Germany to keep hydrogen and gas network regulation separate, updates storage rules

Germany’s government has approved new legislation regulating the evolving hydrogen network infrastructure. The cabinet decided to regulate the existing gas pipeline network and the new hydrogen infrastructure separately, meaning that existing planning rules for the gas grid and how it is financed via grid fees will not automatically apply to pipelines carrying hydrogen. The economy and energy ministry (BMWi) in charge of the bill said this was necessary to avoid cross-financing between fossil gas and hydrogen networks, which would be in violation of EU law. Gas grid operators, on the other hand, have long argued that it would be easiest to apply the existing rules to the new commodity in their pipelines and warned that instead of simply using the existing grid step-by-step for hydrogen, the new regulation would now make the change significantly more expensive and slower to develop. Gas transmission grid association FNB Gas said Germany was losing years in decarbonising its industry because of the decision. “The goal must be that one network can develop out of the other. Today's gas customer is tomorrow's hydrogen customer,” Thomas Gößmann, chairman of the Board of FNB Gas, said.  Energy association BDEW criticised that the separated regulation “prevents the coordinated development of gas and hydrogen infrastructures and does not set a reliable framework for investors and market participants.” Meanwhile, the Association of Energy Market Innovators (BNE) said the new rules would not prevent cross-financing and risked that the new hydrogen grid was going to be paid for by gas customers.

In the same bill, which amends the existing Energy Industry Law (EnWG), the government agreed on a new definition of “energy storage,” clarifying who is permitted to operate such devices (as a general rule: not grid operators). The new definition is also meant to prevent power storage operators from having to pay grid fees and levies twice, meaning on the electricity they purchase (to store) and again on the electricity they sell. Green Party MP Ingrid Nestle said the reform has “finally adapted the storage concept to reality.” ”Unfortunately, this does not apply to the regulation of grid fees, which still charges storage facilities twice,” she added. This worry was echoed by the BDEW, which said the new phrasing still wasn’t clear enough to prevent double charging of storage operators.

The changes to the EnWG are subject to approval by parliament (Bundestag) before they can come into effect.