Hydrogen Economy – Financing of the hydrogen core network: The first payment to the hydrogen core network operators from the amortization account has been made – Germany
The construction of a hydrogen core network is a fundamental prerequisite for the successful ramp-up of the hydrogen market. This will solve a key task of the market ramp-up: connecting suppliers and demand. Following approval of the 9,040 km core network, the hydrogen pipelines will gradually go into operation starting this year – first the converted natural gas pipelines, followed by the new pipelines. Germany is thus leading the way in Europe and has established itself as a pioneer in terms of the speed of developing a high-performance and cost-efficient hydrogen infrastructure. The Federal Network Agency adjusts the network planning every two years to reflect actual demand to avoid misinvestments.
Federal Minister for Economic Affairs and Climate Protection, Robert Habeck :
Today’s payment to the hydrogen core network operators is a milestone in the construction of the ‘hydrogen highway’ – the hydrogen core network.
“An efficient hydrogen transport infrastructure is a key prerequisite for ramping up the hydrogen economy in Germany. The core network will bring hydrogen to Germany’s major consumers, making climate-neutral transformation a reality. With the amortization account, we have developed an innovative financing concept that encourages private-sector investment and enables the long-term full financing of the hydrogen core network through network fees. Today’s payment to the hydrogen core network operators will enable the first core network pipelines to be completed this year.”
Today’s payment from H2 Amortisationskonto GmbH (AMKG) to the hydrogen core network operators serves as the first interim financing for the construction of the hydrogen core network. KfW , as the lender, has transferred EUR 172 million to the amortisation account. Repayment will be made through privately generated network fees after the market ramp-up.
Federal Minister of Finance Dr. Jörg Kukies stated:
With the establishment of a hydrogen core network, an essential prerequisite for the ramp-up of the hydrogen economy has been created.
“Now it is important to procure the required quantities of hydrogen through production in Germany and imports and to put them into use. More pragmatism is needed at the European level and in Germany, for example, regarding the criteria for the production and use of all hydrogen dyes. We are convinced that the ramp-up will be successful and that the core network will be economically viable in the long term. We are expressing this conviction through the subsidiary safeguarding of funding by the federal government.”
The core network will be financed entirely privately through network users’ network fees. Since there will be relatively few consumers in the first years of the hydrogen ramp-up, the initially high investment costs cannot be fully passed on to users. Network fees will therefore be capped to prevent initially very high fees from hindering the hydrogen ramp-up. The difference between investment costs and capped network fees will be interim financed via the amortization account and later offset by additional revenue when more hydrogen consumers are connected to the network. The concept, which is continuously evaluated, includes subsidiary financial protection from the federal government against unforeseeable developments. In addition, the Federal Network Agency will review the ramp-up fee every three years.
H2 Amortisationskonto GmbH (AMKG) was appointed by the hydrogen core network operators as a special purpose vehicle to manage the amortization account. As required by law, KfW has granted the account-holding entity a loan to provide interim financing for the construction of the hydrogen core network. AMKG’s shareholders are the hydrogen core network operators, through Trading Hub Europe (THE), and partly directly.
The next payment from the amortization account is scheduled for March 2026.
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Hydrogen Economy – Financing of the hydrogen core network: The first payment to the hydrogen core network operators from the amortization account has been made – Germany, source
