LNG

The German Association of Transmission System Operators (FNB Gas) said the timetable has been set up for having a shared natural gas pipeline system with hydrogen in Germany's huge pipeline network.

The TSOs in Germany and regulated operators of gas and hydrogen transport networks are obliged by law to set up and operate the network in an equal and non-discriminatory manner.

“In order to fulfil this shared responsibility, the network operators have commissioned FNB Gas as a service provider to fulfil changeover legal tasks,” the FNB said.

The scenario framework for the first integrated gas and hydrogen network development plan is to be handed over to Germany’s Federal Network Agency on June 30, 2024.

The newly established coordination office for the integrated network development planning for gas and hydrogen (KO.NEP) has now officially begun work.

The task of the KO.NEP is to coordinate the future development of the gas and hydrogen system and to submit them to the Federal Network Agency (BNetzA) every two years.

Central contact

“It acts as the central contact for authorities and market participants on network development planning issues in the areas of gas and hydrogen and is also responsible for the creation and operation of the legally required databases for the gas and hydrogen network,” the statement added.

FNB Gas Managing Director Barbara Fischer said the body had already gained valuable experience in coordinating gas network development planning.

“We have been supporting the development of the hydrogen core network with great commitment for over a year,” explained Fischer.

“We will bring this knowledge about the processes and content of network planning in both areas into the new coordination office,” she added.

“We have put together a competent team to carry out the coordination office’s tasks,” Fischer stated.

FNB Gas 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 ports of Lubmin and Mukran.

Members

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.

Members of FNB Gas are the following TSOs: 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.

The German Association of Transmission System Operators (FNB Gas) said that had been a “significant easing of the supply situation” and Germany was looking forward to natural gas energy security in the future.

The German Association of Transmission System Operators (FNB Gas) said that members were partially disappointed with the upcoming adoption of the amendment to the Energy Industry Act (EnWG) in Germany’s Bundestag to create the legal framework for the financing and integration of development planning for the nation’s natural gas and hydrogen network.

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.

The German Association of Transmission System Operators (FNB Gas) said 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.

Germany's hydrogen obsession, which has made liquefied natural gas suppliers uneasy and prevented the Germans securing long-term LNG supply contracts, has been brought into focus by a German report saying that hydrogen demand would fall well short of the baseline the country is assuming in its plans to extend its gas network to carry the fuel.                  

The body representing German pipeline operators has issued its network development plan for gas from 2020-2030 and is preparing for the arrival of LNG cargoes in addition to pipeline supplies from Russia and Norway.

“The additional measures compared to the previous gas network development plans are largely in place in connection with the supply of Baden-Württemberg, the connection of the LNG terminals and the necessary expansion measures for ‘green gases’ and security of supply in the Netherlands,” said the German Association of Transmission System Operators (FNB) in its report.

The Germans form Europe’s biggest natural gas market after the UK and the nation is an importer of more than 90 percent of its needs.

It receives Russian natural gas via Ukraine and Poland and from the Nord Stream 1 pipeline across the Baltic Sea for onward distribution to other EU countries in the region.

Germany will additionally be joining the LNG market by 2022 with volumes from North America and elsewhere with regasification and import terminals planned for on onshore Elbe River terminal at Brunsbuettel near Hamburg and a floating storage and regasification unit at the North Sea port of Wilhelmshaven.

“For the bottleneck analysis in the Germany-wide Trading Hub Europe market area, over 51,000 individual load cases per calculation year are used,” it added.

“In the considered scenarios with different characteristics of forecast market shifts there are significant variations in the different
sources of gas from Russia, Norway and LNG,” stated the FNB.

“The transmission system operators provided results for the Gas 2020–2030 network development plan, including information obtained through public consultation and thus meet the requirements of the Energy Industry Act and the Gas Network Access Ordinance,” explained the FNB.

In the scenario framework, there are two possible outcomes for the development of gas demand in Germany up to the year 2030.

These scenarios take into account the current European climate protection goals.

With a network extending approximately 40,000 kilometres in length, the German transmission system operators form the backbone of the entire gas transport system in Germany.

The distribution system for natural gas that is fed by the transmission system is more than 470,000km long.

The existing gas infrastructure can make a significant and economically valuable contribution in the energy system of the future.

Gas itself is a climate-friendly source of energy and can become completely climate-neutral. The gas infrastructure opens up the opportunity to transport very large quantities of renewable energy as well as to store it long term.

Through the integration of “green gases” in the existing infrastructure, it is noted that a significant contribution can be made swiftly and cost-efficiently to the reduction of CO2 emissions.

“The transmission system operators also have plans for a hydrogen network based on the market needs and fleshed out by 2030,” said the FNB.

“These plans are a first step towards a national one and prospective European hydrogen network,” it added.

It was noted that it would seem to make sense to put this infrastructure to work in the future to transport “green gas”, i.e. climate-neutral gas obtained from biogas or generated synthetically from renewable electricity in the form of hydrogen or methane.

LNG facilities should also be taken into consideration “in competition for planning purposes” so that the networks are not designed to be able to take over further capacity from LNG facilities in addition to any takeover of the network entry points.

Furthermore, LNG facilities are likely to be in competition with each other.

The design of the rival marketing will enable capacity that is not nominated or not booked in the short and medium term to be used at the rival points.

The proposed rival planning is intended to allow the LNG facilities to maintain freely allocable capacity.

“The overall comparatively low cost of using market-based instruments in the gas marketing year, from the perspective of the transmission system operators, do not offer sufficient justification for an alternative Network expansion,” said the FNB.

“In terms of a needs-based network expansion, an evaluation of possible structural measures should be carried out for the period after the gas business year 2025-2026 as an alternative to the use of market-based instruments,” it added.

Natural gas supplies about 24 percent of Germany’s energy needs today, a figure that rises to 45 percent for heating and gas beats electricity by more than a factor of four.

The gas network also has substantial storage capacity, as it has to cope with significant seasonality.

Average gas consumption in February is more than three times greater than in August.

To meet the spike in demand in winter, Germany has gas storage volume of around 260 terawatt hours, enough to cover peak demand for more than two months without additional supply sources.

The body representing German pipeline operators said the leading European Union nation would have enough natural gas this winter, despite restrictions on transit routes for Russian supplies because of an EU ruling in favour of Poland and as Germany is developing its first LNG import facilities.