Germany’s energy policy lawmakers from three coalition parties have reached an agreement on a financingmechanism for the country’s future hydrogen network, as reported by Reuters on April 5. Under the agreement, the country’s core network for hydrogen fuel will stretch over 9,700 kilometers (km) and cost around EUR20bn, with existing gas pipelines constituting 60% of the network. The completion deadline for this network has been extended by five years to 2037, with an aim to alleviate the financial burden on the operators.Additionally, the project will be financed through user fees, while the Economy Ministry has been considering setting up an amortization account to spread the network construction costs over a long period. This approach intends to ensure access to affordable hydrogen fuels for customers, rather than having them undertake the full amount of construction expenses.

The planned network will connect ports, industry, storage facilities, and power plants, facilitating the supply of zero-carbon hydrogen fuel for hard-to-abate sectors such as steel and chemicals. Germany’s 2023 National Hydrogen Strategy anticipates a surge in hydrogen demand to between 95 and 130 terawatt hours (TWh) by 2030, a significant increase from the current level of around 55 TWh. Notably, more than 70% of the projected 2030 hydrogen demand would be met by imports, and the upgraded network is poised to play a crucial role in meeting these targets. Upon completion, the network is positioned as the core of Europe’s hydrogen grid by connecting to Germany’s neighbors such as Denmark, Norway, and Spain.

Sources:

https://www.reuters.com/business/energy/german-coalition-agrees-financing-details-hydrogen-network-2024-04-05/

https://www.reuters.com/business/energy/germanys-core-network-hydrogen-fuel-cost-20-bln-euros-by-2032-fnb-gas-chairman-2023-11-14/

https://www.lexology.com/library/detail.aspx?g=2ed8fda2-db48-462a-8569-15dfbd482cea#:~:text=The%20German%20Government%20estimates%20around,by%20hydrogen%20imports%20from%20abroad.