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Federal Ministry for Economic Affairs and Climate Action

Germany's cabinet passes legislation enabling expansion of hydrogen network

The Federal Cabinet greenlights hydrogen network planning and funding bill. Yesterday, Federal Minister of Economy, Robert Habeck, alongside Thomas Gößmann, the CEO of the Long-Distance Network Operator (FNB) Gas, unveiled a blueprint for erecting a nearly 10,000-kilometer-long central hydrogen network.

The estimated cost stands at 19.8 billion euros, entirely sourced from private financing. Approximately 60% of the network will repurpose existing natural gas lines, with the remaining 40% allocated for new infrastructure. Hydrogen emerges as a pivotal energy source in the energy transition, particularly within the industrial sector.

"We have created a reliable framework for the construction and operation of the hydrogen core network. This gives our economy planning security for investments in the decarbonization of business and production processes. With the cabinet's decision and the transmission system operators' draft application for a hydrogen core network, we have set the course for the rapid and cost-efficient development of the hydrogen network infrastructure in Germany. The core network will connect central hydrogen locations throughout Germany and forms the first stage of the network ramp-up. I am pleased that, with the financing concept, we are also creating a framework for a private-sector development that also takes into account the performance of future grid customers through a fee cap. This will enable the transformation of energy-intensive sectors towards climate neutrality to gain momentum and Germany to remain competitive. After all, it is not only industry that benefits from an efficient hydrogen infrastructure, but also Germany's future viability," Habeck said.

Securing funding for the central hydrogen network through network tariffs

The bill establishes regulations for the financing of the core network. In principle, the central hydrogen network should be financed entirely by network fees and thus be built privately. The network fees are capped to prevent very high fees from hindering the increase of hydrogen in the first years of network construction. Future core network operators will receive a risk-appropriate interest rate and subsidiary risk insurance from the federal government, taking into account a franchise. By "changing the rates" over time, future users will bear the cost of establishing the network, because they will also benefit from a sufficiently dimensioned network and a successful start-up.

There will also be changes in the EnWG. With the new EnWG regulations, there will be continued planning of grid development for gas and hydrogen. In 2026, the Federal Network Agency is expected to approve a network development plan for gas and hydrogen for the first time. As part of an integrative process, transmission system operators and regulated hydrogen transmission system operators will in future create a scenario framework every two years and, based on this, an integrated gas and hydrogen network development plan.

The draft application submitted by the transmission system operators, through which key hydrogen locations throughout Germany will be connected, is the first stage in the implementation of the network.


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