Keep it local vs. financial benefits: Compensation payments through cost savings in renewable energy provision for green hydrogen production in Germany

This study examines the socio-economic trade-offs required to foster public acceptance of green hydrogen production in Germany, focusing on regional differences in compensation needs for affected households near green hydrogen plants, based on a survey conducted in 2022/23. Using a choice-based conjoint experiment and Willingness-to-Accept (WTA) analysis, the preferences of households in three focus regions were analysed, emphasising their resistance to importing renewable electricity over locally sourced alternatives. Results indicate that urban areas require significantly higher compensation payments due to dense populations and limited production capacity, while industrial regions have lower compensation requirements due to fewer affected households and large-scale production. The study also evaluates the feasibility of financing compensation payments through cost savings by importing renewable electricity from Spain. Although economically viable under certain policy scenarios, such savings are insufficient to offset compensation costs in densely populated areas. The findings highlight the inevitability of imports due to Germany's limited renewable energy capacity but underscore the necessity for region-specific compensation schemes to address different regional preferences. Policymakers are requested to define transparent compensation mechanisms, prioritise localised renewable energy production where feasible, and establish international partnerships for cost-effective electricity imports. These strategies will ensure a balanced approach to advancing Germany's green hydrogen economy while maintaining public support.

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