Germany backs investments to build 9,700-kilometre, €20 billion hydrogen grid

The German government is supporting the construction of a 9,700-kilometre-long pipeline network to transport hydrogen across the country and to its neighbours, the economy ministry said in a press release. Economy minister Robert Habeck likened the so-called “hydrogen core grid” – to be constructed by 2032 – to Germany’s famous motorway infrastructure (Autobahn). The grid will connect the big feed-in locations – where hydrogen is produced or imported, for example from Norway or the Mediterranean – with the demand, for example in industrial regions. A distribution grid would be planned at a later stage. However, the chicken-and-egg problem had to be solved. “We now have to build a grid for an energy source which we do not have yet,” said Habeck. Germany was a frontrunner in Europe in this regard, he said. However, such an endeavour had to be financed, preferably privately, he said.

Investments of 19.8 billion euros would be necessary to build the “hydrogen core grid,” said Thomas Gößmann, head of the gas transmission grid operator association FNB Gas. These had to be made until 2032, but operators’ revenues from transporting significant amounts of hydrogen would only slowly increase. Gößmann added that the network would not have to be built from scratch. Instead, about 60 percent of the pipelines would be existing natural gas pipes. To back investments, the German state will set up an “amortisation account”, which would be used to cap grid fees for the users. The government assumes that the account will be balanced by 2055 at the latest in view of increasing grid utilisation. If there is still a shortfall by then, the state would pay the bulk, while grid operators will have to contribute up to 24 percent.

Renewable hydrogen is considered key for the decarbonisation of sectors such as heavy industry and aviation, which cannot easily switch to direct use of electricity to lower emissions. Grid operators last year presented their vision for a 'European Hydrogen Backbone' as part of efforts to transform the continent’s energy system towards climate neutrality. Construction of Germany’s core grid is set to start in 2024, and the government plans to introduce a law to speed up planning and permitting, similar to the legislation introduced to hasten the construction of Germany’s domestic liquefied natural gas (LNG) import infrastructure during the energy crisis. There will initially be overcapacities for the transport of hydrogen. Plans for the core grid exceed projected demand by 2030 about two-fold, said Habeck, so “we plan for the future”. Plans will be evaluated and adapted every two years. Habeck said Germany would produce 30-50 percent of the hydrogen it needs itself and import the rest.