„National hydrogen grid company would have no discernible added value“

Munich (energate) – With the update of the National Hydrogen Strategy, the Federal Ministry of Economics has proposed the establishment of a hydrogen network company with state participation. Opposition came promptly from the Bavarian state government. In the Free State, the long-distance network operator bayernets is already working on a hydrogen start-up network. energate spoke with Stefanie Jacobi, Hydrogen Project Development and Deputy Head of Grid Strategy & Innovation at bayernets GmbH, about the project and the proposal from Berlin.

energate: Ms. Jacobi, with your “HyPipe Bavaria” project you want to lay the foundation for a hydrogen network in Bavaria. What exactly should the network look like?

Jacobi: With “HyPipe Bavaria – The Hydrogen Hub”, Bayernets is setting up a hydrogen start-up network in Bavaria before the end of this decade. We will start with clusters in the industrial centers of Burghausen and Ingolstadt. There, we are building regional hydrogen networks to connect local producers and consumers by the middle of the decade. In a further step, we will convert various lines between Burghausen, Munich, Ingolstadt and Ulm to transport hydrogen. The resulting hydrogen transport network with a length of around 300 kilometers can be used by all market participants on a non-discriminatory basis. It forms the basis for a wide-ranging hydrogen supply in Bavaria and creates optimal conditions for connection to the national and European hydrogen transport infrastructure.

energate: To what extent do you use existing gas pipelines for this?

Jacobi: We plan to use existing natural gas pipelines for the most part for the Bavarian hydrogen startup network. For example, 95 percent of the planned hydrogen pipelines are created by converting our pipelines from natural gas to hydrogen. Using existing natural gas pipelines significantly reduces costs and accelerates hydrogen network development. In addition, our integrated planning processes and network modeling allow us to continue to ensure the secure transport of natural gas while building a high-performance hydrogen transport network.

energate: In this context, how do you assess the proposals for a national hydrogen grid company?

Jacobi: The proposals are incomprehensible to us, as they would massively slow down the urgently needed development of a hydrogen network without any recognizable added value. Like many other gas network operators, we are working with our partners in various projects to build a hydrogen transport infrastructure. In two to three years, we will convert the first lines to transport hydrogen. And if the hydrogen ramp-up succeeds as we all wish, things will continue to go from strength to strength. That a national hydrogen grid society would be faster and more efficient here is wishful thinking at best.

energate: Why is that?

Jacobi: On the one hand, further interfaces would be created. The more existing natural gas pipelines are converted, the faster and more cost-effectively the urgently needed hydrogen transport infrastructure can be built. However, since security of supply with natural gas must still be ensured, a national hydrogen grid company would have to coordinate very closely with the gas grid operators. However, the processes required for this would first have to be established. In contrast, the gas network operators have already been working together very successfully for years in the interests of secure natural gas transport and can develop the creative solutions for hydrogen transport that are required in many places.

On the other hand, gas network operators have mastered the planning, construction and operation of pipelines for the transport of gaseous energy sources for many decades. In contrast, a national hydrogen grid company would start from scratch and would have to compete with gas grid operators for the already scarce skilled personnel.

Furthermore, there is often decades of trusting cooperation between gas network operators and the customers connected to their networks. This is a basic prerequisite for a successful conversion from natural gas to hydrogen. It is completely unclear how a newly formed hydrogen network company is supposed to manage such a conversion without knowledge of the plants and processes.

energate: The federal government argues that state participation could ensure financing of the necessary investments on favorable terms.

Jacobi: There is sufficient equity and debt capital available once the amortization risk has been resolved in the unlikely event that the hydrogen ramp-up does not succeed as expected. The German Energy Agency (Dena) has put a sensible proposal on the table for this. According to this, the state does not have to take any money into its hands, but acts “only” as an insurance company. The risk of the insured event occurring can be significantly influenced by the right legal framework. In this context, it is still important that the Dena model assumes a regulated system, so that losses are not socialized and profits privatized.

energate: Bavaria’s Economics and Energy Minister Hubert Aiwanger is at odds with the federal government on the national grid company. After “HyPipe Bavaria” failed to join the ranks of funded IPCEI projects, the Bavarian government now wants to step in with funding. What’s next for the project?

Jacobi: We welcome the Bavarian government’s initiative to provide start-up financing and thus offer our own solution to the amortization risk. However, we do not yet know the details. Irrespective of this, we are continuing to drive the “HyPipe Bavaria – The Hydrogen Hub” project forward intensively together with our partners.

Source: energate messenger (04.01.2023)