Hydrogen core network: EU Commission approves 3 billion euros in aid

Germany may provide 3 billion euros in aid for the construction of long-distance pipelines for the future hydrogen core network. The project serves the objectives of the EU's hydrogen strategy and the "Fit for 55" package, the EU Commission explained its decision. Without the long-distance pipeline infrastructure, renewable hydrogen for industry and transport could not be ramped up by 2030.

Federal Minister for Economic Affairs Robert Habeck presented the plans for the German hydrogen core network in November 2023. 9,700 kilometers of pipelines are to be built between industry, storage facilities and power plants. Existing natural gas pipelines will be converted and new pipelines and compressor stations will be built.

Core network ready by 2032

The first major pipeline is scheduled to go into operation in 2025 and the entire core network is to be completed by 2032. According to the EU Commission, Germany expects few network users at the beginning, meaning that the fees will initially be lower than necessary to cover the costs. The aid is intended to promote the use of the network and the ramp-up of the hydrogen market.

The construction and operation of the hydrogen core network will be financed by the hydrogen transmission system operators, who will be selected by the Federal Network Agency. The aid is granted in the form of a state guarantee, which enables the transmission system operators to obtain more favorable loans to cover losses at the beginning of the ramp-up phase.

The loans are granted by the Kreditanstalt für Wiederaufbau (KfW) at its own refinancing costs, which means that interest rates are below market rates. They must be repaid by 2055; the amount and timing of repayments can be adjusted in line with the expected gradual increase in demand for hydrogen. The 3 billion euros correspond to the additional financing costs that the transmission system operators would have to bear without the state guarantee.

(anw)