Bun­desnet­za­gen­tur launch­es con­sul­ta­tion on tar­iffs for the hy­dro­gen core net­work

Year of issue 2024
Date of issue 2024.04.09

The Bundesnetzagentur has today launched a consultation on its determination for the financing of the hydrogen core network (the "WANDA determination").

"We are creating the necessary framework for calculating network tariffs for the hydrogen core network, which will both support the development of a hydrogen industry in Germany and ensure reliable pricing," said Klaus Müller, President of the Bundesnetzagentur.

Determination for the financing of the hydrogen core network

The aim is for the investments made in setting up the hydrogen core network to have been recovered through network tariffs by 2055. The WANDA determination establishes the regulatory framework for the recovery of the investments and creates rules for calculating a marketable tariff for the launch of the hydrogen network. The tariff would be charged as from 2025 at all entry and exit points of the hydrogen core network and should be kept as stable as possible. The Bundesnetzagentur would review the tariff every three years and change it if necessary.

During the initial phase, the costs for network operation will be higher than the revenue, while in the second phase the revenue will be higher than the costs. These deficits and surpluses in revenue would be recorded in a special interim account, with the aim of having the account balanced by 2055. This means that setting up the hydrogen network infrastructure would be completely financed by the network customers.

The network operators' gaps in financing resulting from the delay in earning sufficient revenue would be filled in an interim period through a state-secured funding mechanism. Arrangements for this mechanism are not part of the WANDA determination but will be set out by the legislators in the Energy Industry Act (EnWG).

Background

The hydrogen core network will represent a new energy infrastructure for Germany, and setting up the network will be costly. The federal government has proposed a long-term system for recovery of the costs. The plan is for the network to be set up with private-sector financing and for investments to be fully recovered through network tariffs. Demand for hydrogen in the first few years is expected to be low, but the Bundesnetzagentur anticipates a well-established hydrogen market with a larger number of network customers in the long term. The network tariffs will be capped so as to prevent very high tariffs in the first few years from hindering the startup of the network. This means that customers using the network after the initial phase will also bear the costs of setting up the network.

The project will be safeguarded by a state funding mechanism, which will fill the gaps in financing in an interim period. An amendment to the Energy Industry Act with this mechanism is currently in the legislative procedure.

Next steps

Responses to the consultation can be submitted until 30 April 2024. The determination is due to take effect on 1 January 2025.

The draft determination and explanatory information have been published online at www.bundesnetzagentur.de/wanda (in German).

The WANDA determination does not set the exact tariff for the startup phase of the network. The tariff and other supplementary elements will be set out in separate determinations later this year.