Germany's energy transition hit by costly hydrogen and impending gas‑network shutdown

A Fraunhofer IEG and CINES analysis projects that by 2035 the transport and storage of green hydrogen will significantly raise its cost. Production alone is estimated at €3.80‑€7.30 per kilogram, but for peak‑load power plants the total can rise to €8.77‑€15.16 per kilogram (≈ 265‑460 €/MWh). Infrastructure fees, including pipeline tariffs and storage, may add 34‑131 % to the price for such plants, while industrial users see a smaller 8‑16 % increase.

A separate Fraunhofer IFAM study warns that Germany’s gas distribution network will become uneconomic by 2045, even with a mandated “biotreppe” of biomethane and green gas. The study predicts gas utilities will be unable to offer competitive gas prices, making new gas‑heater installations a risky, potentially loss‑making investment. The federal government’s plan to keep gas‑heater installations permissible clashes with these findings.

In parallel, the government intends to halve climate‑friendly heating subsidies, cutting the maximum grant for heat‑pump upgrades from €21,000 to €19,600 this year and targeting a €13,200 cap by 2030, aiming to save roughly €2.1 billion. The combined pressure of rising hydrogen costs, the looming gas‑network phase‑out, and reduced heating incentives signals a decisive shift toward electrified and renewable heating solutions in Germany.