Hydrogen Expansion in Austria and Denmark Could Affect German Power Prices – Fraunhofer Calculates 2030 Impact

Kassel/Münster – The planned expansion of hydrogen production in Austria and Denmark could also affect German power prices. Model calculations by Fraunhofer IEE for 2030 show a moderate increase in German wholesale electricity prices.

The build-up of a European hydrogen economy is creating new large electricity consumers that can change power trading between countries. The volume of additional electricity required is only one factor. The location of electrolysis plants and how flexibly they are operated also matter. As a result, the siting of hydrogen production is becoming more important for price formation in neighbouring power markets.

Fraunhofer Calculates Price Effects for Three Electrolysis Scenarios

Electrolysers use electricity to produce hydrogen. During periods of high wind and solar generation, they can take advantage of hours with low electricity prices and absorb surplus power. At the same time, additional demand abroad changes the volumes of electricity traded between European price zones.

The Fraunhofer Institute for Energy Economics and Energy System Technology (IEE) examined three variants for 2030 on behalf of the Flensburg Chamber of Commerce and Industry (IHK Flensburg). Relative to a modelled baseline scenario, the study assumed 1 gigawatt (GW) of additional electrolysis capacity in Austria, 1 GW in western Denmark and 3 GW in western Denmark.

The study is linked to the NordicTwinSeaZone concept of the Schleswig-Holstein Chamber of Commerce and Industry (IHK Schleswig-Holstein). The chambers of commerce and industry are advocating a joint price zone comprising Schleswig-Holstein, Hamburg and western Denmark. The aim is to make better use of renewable electricity and create more favourable conditions for hydrogen production. The latest short study complements earlier Fraunhofer calculations on the concept.

For Germany, the results show average price increases of EUR 0.6 per MWh in the Austria scenario, EUR 0.5 with 1 GW in western Denmark and EUR 1.7 with 3 GW. The effects arise mainly in hours with high renewable generation and low or negative prices. By contrast, flexibly operated electrolysers reduce their consumption when prices are high.

In the Austria scenario, annual electricity demand for the additional electrolysis in Austria rises by 3.7 TWh. As a result, Germany exports around 1.7 TWh more electricity per year to Austria on a net basis.

The three variants for Austria and western Denmark were each examined separately. No overall effect of hydrogen expansion across Europe can be derived from them.

EU Rules and Site Conditions Determine Hydrogen Costs

Besides power prices, EU requirements for renewable hydrogen are decisive for the economics of hydrogen production. Delegated Regulation (EU) 2023/1184 provides relief for electricity bidding zones with a renewable power share of more than 90 percent. In these zones, grid electricity can be counted under certain conditions and within a limited number of operating hours without the otherwise required proof of additionality and of temporal and geographical correlation.

In other bidding zones, electricity consumption and the associated renewable generation must, under current law, generally match on an hourly basis from 2030. Exemptions apply in certain market situations. The European Commission has initiated a review of the requirements. Several member states and industry associations are calling for stricter requirements to be postponed. No such change has been adopted to date.

Fraunhofer assumes that Austria and western Denmark will meet the conditions of the 90 percent rule in 2030. Whether this will actually be the case remains open. Under EU law, such a classification can remain valid for several years. The assumption is decisive for the modelled operating conditions and cost differences.

The simplified calculations yield levelised hydrogen production costs of EUR 6.2 per kilogram in Austria and EUR 4.1 and EUR 4.4, respectively, in western Denmark. For Germany, Fraunhofer cites EUR 6.5 to EUR 7.5. These are model values, not current market prices.

European Hydrogen Ramp-Up Lags Behind Policy Targets

European electrolysis expansion has so far fallen short of policy targets. According to the EU Agency for the Cooperation of Energy Regulators (ACER), 308 megawatts (MW) of electrolysis capacity were installed in the EU at the end of 2024. Globally, installed capacity doubled to more than 4 GW in 2025, according to the International Energy Agency (IEA), with a large share of the growth coming from China. The IEA also points to delayed investment and uncertain demand.

Germany aims to have at least 10 GW of domestic electrolysis capacity by 2030. Including derivatives, the hydrogen strategy projects demand of 95 to 130 TWh and an import share of 50 to 70 percent.

The Fraunhofer results thus highlight an additional aspect of the hydrogen ramp-up: not only production costs and competition between sites are decisive, but also the impact on neighbouring power markets. How large this impact will be depends on actual deployment, EU rules and future power market conditions.

Source: IWR Online, 20 Oct 2026