Gov't agrees reform to allow German gas grid decommissioning, transformation

Germany’s cabinet agreed on a draft law reform that will allow utilities to shut down gas grids and disconnect users from supply networks. The reform to the Energy Industry Act (EnWG) would give utilities legal footing to decommission gas grids if they no longer see a future for them.

Key elements of the draft bill, which must now be debated in parliament, include provisions governing the future of gas networks, as well as guidelines on market design and the regulation of hydrogen and gas infrastructure. The reform gives utilities a legal basis for the conversion to low-carbon gases such as hydrogen or biogas, or for decommissioning, with utilities having to inform consumers years in advance about plans to disconnect them. Grid operators will have to draw up a “network development plan”, if they expect a permanent reduction in gas demand within the following ten years which requires the conversion to hydrogen or the permanent decommissioning of (parts of) the grid.

Theoretically, Germany’s gas grid could be repurposed to carry low-carbon fuels such as biogas or hydrogen. But these are expected to be prohibitively expensive and inefficient to heating buildings. Think tank Agora Energiewende therefore anticipates that the transition to net-zero will render more than 90 percent of the country’s distribution gas grid useless.

Local utilities have struggled to develop plans to decommission or repurpose their networks of gas pipelines, as a lack of rules governing the phase-out of gas grids or their conversion, as well as the question of who pays, remained major obstacles, a survey by local utility association VKU found. 

“The draft provides the basis for the urgently needed planning certainty for the future of gas distribution networks,” said VKU head Ingbert Liebing.

Energy industry association BDEW welcomed the plans, highlighting the importance of a clear planning horizon for grid operators and market participants. However, the lobby group’s head Kerstin Andreae was critical that grid operators would be solely responsible for providing information about the gas transition. “This is the task of politicians and all market participants,” Andreae said. 

Environmental group umbrella organisation DNR also welcomed the plans, but called it a “strategic mistake” to regulate the phase out of gas grids while at the same time allowing the continued installation of gas boilers. Germany’s government recently agreed to allow households to continue installing oil and gas boilers, and drop a mandatory renewable energy quota for new heating systems. 

To protect consumers, the government said utilities would have to inform affected households at least ten years in advance if they planned to stop the supply of gas. This is not permitted if it is foreseeable that no alternative heating supply will be available at the time of the planned disconnection, the reform stipulates. VKU said a five-year notification period would be enough.

The draft reform transposes European requirements into national law. The deadline to do so is 1 August.