In brief
Germany is taking further steps with regard to developing a national hydrogen infrastructure. On 19 June 2023, the Federal Government published respective draft legislation1 that provides for the development of a hydrogen core grid (Wasserstoff-Kernnetz). The Bundesrat (one of the two legislative chambers in Germany representing the German states) issued an essentially positive statement on this draft2. The legislation is expected to be adopted soon. The envisioned hydrogen core grid is the first step toward developing a general hydrogen grid in Germany, creating the first supra-regional hydrogen grid connecting the most important supply points with greenhouse gas-intensive industry locations.
On 27 June 2023, the Federal Government also published an Update of the National Hydrogen Strategy (Fortschreibung der Nationalen Wasserstoffstrategie) (“NHS Update”)3, which was originally published in 2020. This update — which includes the hydrogen core grid as an envisaged measure — adapts the original political framework and sets more ambitious targets for ramping up a hydrogen economy.
In depth
The hydrogen core grid
A new sec. 28 of the German Energy Industry Act (Energiewirtschaftsgesetz (EnWG)) is to be introduced, which provides for the prompt creation of a hydrogen core grid in order to enable a rapid ramp-up of the hydrogen market. The hydrogen core grid is to be the first stage in the development of a general Germany-wide (and later Europe-wide) hydrogen grid.
Objective and infrastructures to be connected
The main objective of the hydrogen core grid is to connect the main hydrogen production sites and potential hydrogen import points with the main hydrogen consumption points and hydrogen storage facilities. This aims to create an initial supra-regional hydrogen infrastructure, enabling the supply of hydrogen to particularly greenhouse gas-intensive industrial locations (such as the iron, steel, chemical, glass, and ceramics industries as well as refinery locations) where decarbonization is difficult to achieve by other means. Furthermore, large combined heat and power plants (CHP plants) (KWK-Anlagen), storage facilities, and electrolysers shall be connected to the hydrogen core grid, as well as respective import projects of common European interest (IPCEI), projects of common interest (PCI) and projects of mutual interest (PMI). Only infrastructure that is scheduled to be in operation by 2032 is taken into account. Despite the regional concentration of energy-intensive industries in Germany, especially in the Ruhr region, the core grid shall provide for a north-south and west-east corridor.
Relationship to the existing gas grid
As much as possible, the hydrogen core grid shall be realized on the basis of the existing gas pipeline infrastructure. Thus, if the functions of the gas grid as a whole are not impaired, the existing gas pipeline infrastructure shall be detached from the gas grid and converted for hydrogen transport.
Development by transmission system operators
Developing the hydrogen core grid is the responsibility of the German Transmission System Operators (TSOs) (Fernleitungsnetzbetreiber), who must submit a corresponding application for approval of the hydrogen core grid to the Federal Network Agency (Bundesnetzagentur) within a short period of time after the law has been passed. In anticipation of this, the TSOs already published an initial planning status for such a hydrogen core grid on 12 July 20234. It envisages a grid length of about 11,200 kilometers; however, it is assumed that the final hydrogen core grid will be smaller than in the current planning status due to optimizations in the future process5. After these optimizations, the core grid is expected to consist of about 60% converted gas pipelines and about 40% newly built hydrogen pipelines6.
Financing
The development of the hydrogen core grid is to be financed through grid fees (Netzentgelte). This means that there will be no special state subsidies, but the costs are to be borne by the grid users (Anschlussnehmer). Therefore, sec. 28 EnWG is to be amended to allow grid fees to be capped in the ramp-up phase and to be spread out over time in order to enable competitive grid fees from the outset.
Further steps
By the end of 2023, further legislative measures are to be taken in the second stage, and based on the hydrogen core grid, comprehensive planning for a general hydrogen grid is to be initiated7. In addition, gas grid development planning is to be transformed into integrated gas and hydrogen grid development planning. This grid development planning shall also provide for the connection of other consumers, especially via the distribution grid (Verteilnetz).
Update of the National Hydrogen Strategy
The National Hydrogen Strategy was originally adopted by the German Federal Government in June 2020 (“NHS 2020”)8 and provides the basic strategies and objectives of German hydrogen policy. It applies to the period up to 2030. The initial evaluation of NHS 2020 was scheduled to take place after three years. The results of this evaluation, as well as new developments like the war in Ukraine and its effects on energy supply security, are reflected in the current NHS Update.
The hydrogen core grid is also one of the measures envisaged under the NHS Update.
Main objectives
Even after the NHS Update, and especially in light of the war in Ukraine, the overarching objectives remain the same as they were in NHS 2020: climate protection by a transformation toward climate-neutral energy and ensuring energy supply through the competitive intra-European production of hydrogen as well as diversification and securing international hydrogen imports.
Green, blue, turquoise, and orange hydrogen
Particularly for reasons related to energy supply security, blue, turquoise, and orange hydrogen assume increased importance under the NHS Update. In this respect, the market ramp-up phase will no longer rely entirely on green hydrogen. Direct financial support for hydrogen production remains limited to green hydrogen production. However, to ensure a rapid development and market ramp-up of the hydrogen market, to enable the technological switch to hydrogen, and to cover the expected demand, the use of blue, turquoise, and orange hydrogen on the consumer side will be promoted to a limited extent in the future.
