INES Comments on Hydrogen Network Tariff Regulation

The German Ministry of the Economy currently consults a Hydrogen Network Tariff Regulation. The regulation determines admissable costs for voluntarily regulated hydrogen network operators. INES believes that the regulation must ensure that costs are defined on a level that would also be reached in the market.

The German Federal Ministry of Economics and Energy consults a draft for a Hydrogen Network Tariff Regulation (Hydrogen NTR) from today till Friday, September 10, 2021. The Hydrogen NTR addresses rules to determine costs of operation for hydrogen networks. However, how these rules influence the coming-together of network tariffs is not part of the regulation. The regulation concerns construction and operation of pure hydrogen networks as well as determining costs resulting from the conversion of gas networks into hydrogen networks. It thereby follows current gas network regulation mildly. Though the rules are modified in such areas that have to be treated differently due to the yet immature hydrogen market runup.

Sebastian Bleschke, Managing Director of INES, comments:
„With the Hydrogen NTR, the Ministry follows its path for an adaptive regulation of hydrogen networks consistently. While the Energy Economy Law (Energiewirtschaftsgesetz, EnWG) lay the foundation, the current regulation substantiates on how costs for voluntarily regulated Hydrogen Transmission System Operators (Opt-in) have to be determined. Generally, the regulation has to ensure that hydrogen network costs are defined on such a level that would also evolve in a competitive market. For this to happen, operating expectancies have to be interpreted technically. Moreover, determining legitimate profits for hydrogen network operators will be crucial. Planned subsidies will have to be addressed specifically in that respect. It must be ensured by the Ministry that investments based on public funds do not yield interest after all. An ROE of 9 per cent, as currently discussed in political circles in Berlin seems to be quite high. However, that amount would be acceptable to bridge a window of five years until 2026 – as it is common for regulation periods. It seems more important to us that the Federal Network Agency (Bundesnetzagentur) as the independent National Regulation Agency defines the ROE by a politically independent calculation in the future.”

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