Companies involved in a hydrogen project at the Heide oil refinery near Hamburg said on Monday they would build a 30 megawatts electrolysis plant as a first step towards developing commercial-scale carbon-free energy.

Germany last month agreed a national hydrogen strategy to help to decarbonise the economy, including providing 9 billion euros ($10.58 billion) to help promote new projects that can make the transition from pilot status to production of marketable clean fuel.

The country is aiming for 5,000 MW of electrolysis capacity by 2030 to replace conventional and nuclear power and to develop fuel for heating and transport to eventually replace gas and oil.

The partners involved in the Heide refinery project, known as WESTKUESTE 100, received approval for 30 million euros in funding from the economy ministry. They are providing 59 million euros making at total investment of 89 million, they said.

The spending plans are modest but the size of the plant - at 30 MW - is a considered a game changer in the development of hydrogen as a fuel.

Germany has been experimenting with around 40 electrolysis plants for a decade but the biggest so far measures 6 MW.

The plant will pass electricity from wind turbines through water to extract carbon-free hydrogen that will be used by the Heide refinery instead of fossil fuel-based hydrogen.

The plant will also produce alternative hydrogen fuels for the raw material needs of the partners in the project ranging from heat to kerosene and plastics.

The 10 partners in the project include the German sections of French utility EDF and cement maker Holcim , gas pipeline operator Open Grid Europe (OGE), Danish wind company Orsted, the Heide refinery, the Heide town's municipal utility, local utility network Thuega and Thyssenkrupp Industrial Solutions.

Eight of the partners are companies which are working with the Heide region's public sector development agency and the Westkueste University of Applied Sciences.

EDF, Orsted and the privately-owned Heide refinery will construct the plant in a newly founded joint-venture partnership.