Wait-and-see approach to hydrogen infrastructure development harms Germany as a business location

Regarding tomorrow’s vote in the German Bundestag on the proposal of the Federal Government within the framework of the amendment to the EnSiG and other energy industry regulations to postpone the deadline for the submission of a concept for future hydrogen network development planning by one year (to 31.12.2023), FNB Gas Managing Director Inga Posch comments as follows:

“If the BMWK now steps on the brakes when it comes to network development planning for hydrogen, it must be aware that it will hardly be possible to establish a supraregional hydrogen network in this way before the end of this decade. And without a grid, there can be no hydrogen market.

The ramp-up of the hydrogen economy is crucial for the competitiveness of Germany as a business location. Germany is in danger of missing the timely switch to a sustainable energy source. This means that important opportunities for achieving the climate targets are being missed.

Concrete proposals are on the table – from the network operators’ proposals for integrated network planning for natural gas and hydrogen to financing concepts. The dena model for pre-financing the development of the hydrogen infrastructure by the network operators in conjunction with risk hedging by the state would solve the chicken-and-egg problem in financing and ensure affordable network fees for customers. Our message as a network operator is: We are ready.

The German government justifies its wait-and-see approach with the fact that the EU gas market package has not yet been adopted. In our view, this is inconclusive. On the one hand, the EU Commission’s drafts leave the member states sufficient flexibility to transfer existing network development planning processes from the natural gas sector to the hydrogen sector. No opposition to this from the European Parliament or the Council is apparent.

On the other hand, the European Union needs Germany in particular, as the largest industrialized country, as a locomotive for the changeover. Otherwise, Germany risks becoming a brake block.

The development of a hydrogen startup network is a no-regret investment in the future. Not least in view of the USA and the knock-on effect on investment of the Inflation Reduction Act, Germany cannot afford to wait. The federal government should immediately award the contract to build the hydrogen infrastructure.”

Background:

• Transmission system operators have already been developing demand and scenario-based hydrogen networks since 2020.(Link)
• On September 1, the network operators presented concrete proposals for integrated network development planning for hydrogen and natural gas in the hydrogen report.(Link)
• At the end of August, the German Energy Agency published a target-oriented proposal for the pre-financing of the development of the hydrogen infrastructure by the network operators in conjunction with risk hedging by the state.
• The EU Commission’s drafts are currently being discussed in the Council and Parliament. They leave sufficient flexibility for member states to transfer existing network development planning processes from the natural gas sector to the hydrogen sector.