Hydrogen technologies offer eastern Germany the potential for value creation worth billions
Electrolyzer production could generate up to 2.2 billion euros for eastern Germany by 2045
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The production of hydrogen technologies opens up significant opportunities for value creation, industrial development, and employment in eastern Germany. A new study by the Initiative for Hydrogen in Eastern Germany (IWO), conducted by the WifOR Institute and the Fraunhofer Institute for Solar Energy Systems ISE, shows: By 2045, the production of electrolyzers and their precursors could generate up to 2.2 billion euros in annual gross value added in eastern Germany.
“The study shows that the economic opportunities of the hydrogen economy extend far beyond the production and use of hydrogen. It is precisely the manufacture of the technologies required for this that opens up new potential for industrial value creation and employment in Eastern Germany,” says Dominik Härle, Executive Director of the Initiative for Hydrogen in Eastern Germany.
Industrial Value Creation Takes Center Stage
The findings draw attention to an aspect of the hydrogen economy that has received little attention to date: the industrial manufacturing of electrolysers and the associated potential for value creation and job creation. In doing so, the IWO is creating a new industrial policy perspective on the hydrogen economy. The economic opportunity lies not only in producing hydrogen but also in exporting the technologies that make the global ramp-up of hydrogen possible in the first place. Electrolyzers consist of a wide variety of components and intermediate products. Consequently, their expansion benefits not only the electrolyzer manufacturers themselves but also companies in the mechanical engineering, metalworking, and electrical industries. This is of particular importance for eastern Germany.
“Building a hydrogen economy doesn’t start with hydrogen production. It starts with the technologies that enable the hydrogen ramp-up. The manufacture of electrolyzers combines research, innovation, and industrial production in a unique way,” says Dr. Tom Smolinka, head of the Membrane Electrolysis Department at Fraunhofer ISE.
As a result, the scenarios for 2045 indicate a gross value-added potential for Eastern Germany ranging from 480 million to 2.2 billion euros. The baseline scenario, at around 1.4 billion euros, is thus on par with the current scale of paper and paper products manufacturing in eastern Germany. The 2.2 billion euros corresponds to the current gross value added from coking and petroleum processing. The economic potential extends well beyond the electrolyzer manufacturers. How much value-added remains in eastern Germany depends largely on the involvement of regional suppliers. At the same time, electrolyzer manufacturing requires, among other things, metal products, electronic products, electrical equipment, machinery, and chemical and material-related intermediate inputs.
This economic development is also associated with significant employment potential. In the baseline scenario, the employment effect for 2045 is estimated at around 12,570 people, of whom approximately 8,080 would be employed by electrolyzer manufacturers and 4,490 in East German supply chains. Depending on the market scenario, the range extends from approximately 4,300 to 20,000 people. The focus is on skilled labor, accounting for 58 percent of the effect, with an additional 30 percent or so comprising specialists and experts.
“The study makes it clear that it is not only electrolyzer manufacturers who benefit from a growing hydrogen economy. Value creation and employment are generated along the entire supply chain. Particularly noteworthy is the high proportion of skilled jobs, which are of great importance for the industrial transformation of eastern Germany,” says Florian Fickler, team lead for labor market research at the WifOR Institute.
Value creation occurs where technologies are manufactured
The study makes it clear that the economic opportunities of the hydrogen economy extend far beyond the production and use of hydrogen. Additional value is created, in particular, where the technologies for the hydrogen ramp-up are developed, produced, and integrated into industrial value creation via regional supply chains.
This opens up the opportunity for eastern Germany to leverage its existing industrial and technological strengths in a globally growing market of the future. At the same time, the results show that the choice of location for production and supply has a significant impact on value creation and employment. A substantial portion of the economic effects arises along the supply chains and thus where industrial manufacturing takes place.
“The study shows that the hydrogen ramp-up is associated with significant industrial value-added and employment effects. Where electrolyzers and their components are produced plays a key role in determining where value creation and jobs are generated. If Germany and Europe rely on a strong industrial base when building the hydrogen economy, this will benefit not only technological sovereignty and security of supply, but also value creation and jobs,” says Dominik Härle.
Two Renowned Experts
The IWO commissioned two renowned experts to conduct this study: the WifOR Institute and the Fraunhofer Institute for Solar Energy Systems ISE.
The WifOR Institute is an independent economic research institute specializing in macroeconomic analysis. In the area of the labor market, it analyzes the economic and employment-related impacts of transformations—ranging from value-added and employment effects to skills requirements and strategic implications for labor market, industrial, and economic policy.
The Fraunhofer ISE in Freiburg is one of Europe’s leading research institutions in the field of renewable energy. Researchers there work on technical solutions across the entire hydrogen value chain—from materials research to the development and optimization of electrolysis processes, and on to system integration into energy infrastructures.
Eastern Germany Joins Forces for Hydrogen
The Initiative for Hydrogen in Eastern Germany e.V. (IWO) is the joint platform of the six federal states in eastern Germany for advancing the hydrogen economy across state lines. It brings together regional expertise and strengths from Berlin, Brandenburg, Mecklenburg-Western Pomerania, Saxony, Saxony-Anhalt, and Thuringia. The federal government supports the initiative as a network member.
The founding of the IWO stems from a resolution passed at the 2022 Conference of Minister Presidents of Eastern Germany. The basis for this was the Riemser Declaration, which stated: “Eastern Germany possesses strengths that can complement one another in implementing a hydrogen ramp-up along the entire value chain. Efficient cross-state cooperation offers the opportunity to harness synergies and reduce costs.”
With this in mind, the IWO’s mission is to tap into existing opportunities and potential and to establish Eastern Germany as a key region for the hydrogen economy. The IWO connects stakeholders from politics, business, academia, and government and promotes cross-regional cooperation among all members. A central goal is to optimize the framework conditions for hydrogen projects.
Note: This article has been translated using a computer system without human intervention. LUMITOS offers these automatic translations to present a wider range of current news. Since this article has been translated with automatic translation, it is possible that it contains errors in vocabulary, syntax or grammar. The original article in German can be found here.
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