Small and medium enterprises make up 99 percent of all companies in Germany. They account for a large proportion of jobs and make a sizeable contribution to exports. Yet, when it comes to the energy transition, hesitancy often prevails even in this sector.
This is where green hydrogen in particular offers numerous practical applications for small and medium enterprises – from process heat to electricity storage and mobility. Thüga AG, a network of around 100 local energy and water suppliers in Germany, is consolidating its hydrogen projects as part of a nationwide drive to better tap into this potential. A key element of this is a gas grid of more than 80,000 kilometers in length that is set to be gradually developed for hydrogen applications.
“Many of our customers view the future with uncertainty when it comes to an economically viable energy supply. This is exactly where we see green hydrogen as the solution – not only for large scale industry, but also for SMEs,” says Béatrice Angleys, Head of Hydrogen Platform at Thüga AG, during ees Europe 2025.
Green hydrogen can be used to store and reconvert excess energy from renewable sources, generate heat in hydrogen-ready gas-fired power plants or using waste heat from electrolysis processes, and as an energy carrier for industrial process heat. Hydrogen can also be used effectively in the chemical industry, such as for fertilizer production, and in the mobility sector where electric drives are not a viable solution.
Thüga AG is implementing numerous projects to tap into this potential along the entire value chain, from generation to distribution to specific applications. A good example is the H2Direkt project, which, in collaboration with other project partners, involved the switchover of an existing gas distribution system to a 100-percent green hydrogen operation. This has resulted in ten households and one business being heated without interruption for over eighteen months. “We often find that local utilities are perceived as lacking in innovation. But projects like these prove quite the opposite,” notes Béatrice Angleys.
Thüga AG aims to better convey the usability and benefits of hydrogen to SMEs via projects like these. They hope this will lead to less reluctance among SMEs, which stems from not only economic pressure from competitors, but also political frameworks that direct subsidies first and foremost to large companies. “In principle, there is a demand for hydrogen in these companies. One of our studies found that two thirds of industrial companies surveyed indicated a desire to use hydrogen in the future. In the case of larger companies with an energy consumption of over ten gigawatt hours per year, the figure was even higher at over 80 percent. But the critical question is how this demand can actually be met,” says Philipp Kampmann, H2 Ecosystems Manager at Thüga AG.
This puts the distribution of hydrogen firmly in the spotlight. Many areas in Germany are not supplied via the core network, which is instead directed to Germany’s industrial centers. A recent study supported by Thüga AG revealed that around 78 percent of today’s gas demand in Germany lies in regions located over a kilometer away from the planned core hydrogen network. This means that decentralized distribution networks are required for more widespread connectivity, particularly for SMEs. This is an area where Thüga AG plays a key role as a regional utility company.
“In one of our current projects, we are identifying suitable customers who can serve as the output point for local hydrogen networks. As part of this, we have collaborated with the Fraunhofer Institute for Energy Economics and Energy System Technology (IEE) to develop the HyPotentials tool, which identifies companies with high hydrogen potential at postcode level. In future, we want to make this analytical approach accessible to other industries and operations to enter into genuine partnerships with local businesses. So far, our response shows that companies that obtain specific figures and outlooks also have more serious discussions about their strategies to reduce emissions,” according to Béatrice Angleys.
To provide further guidance, the company recently completed a case study in conjunction with a glass manufacturer comparing different technology paths with regard to their long-term economic viability. The study investigated the long-term impact on overall costs of continued operation with natural gas, partial electrification, switch to hydrogen, as well as CO₂ separation – a method in which CO₂ from flue gases or the air is separated to prevent it from entering the atmosphere. Surprisingly, the results showed that the electrification and hydrogen scenarios are economically comparable in terms of competitiveness – contrary to the original assumption that electricity would be significantly cheaper.
The cost range is similar due to high investment costs, for example by replacing glass molds more frequently in the case of electrical operation. The running costs for hydrogen operation are, in fact, currently higher and the assumed price of hydrogen begins at a high level but is set to drop significantly in future. Continued operation with natural gas and the CO₂ separation option appear competitive at first glance, but it is unclear how much longer natural gas will even be available in Germany, and under which conditions.
“Even if political hurdles slow down the expansion of green hydrogen, we’re convinced that it can be a fundamental part of the energy transition in Germany. That is why we are taking action across the entire value chain, developing strategically relevant projects, strengthening the connection between distribution systems and core hydrogen networks, and preparing our power plants for the use of hydrogen. But the key to success lies in close dialogue with our customers to shape this transformation together in a targeted way,” summarizes Philipp Kampmann.