De­ter­mi­na­tion for the fi­nanc­ing of the hy­dro­gen core net­work

Year of issue 2024
Date of issue 2024.06.06

The Bundesnetzagentur has today issued a determination for the financing of the hydrogen core network (the "WANDA determination").

"Network operators and investors now have a reliable regulatory framework, which facilitates the financing of the core network by the private sector. At the same time, customers can depend on there being a uniform, affordable ramp-up tariff throughout Germany. The onus is now on the network operators to get started on the hydrogen economy," said Klaus Müller, President of the Bundesnetzagentur.

Go-ahead for the launch of the hydrogen core network with rules for calculating a marketable tariff

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 launching the hydrogen network. The tariff would be charged as from 2025 at all entry and exit points of the hydrogen core network. The aim is for the tariff to remain steady as far as possible until 2055 and then, following a successful start-up phase and a sufficient number of customers entering the market, to generate additional revenue to compensate for the initial cost deficit. The network operators' initial financing gaps will be financed in the interim by a state-secured funding mechanism, which itself is not part of the determination. The Bundesnetzagentur will review the tariff every three years and adjust it if necessary.

WANDA is the first determination to be issued by the new Grand Ruling Chamber for Energy. This ruling chamber was created in response to a ruling of the European Court of Justice, according to which the Bundesnetzagentur must determine the fundamental regulatory framework for network regulation independently of the federal government and of the national legislators.

Hydrogen core network as the next step towards decarbonisation

The hydrogen core network represents a completely new, carbon neutral energy infrastructure for Germany, and setting up the network will be very important for Germany but will also be costly. 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. Therefore the Bundesnetzagentur is initially setting the network tariffs below a cost-covering tariff 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.

Whilst the Bundesnetzagentur is responsible for the methodology for establishing tariffs, the legislators are supporting the long-term amortisation with a state-secured funding mechanism for the interim financing. The funding mechanism is not part of the WANDA determination but is closely connected in terms of its content.

This amortisation system met with broad approval from the market in the course of the public consultation held in April this year. Not only potential network operators but also various professional associations for distributors, consumer organisations and individual companies welcomed this approach of a uniform ramp-up tariff and the proposed intertemporal shift of the initial costs of the new infrastructure. 

Next steps

The next step to be taken is the network operators' request for approval of the hydrogen core network, which is expected towards the middle of this year. Also, all future core network operators that want to have their costs valid for 2025 have until 30 June 2024 to submit their costs data using the data entry form available at the link below.

WANDA is due to take effect on 1 January 2025. The WANDA determination does not set the exact tariff for the startup phase of the network. These and further aspects, such as the various transport products or possible storage discounts, will be dealt with in separate determinations later this year.

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

The data entry form for cost submissions and notes on this can be found at www.bundesnetzagentur.de/wasserstoffnetzbetreiber (in German).