The plant will harness wind to produce electricity as per conventional wind turbines. But when there is too much wind for the grid to handle, that excess energy will be converted via electrolysis - the separation of chemical compounds by electric current - into hydrogen for storage. This hydrogen can then be mixed with biogas at a later stage and converted back into energy that can be used to power homes.

The renewable energies company responsible for the project, Enertrag, says the process is carbon free and comes at no cost to the environment. Merkel said the first-of-its-kind project offers a glimpse into the future of clean energy production.

"I am glad that an enterprise from the Uckermark (region) has developed this trendsetting project. The combination of renewable energy and energy storage will be a determining factor in a steady and climate-acceptable energy supply," she said at the foundation stone-laying ceremony.

"Enertrag has found an innovative solution to the challenges of meeting demand for renewable energy."

Brandenburg Prime Minister Matthias Platzeck labeled the planned hybrid power station "great progress for the energy industry."

The Enertrag project will cost around 21 million euros ($27.2 million) and take around a year to build. It is expected to be able to provide enough power for around 2,000 homes.

Banking on hydrogen

Critics of the technology say that hydrogen may not be the best medium for storing energy, but Lutz Metz of the Environmental Policy Research Unit at the Free University in Berlin said hydrogen is as good an option as any.

"The conversion of wind power to hydrogen is not so bad," he said. "It's via electrolysis and the efficiency is in the range of 70 to 85 percent, so that's not bad. If you look at a car engine the efficiency is 15 percent, so there's a much more efficient conversion of wind power to hydrogen."

Claudia Kemfert, head of the Department of Energy, Transportation and Environment at the German Institute for Economic Research in Berlin, said the Enertrag plant is a breakthrough for the renewables sector.

"I think it's a technological innovation. On the one hand it uses a renewable energy, which is biogas in this case, and also it produces hydrogen at the same stage.

"The innovation here is that you can also store the electricity which is produced by this plant and new energy is also being produced. I think it's a real breakthrough and will be … used on a global scale in the future."

Kemfert said that although the energy produced at the Prenzlau plant will be significantly less than that produced at a coal power plant - which can cost billions of euros to build - it is still a valuable asset for Germany in its efforts to curb its greenhouse gas emissions.

"It brings new technology to Germany, which is also an important issue because we can sell it on the global scale and get a comparative advantage to other countries. On the other hand, we can of course also supply it in order to reach our own climate agreement … it's one step out of many, which is really important."

Author: Darren Mara

Editor: Trinity Hartman