The German Association of Transmission System Operators (FNB Gas) said that members have decided that the financing model for the hydrogen core network to run alongside natural gas must be suitable for investment by mainstream capital markets.
FNB Gas wants the core network to have a balanced risk-reward ratio and “state protection at all times and for all core network operators” to increase legal certainty.
FNB Gas Managing Director Barbara Fischer emphasized the need for the financing model to be suitable for the capital markets.
Her statement came as the “expert hearing” took placein the Committee for Climate Protection and Energy in the German Bundestag in Berlin on the draft law to amend the Energy Industry Act with regulations for the financing of the core network.
“The transmission system operators (TSOs) agree with the federal government that the hydrogen infrastructure in Germany should be financed privately,” explained Fischer.
Financing model
“To this end, the draft law presents a fundamentally functional financing model, with which the necessary private capital can only be mobilized if investors consider it to be suitable for the capital market and the investment conditions are at least no worse than for investments in other infrastructure areas such as electricity,” she added.
“There is currently a higher interest rate, no run-up risk and no deductible risk,” stated Fischer.
“In order not to jeopardize the success of core network planning to date, from an investor perspective, a few but crucial changes to the draft law are necessary. The main aim is to improve risk assessment for investors,” Fischer declared.
FNB Gas also noted that the network operators' “conditioned tender obligation” must be supplemented by an unconditional tender right of the network operators in the event of failure of the market ramp-up.
“A contract under public law would increase legal certainty,” said FNB Gas.
Capacity reservations
FNB Gas said earlier in February that members were seeking more capacity reservations and capacity expansion for pipelines as well as more sector benefits from imported and regasified LNG and from power plants in accordance with the new gas industry framework for Germany.
According to the German federal government's draft law, the TSOs and the regulated operators of hydrogen transport networks must create the framework for the first integrated network for gas and hydrogen by June 30, 2024.
The FNB plan focuses on the conversion of 60 percent of existing gas pipelines to carry hydrogen, which is additionally burdened by being more explosive than natural gas.
FNB has also previously outlined the future role of LNG import facilities at the coastal locations of the North Sea port of Wilhelmshaven, at Brunsbüttel on the Elbe and at the Baltic Port of Lubmin.
FNB Gas, which comes from the German words Fernleitungsnetzbetreiber, groups a dozen companies overseeing 40,000 kilometres (25,000 miles) of natural gas pipeline flows and other infrastructure.
The TSOs had earlier presented their draft gas network development plan through 2032 and which reflected the far-reaching changes in Germany's energy supply now that Russian pipeline gas deliveries have ended.
Gas demand issues
FNB Gas, which is based in Berlin and was founded in 2012, believes that German natural gas consumption was expected to fall by at least 20 percent by 2032.
Germany first presented its hydrogen strategy in mid-2020 under the Government of Chancellor Angela Merkel.
The strategy was continued by the Government coalition after Merkel of the Social Democrats (SPD), the Green Party and the Free Democrats.
The three parties agreed to present an ambitious update to the strategy to make the country a leading market for hydrogen technologies by 2030.
Members of FNB Gas are the following companies: bayernets GmbH, Ferngas Netzgesellschaft GmbH, Fluxys TENP GmbH, Gascade Gastransport GmbH, Gastransport Nord GmbH, Gasunie Deutschland Transport Services GmbH, GRTgaz Deutschland GmbH, Nowega GmbH, ONTRAS Gastransport GmbH, Open Grid Europe GmbH, terranets bw GmbH and Thyssengas GmbH.
