Interview with Axel Wietfeld, head of Uniper’s hydrogen business unit

Even though the pandemic is not over, it was partly possible to enjoy the summer. I hope you were able to! I am aware that this was not the case in parts of Germany and Belgium as well as in Mediterranean countries due to extreme weather conditions.

Developments in the gas trading markets were extreme, too. Prices for the front-month reached all-time highs, with prices following the soaring Asian prices. The gas demand in North Asia – and Latin America – was huge and a primary driver of the price rally. In addition, there are "European" factors. What is “new”, is the behaviour of Gazprom Export. In the past years, the Russian gas major acted as a kind of “swing producer” and supplied sufficient volumes to keep the market decently balanced. This year, Gazprom is not able or willing to do so. For months I have been reporting about the observable phenomena of that change. This edition once again has a lengthy overview of the latest developments. In the monthly price reporting, I describe how prices react to changes of capacity bookings, gas flows and alleged Nord Stream 2 news. Spoiler: Very nervously!

Moreover, the high prices have two effects: The market-to-market evaluation of open positions melts credit lines between trading partners. This makes procurement more difficult. Some market participants think this is currently the biggest problem. Secondly, all observers expect that some suppliers in the final customer segments – even utilities – will get into difficulties. This is the case for all suppliers that largely rely on the short-term covering of sales positions in the spot market. Many distribution companies, and I hear this repeatedly in conversations, have become more cautious since 2018, but not all of them. I know one of the suppliers is in trouble. But since they haven't yet been able to comment to me, the case is only being reported anonymously in market rumours for now.

Despite the market turmoil, the topic of the month is a long interview – the summer interview has become a tradition for me. I talked to Axel Wietfeld from Uniper about Uniper’s hydrogen business. I learned a lot. Hydrogen is, of course, also an important topic in this issue.

But sometimes more traditional gas topics move us. GasVersorgung Süddeutschland will terminate its balancing group cooperation BIKpool. I was surprised at the number of calls I received from people asking for an alternative.

---

Topic of the month: Interview with Axel Wietfeld, head of Uniper’s hydrogen business unit

Of the German companies in the energy industry, Uniper is probably working most consistently to develop a hydrogen business unit. The topic emerged for the first time in the presentation for investors, in which the results for the first half of 2019 were presented. At the time, there was one first project, the participation in the Energy Parc Bad Lauchstädt (Saxony-Anhalt). Jointly with Terawatt, an engineering company, VNG and the VNG affiliates VNG Gasspeicher (storage) and Ontras (TSO) as well as DBI – Gastechnologisches Institut (a research institution in Bad Lauchstädt), the whole value chain for green hydrogen is to be established. The project was picked in the first round of the funding programme Sandboxes for the Energy Transition (Reallabore der Energiewende). At the end of 2020, the project partners submitted the final application for supporting funds. They are now waiting for the approval that was already expected for mid-2021 (ener|gate Gasmarkt 05/21).

But back to Uniper: In 2020, the project pipeline was filled substantially. Uniper presented this slide in its presentation during Fortum’s Capital Market Day in December 2020. Since the end of 2020, more projects were added to the pipeline. Axel Wietfeld is the head of the business unit Hydrogen, which was founded in mid-2020 (ener|gate Gasmarkt 07/20). He is also the managing director of Uniper Hydrogen GmbH, the legal entity for the hydrogen business. ener|gate Gasmarkt talked to Mr Wietfeld about Uniper’s hydrogen business.

---

Framework conditions

Regulation of hydrogen networks

In the last edition, ener|gate Gasmarkt reported on the amendment of the German Energy Act (EnWG) with the new regulation of hydrogen networks. The report said that only an additional motion for a resolution would call on the federal government to implement a joint regulation of gas and hydrogen networks as soon as an amended European legal framework made it possible. The coalition partners already agreed in May on this resolution. But the report was not complete or entirely correct. Joint regulation is also included as a target in the EnWG. And this, too, had already been agreed in May. The new Section 112 b of the EnWG obliges the German government to provide a concept for the further development of a German hydrogen network (ener|gate Gasmarkt 03/21).

Compared to the draft from February, which already included the article, the deadline for this concept was shifted from June 30 to December 31, 2022. Moreover, the concept is now to consider “the target of an adjustment of the regulatory framework to allow a joint regulation and financing of gas and hydrogen networks. In their optimistic assessment that at the end of the day, a joint regulation of gas and hydrogen networks was achieved in the amended Energy Act, some gas associations refer to this paragraph. As an example of such an optimistic assessment, here is a quote by DVGW's president Michael Riechel (Thüga’s CEO is his main occupation): “The parliament cut an intricated knot with its decision to amend the Energy Act and include a joint regulation and financing of hydrogen and gas networks”.

---

---