German-Mexican Energy Alliance Zooms in on Hydrogen

Germany is willing to bet big on the development of green hydrogen. Developing a new network for the technology is challenging, therefore,  the German government is considering  Mexico as a strategic partner in the development of the renewable fuel.

“With this strategy, we want to prepare economies for the future. We want to help our partners be part of the international hydrogen race. This will create a win-win situation and countries that produce more green hydrogen than they need could export it to Germany. Mexico has a lot of potential to produce green hydrogen,” said the German ambassador to Mexico, Peter Tempel, during Solar Power Mexico.

As part of the alliance, the German Association for International Cooperation (GIZ) is preparing a 7-part study on hydrogen in collaboration with the German-Mexican Chamber of Commerce CAMEXA and the German Embassy in Mexico. GIZ released the fourth part of the series in October. “The results of the study conclude that Mexico has great potential to produce green hydrogen due to its renewable capacity via solar, wind and geothermal. For this reason, we could be one of the world's great players in green hydrogen production,” said Israel Hurtado, President of the Mexican Hydrogen Association (AMH) at Solar Power.

The GIZ estimates that with the right incentives, Mexico could have installed over 670MW of electrolysis capacity by 2030. In 2050, national capacity could reach 38.7GW, making Mexico a global green hydrogen giant. To reach this goal, Mexico would require US$15.5 billion in investment. The funds would be the opposite of a sunk cost, as the Mexican green hydrogen market could be valued at US$5.7 billion per year in the decades to come.

Nevertheless, green hydrogen’s impact on climate might still be its best asset. “By 2050, the introduction of green hydrogen technologies could reduce emissions of more than 40 million tons of CO2 per year,” according to the study, mostly in the transport sector but also for PEMEX operations, thermal power production and energy storage, among other industrial applications.

Hydrogen is created by splitting water into oxygen and hydrogen via a process called electrolysis. When powering such an electrolyzer with renewable energy, the process effectively becomes carbon neutral and results in green hydrogen. Dirtier alternatives, such as grey and blue hydrogen already exist. But now that a global push for decarbonization is widening its scope, hydrogen has once again been considered as the optimal solution to reduce emissions in complicated areas such as fuels, transport and non-intermittent power production.