Germany’s hydrogen core grid needs clear funding rules to succeed – industry

Industry association vbw has called for greater clarity about the funding of Germany’s planned hydrogen core grid, which is supposed to become the foundation of the country’s future energy supply architecture for many industries. Ahead of a vote in Germany’s parliament on the hydrogen grid’s funding, the Bavarian industry lobby group said that creating a viable infrastructure for the potentially climate-friendly gas is paramount to reaching the climate targets and implementing a successful energy transition. “There are many unknowns regarding hydrogen,” the association said, which called for a regulatory framework that is “fit for the capital market” by providing investors with planning security. Otherwise, the risk for a default in the market scale-up would be too high for many investors, vbw added. “Whether the scale-up is going to be a success in large part depends on the rules set by the state when it comes to producing, importing, and using hydrogen,” it added.

Germany’s Federal Network Agency (BNetzA) launched a public consultation on the hydrogen core grid’s funding earlier this week. “We create the conditions for achieving reliable grid fees,” said BNetzA head Klaus Müller. Until 2055, the grid should be financed through grid fees, for which the consultation should lead to an accepted mechanism to set the fees, which are slated to be introduced by 2025, the agency said. The ambition would be to keep costs for grid users as stable as possible for the next 30 years. “This means the creation of a hydrogen grid infrastructure will be fully paid for by grid customers.” However, funding gaps, which exist until profits from hydrogen transport are generated, should be filled with state guarantees, especially since a low use of the grid is expected in the first years, the regulator added.

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 by 2032. The hydrogen core grid is meant to connect the big feed-in locations – where hydrogen is produced or imported, for example from Norway or the Mediterranean – to areas of high demand, for example in industrial regions.