Regulatory framework for hydrogen networks

German Energy Industry Act (EnWG) 2021

Since 2021 the EnWG has defined hydrogen as a public energy source. The hydrogen network is fundamentally independently regulated and is separate from the natural gas regulation. Cross-funding between natural gas and hydrogen networks is not intended. The legislation states that hydrogen network operators are able to decide whether they wish to be subject to the regulation (opt-in) or prefer to remain unregulated. Regulation involves numerous obligations, such as the creation of a hydrogen network development plan and separate accounting. In return, regulated network operators benefit from, for example, higher returns on equity, which are covered in another regulation (H2-NEV [Hydrogen Network Tariff Regulation]). 

The EnWG also includes a duty of cooperation. However, the wording used here is ambiguous and incomplete, and it throws up antitrust issues, which is the reason why, for example, network operators are not able to exchange any information on hydrogen networks within the scope of the network development planning. This and other gaps have resulted in a lack of take-up of the opt-in of this transitional regulation for hydrogen networks in practice.

In addition, the updated EnWG is the first to contain regulations for the conversion of natural gas lines to hydrogen transport as well as for the construction and expansion of hydrogen networks. This also includes extensive permit-related relief where lines are converted from gas to hydrogen.

H2-NEV (Hydrogen Network Tariff Regulation)

The regulation on the costs and charges for access to hydrogen networks and to amend the incentive regulation (“H2-NEV”) entered into force on 1 December 2021. A key element of the regulation is the definition of returns on equity for old and new installations for operators of hydrogen networks. These have been set at 9% for new installations and 7.73% for old installations. Both are valid until the end of 2027, which indicates that the H2-NEV, too, is intended to be a transitional regulation. Overall, the regulation covers a number of important issues and can be considered a starting point for the regulation of hydrogen networks in Germany.

Hydrogen core network

An amendment to the EnWG came into force in December 2023, which contains the first building block of the regulatory, antitrust and network planning basis for the development of a hydrogen core network. The hydrogen core network forms the basic framework of the future hydrogen infrastructure. It will cover the requirements in accordance with the criteria defined in the Energy Industry Act and, in the first stage, will include important supra-regional hydrogen infrastructures that are to go into operation by 2032. The ONTRAS H2 start network of hydrogen is part of the core grid planning.