According to Reuters, the governing coalition in Germany agreed on Friday 5 April on a financing scheme for the country’s future hydrogen transport network. It extends its construction deadline by five years with a deadline set for 2037, while offering protection to investors in case of bankruptcy.

This is a major project, since it involves a nationwide deployment of a 9,700 km hydrogen transport network, with existing gas pipelines accounting for 60% of the network. The budget is estimated at around €20 billion. Representatives responsible for energy policy from the three parties in the governing coalition agreed on Friday on the details of the network, which will be discussed and should be approved by the lower house of parliament later in the week.

Measures to encourage investors

According to the agreement, the network should be operational by 2037 at the latest, five years after the initial deadline, in order to reduce the financial burden on operators, said Social Democrat MP Nina Scheer. The project will be financed by user fees and built by private companies. To encourage investment in a technology that is still in its early stages, network operators will not be held liable if an operator goes bankrupt. This is thanks to a government guarantee of around 6.7% return on equity (before tax).

The Ministry of the Economy plans to set up an amortisation account to cover the construction costs of the network over a long period in order to avoid passing on the full amount to current consumers. The aim is to pay off the costs by 2055. However, the parties of the agreement have agreed that if demand is weak and the market fails to take off, network operators will have to bear around 24% of the costs.

More information on the central hydrogen network can be found here and here, with a press release on the planning of this network.

Do you want to learn more about hydrogen in Germany? Then our latest articles on the country should interest you. You can access all of our Germany-related articles here. 

Article written by Laurent Meillaud and translated by Mariem Ben Tili