German state-owned utility company Uniper is reconsidering the pace of its €8 billion (USD 8.7 billion) green energy transformation, citing slower than anticipated industrial demand for hydrogen. The announcement, made Tuesday during the company’s nine-month earnings report, marks a significant shift in the implementation timeline of Germany’s hydrogen economy plans.
Chief Financial Officer Jutta Doenges revealed that a recent strategy review has led to more conservative projections regarding the development of the green hydrogen market. “We are now less optimistic about the timeline regarding the implementation of a green hydrogen economy,” Doenges stated during an analyst briefing, where the company also reported a two-thirds decline in nine-month core profit.
The strategy adjustment reflects growing scepticism among German corporations about the feasibility and economic viability of the government’s ambitious hydrogen-based emission reduction targets. Uniper’s reassessment particularly stems from a reluctance among potential business-to-business customers to commit to substantial green hydrogen or ammonia supply contracts.
Green hydrogen, produced using renewable energy sources, has been central to both Uniper’s transformation strategy and Germany’s broader decarbonization efforts. However, the company now anticipates a slower deployment of hydrogen power plants compared to projections made 18 months ago.
The development comes as Uniper prepares for its return to the stock market following the German government’s acquisition of a 99.12% stake during the 2022 energy crisis. The bailout, totalling €13.5 billion, was necessitated by Russian gas supplier Gazprom’s reduction and eventual cessation of gas deliveries.
As part of its financial recovery, Uniper has initiated repayment of government aid, transferring €530 million to the German state in September 2023. The company also holds provisions valued at approximately €2.5 billion, scheduled for transfer in early 2025, though the final amount remains subject to adjustment.
The utility’s cautious approach to its green transformation mirrors broader industry concerns about the practical challenges of transitioning to hydrogen-based technologies. This development could have significant implications for Germany’s industrial decarbonisation strategy, which heavily relies on hydrogen as a key element in achieving climate targets.
Despite the planned deceleration, Uniper maintains its commitment to green energy transition, albeit with a more measured approach to implementation. The company’s decision to adjust its strategy highlights the complex balance between environmental ambitions and market realities in the energy sector.
The announcement raises questions about the broader implications for Germany’s hydrogen strategy and could influence other companies’ approaches to green energy investments. It also underscores the challenges faced by traditional energy companies as they navigate the transition to cleaner fuel sources while maintaining financial stability.