Germany has plans to develop a hydrogen core grid, envisioned as the backbone of its future energy supply for multiple industries.

The Bavarian industry lobby group, ‘vbw’, vocalizes the need for greater clarity in terms of how this ambitious project will be funded.

The group emphasizes that a well-founded infrastructure for hydrogen is essential to meet the country’s climate goals and facilitate a successful energy transition. However, the association identifies several uncertainties surrounding hydrogen, advocating for a regulatory framework that secures investment by catering to the capital market.

The potential for market scale-up failure is cited as a major concern for investors without this regulatory framework. The group states the success of the scale-up largely depends on the state’s regulations concerning production, import, and usage of hydrogen.

Germany’s Federal Network Agency (BNetzA) initiated a public consultation on the hydrogen core grid’s funding earlier this week. The head of BNetzA, Klaus Müller, affirmed the agency’s intent to establish reliable grid fees.

The agency outlined a plan to finance the grid through grid fees until 2055. It aims to keep grid user costs steady for three decades, and stresses that the cost of establishing the hydrogen grid infrastructure will be borne fully by grid customers. Additionally, the agency proposed state guarantees to cover funding gaps until hydrogen transport profits materialize, particularly considering the anticipated low grid usage in the initial years.

Germany’s government is supporting a project to construct a 9,700-kilometre-long pipeline network to transport hydrogen domestically and to neighboring countries by the year 2032. This hydrogen core grid is designed to bridge supply and demand by connecting large feed-in locations- where hydrogen is produced or imported- to high-demand areas such as industrial regions.