FRANKFURT (Reuters) - Hamburg's municipal heating company and Shell, Mitsubishi (MBI) <7011.T> and Vattenfall have signed a letter of intent to develop a 100 megawatt (MW) hydrogen electrolysis plant, the city state said in a statement on Friday.
Electrolysis is a carbon-free process - if powered by renewable electricity - to extract "green" hydrogen from water and a key technology in Germany's plan to decarbonise its economy by 2050.
The envisaged size of the Hamburg plant is in line with a number of such other initiatives, bringing the hydrogen push in Europe's biggest economy closer to commercially viable output levels.
The so-called Green Energy Hub would produce renewable hydrogen derived from wind and solar power, the statement said. Hydrogen, produced using fossil fuels, is not carbon free.
"This is a bold venture that now needs to be filled with life," said Jens Kerstan, head of the supervisory boards at public sector Waerme Hamburg and Gasnetz Hamburg.
The plant would be located at Moorburg, a Hamburg suburb where Vattenfall is idling its conventional coal-to-power generation plant to avoid heavy carbon pollution from coal burning.
The partners said they would apply for funding from European Union programmes under Important Projects of Common European Interest (IPCEI). Subject to a final investment decision, production could start in 2025.
The Moorburg location, which the partners say offers ideal conditions and numerous potential consumers of green energy in the vicinity, is connected to high and low voltage grids while overseas ships can call at the site directly via the Elbe river, with the city's port offering discharging terminal services.
The municipal gas grid could also expand a hydrogen pipeline within 10 years.
Last month, five northern German states calling themselves Hy-5, including Hamburg, said they will promote green hydrogen around the region.
(Reporting by Vera Eckert, editing by Kirsten Donovan)