Areas for action
The NHS Update addresses the following four main areas for action (Handlungsfelder), enabling Germany to become the leading provider of hydrogen technologies across the entire value chain by 2030.
Ensuring the availability of sufficient hydrogen
Total German hydrogen demand for 2030 is currently assumed to be between 95 and 130 TWh. To meet this demand, expansion targets for domestic green hydrogen generation will be doubled from 5 to 10 GW. The backbone of this domestic production of green hydrogen is to be the expansion of electricity generation from renewable energies, especially offshore, and the establishment of a hydrogen storage infrastructure.
However, this will only cover 50% of the hydrogen demand at best, which is why imports from abroad will play a decisive role. Existing structures, such as H2Global, are to be further developed for this purpose. A more advanced import strategy for hydrogen and hydrogen derivatives is expected to be added to the NHS Update before the end of 2023.
Establishing an efficient hydrogen infrastructure
The proposed German hydrogen grid is to be set up rapidly and connected with neighboring EU countries as early as 2030 via the first European hydrogen grid (the so-called “European Hydrogen Backbone”). One of the most important measures in this regard is the development of the abovementioned German hydrogen core grid. In addition, the import infrastructure is to be improved through measures such as accelerating the expansion of hydrogen import terminals.
Establishing hydrogen applications
The conversion to and application of hydrogen is especially to be promoted in the greenhouse gas-intensive sectors, with a particular focus on the industrial and transport sectors. Notably, government subsidies are to be used in implementing this transformation. In the power sector, applications such as hydrogen power plants are to be established, specifically in the form of so-called “hydrogen sprinter power plants” (Wasserstoff-Sprinter-Kraftwerke) for the conversion of pure hydrogen or ammonia into electricity.
Establishing effective framework conditions
Coherent conditions for the entire hydrogen sector are to be created at a national, European, and, if possible, international level. To this end, homogeneous sustainability standards and certification procedures are to be introduced at the European level, especially for blue hydrogen. Furthermore, planning and approval procedures are to be accelerated for this purpose.
Conclusion
The NHS Update has become urgently necessary due to developments since 2020. It provides the next steps for the development of a comprehensive hydrogen infrastructure — especially in connection with the creation of the hydrogen core grid. However, the framework conditions that have been established by the NHS Update require further development and need to be implemented promptly. This will be especially hard to achieve at a European level, as a consensus between the EU member states must be reached. In particular, it remains to be seen how the German plans fit into the EU regulatory framework to be created by the Gas and Hydrogen Internal Market Regulation and the corresponding directive (Gas- und Wasserstoff-Binnenmarkt-Verordnung und -Richtlinie). In this respect, the trialogue negotiations are currently taking place.
Some pressing questions regarding the hydrogen core grid remain even after the draft legislation has been passed, such as the specifics on how the costs resulting from stretching the grid fees will be financed. The German Economic Ministry (Bundeswirtschaftsministerium) seems to have recognized this problem and has declared that it is working on a detailed solution9. Such a solution will hopefully be found quickly and will be balanced in such a way that the grid expansion will not be delayed as a result.
1 BT-Drs. 20/7310, link: https://dserver.bundestag.de/btd/20/073/2007310.pdf.
2 BT-Drs. 20/8165, link: https://dserver.bundestag.de/btd/20/081/2008165.pdf.
3 Fortschreibung der Nationalen Wasserstoffstrategie: NWS 2023, link: https://www.bmwk.de/Redaktion/DE/Publikationen/Energie/fortschreibung-nationale-wasserstoffstrategie.pdf?__blob=publicationFile&v=9.
4 FNB Gas, link: https://fnb-gas.de/wasserstoffnetz-wasserstoff-kernnetz/.
5 BMWK, FAQ zum Wasserstoff-Kernnetz, link: https://www.bmwk.de/Redaktion/DE/FAQ/Wassertstoff-Kernnetz/faq-wasserstoff-kernnetz.html.
6 BMWK, FAQ zum Wasserstoff-Kernnetz, link: https://www.bmwk.de/Redaktion/DE/FAQ/Wassertstoff-Kernnetz/faq-wasserstoff-kernnetz.html.
7 BMWK, FAQ zum Wasserstoff-Kernnetz, link: https://www.bmwk.de/Redaktion/DE/FAQ/Wassertstoff-Kernnetz/faq-wasserstoff-kernnetz.html.
8 Die Nationale Wasserstoffstrategie, link: https://www.bmwk.de/Redaktion/DE/Publikationen/Energie/die-nationale-wasserstoffstrategie.pdf?__blob=publicationFile&v=7.
9 BMWK, FAQ zum Wasserstoff-Kernnetz, link: https://www.bmwk.de/Redaktion/DE/FAQ/Wassertstoff-Kernnetz/faq-wasserstoff-kernnetz.html.
