Affairs (BMWE) has adopted ten measures to advance the hydrogen market in Germany. The package, presented in Berlin on October 19, includes funding programs for industrial applications, incentives for the retrofitting of power plants, demand-driven infrastructure expansion, and measures to improve the competitiveness of hydrogen.

The ministry aims to facilitate investment and boost demand along the entire value chain. This comes against the backdrop of a market ramp-up that has been delayed so far. According to the BMWE, the production costs for renewable and low-carbon hydrogen are still significantly higher than those of fossil-fuel-based alternatives. At the same time, uncertainties regarding production, infrastructure, and demand are complicating investment decisions.

1.5 billion euros for industrial projects

A key focus is on promoting industrial applications. The BMWE plans to expand the next bidding round for Carbon Contracts for Difference (CCfD) to include a dedicated hydrogen window. At least 1.5 billion euros from the budget is to be made available for the 2027 bidding round.

Hydrogen projects can also apply for CCfD funding outside of this dedicated window. A total of up to 8.7 billion euros in commitment appropriations is earmarked for the program. The BMWE plans to launch a preliminary process involving consultations with market participants in the fall of 2026. The contracts are intended to offset the additional costs of climate-friendly production processes compared to conventional technologies and enable investments in industrial decarbonization.
Electricity generation is also set to receive additional support. The ministry intends to provide targeted support for the transition from gas-fired to hydrogen-powered power plants. To this end, a tender for 2,000 MW of power plant capacity is to be issued in 2027, with the plants to be operated using hydrogen starting in 2040. An additional 2,000 MW is earmarked for tenders between 2030 and 2032. These plants are to be converted to hydrogen starting in 2043.

Boosting Demand for Climate-Friendly Steel

Another approach is the development of a leading market for low-emission steel. According to the BMWE, new tenders for offshore wind farms will use sustainability criteria to promote the use of steel produced with renewable or low-carbon hydrogen.

In addition, the federal government aims to enable requirements for the climate-friendliness of steel and cement in public procurement. A corresponding regulatory ordinance could follow by mid-2027 based on the planned Public Procurement Acceleration Act.

Reducing Costs and Expanding Infrastructure to Meet Demand

To make hydrogen more competitive, the BMWE is also focusing on improving the framework conditions for production and on imports. The ministry intends to work with other EU member states to advocate for a more pragmatic approach to European regulations governing renewable hydrogen. In addition, reliable electricity grid tariffs are intended to improve investment conditions for electrolysis plants.

Offshore production is also set to gain additional opportunities. In the SEN-1 area of the German North Sea, two projects, each with 250 MW of electrolysis capacity, are to be made possible. In addition, the ministry is counting on hydrogen imports from various supplier countries and regions. Existing funding instruments such as “H2Global” and the European Hydrogen Bank are intended to support the development of corresponding supply chains.

In addition to the core hydrogen network, import corridors and storage facilities are to be developed. Furthermore, by implementing the European Gas and Hydrogen Single Market Package, the federal government aims to create the conditions for the needs-based further development of distribution networks. The ministry also intends to examine the need for storage capacity and potential funding requirements. A potential green gas quota should also include hydrogen and hydrogen derivatives as compliance options.

Realigning the Hydrogen Council and Research

The BMWE intends to develop a technology roadmap for hydrogen as part of the High-Tech Agenda for Germany. It is intended to define development goals for the entire spectrum of energy research—from basic research to applied projects and real-world laboratories.

In addition, the federal government is reorganizing the National Hydrogen Council (NWR) both organizationally and strategically. The council is to align its recommendations more closely with the federal government’s specific advisory needs. The newly appointed council is scheduled to meet for the first time on November 17, 2026.

The BMWE’s action plan for the H2 ramp-up is available online.

Author: Susanne Harmsen