10.06.2020

National Hydrogen Strategy Triggers Transformation

The German government passes the much-anticipated National Hydrogen Strategy today, thereby leading the transformation path towards a carbon-neutral gas sector in an entirely carbon-neutral energy system. Many of the concerns of gas storage system operators have been addressed; however, at some points the Initiative Erdgasspeicher (INES) would have advised a somewhat more courageous approach.

Sebastian Bleschke, Management Director of the Initiative Erdgasspeicher (INES) takes a generally positive stance on the National Hydrogen Strategy: “The National Hydrogen Strategy triggers the transformation of the gas sector. It’s the beginning of a truly exciting development that gas storage system operation will actively take part in.”

INES puts emphasis on the following aspects:

• The Strategy takes a clear market-based approach with funding on merely some priorities of the hydrogen economy. It improves the legal framework for utilizing hydrogen at the end-consumer level and supports production capacities to get up and running. A market-based approach is also outlined concerning business and cooperation models between TSOs and companies focusing on electrolyzation. They are legally bound by unbundling regulations.
• The German government does not legally exclude blue and turquoise hydrogen.
• The German government announces that state-induced price components as levies and charges will be altered and reformed, thereby addressing goals of the energy transition such as the usefulness for networks. A carbon price will be the key instrument and the renewable energy levy (“EEG-Umlage”) will be limited and reduced. The government considers green hydrogen to be completely excluded from the renewable energy levy.

“The government’s support to get the market for electrolysis up and running and the announcement of further reforms on levies and charges are essential political demands of gas storage system operators,” Sebastian Bleschke comments. “However, we would have wished for a somewhat more courageous approach concerning network charges in the electricity and gas sector. INES still calls for regulatory changes in this field.“

Gas storage facilities will significantly help to get the hydrogen market up and running. Based on hydrogen they can provide carbon-neutral flexibility at large scales to balance increasing fluctuation in a renewable energy system. Recent studies on the hydrogen market (e.g. Bloomberg New Energy Finance’s “Hydrogen Economy”) indicate that the gas storage demand will rise in an increasingly hydrogen-dependent economy. The future market-design has to take this development into account.

As the National Hydrogen Strategy focuses on market development issues, regulatory questions (e.g. on hydrogen networks) are not addressed in detail. The government merely plans to discuss what is needed in the long run with relevant stakeholders and to put together a guidance report. A suitable approach as Sebastian Bleschke points out: „A stakeholder dialogue should address regulatory issues that are helpful to develop a hydrogen market. Our focus lies on the interaction of networks and gas storage facilities for example. We will therefore actively take part in the process.“

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