Associations warn against ownership separation of hydrogen and gas networks

The European Parliament’s Energy Committee has come out in favor of distinguishing between transmission and distribution system operators and against separating ownership of the hydrogen and gas network at the distribution network level. The Federal Government is urged by a coalition of organizations to take steps to guarantee that the Council adopts the European Parliament’s viewpoint.

The EU Commission is preparing to separate ownership of the hydrogen and gas networks at the distribution network level during the market ramp-up of the hydrogen economy. These plans are criticized by a large coalition of associations, who also make requests to the federal government. The associations criticize the initiative for impeding the rapid expansion of the hydrogen economy and undermining the success of the region’s and the municipalities’ energy transitions toward climate neutrality.

Members of the European Parliament have spoken out against the ownership separation of the hydrogen and gas networks at the distribution network level in the Industry, Research, and Energy Committee (ITRE) of the European Parliament. Also, MEPs decided to keep the separation between transmission operators and distribution system operators, which has worked well for hydrogen networks as well as those for electricity and gas.

The potential for hydrogen and gas networks to operate together has also received praise from ITRE MEPs. By dividing the networks into two separate businesses, unnecessary administrative obstacles would be put in the way of effective network operation. After 2030, it should be able to unbundle agreements for transmission system operators while still having the option of the so-called ITO (Independent Transmission System Operator) model. The association alliance claims that the method has demonstrated its effectiveness in gas networks.

The coalition of organizations calls on the Federal Government to maintain its unequivocal commitment to the EU Council of Energy Ministers to ensure that the Council upholds the European Parliament’s position. However, from the associations’ perspective, the Council proposal’s lack of distinction between distribution grids and transmission networks ultimately results in needless and excessive requirements and makes it practically impossible for many regional and local actors, such as municipal utilities, to organize hydrogen distribution effectively.

The gas network that has been modified for hydrogen must be used to transport and distribute the hydrogen, whether it is domestically produced or imported. The signatories of the alliance of associations further criticize the fact that failing to use the current gas network would delay the ramp-up of hydrogen from the very beginning.

According to the associations, in order to provide industry and commerce, both the transmission network and the greatly ramified distribution network are required: The proposals from the Commission ignore the reality that, in Germany alone, more than 99 percent of industrial and commercial clients currently buy gas through distribution networks. This comprises over 1.8 million medium-sized businesses that employ several million people. The associations insist that this treasure must also be raised for hydrogen distribution. “A coordinated transformation of the gas network infrastructure depends to a considerable part on a speedy, efficient, and socially equitable decarbonization of customers and firms connected to the gas network as well as the preservation of the security of supply,” the alliance adds.

Federal Association of Energy and Water Industries (BDEW), Federation of German Industries (BDI), German Association of Rural Districts, German Association of Cities, German Association of Towns and Municipalities, United Services Union (ver. di), and Association of Municipal Companies are some of the organizations that have signed the appeal (VKU).

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