The German government and KfW have signed a loan agreement of €24bn to support the construction of a national hydrogen core network. The agreement establishes an amortisation account to finance the Federal Government’s national hydrogen strategy, consisting of an infrastructure network with a total length of 9,040 km to be developed by 2032.
While the core network is generally financed privately, the Federal Network Agency (BNetzA) will cap network fees to ensure that the costs for users are affordable from the outset. It will also establish a compensation mechanism to finance (through the amortisation account) the difference between the high investment costs of the network operators and the low revenues from network fees in the initial phase. Once the network operators’ revenue from the network fees exceeds the costs, the additional revenue will be returned to the amortisation account.
In October 2024, the BNetzA approved the core hydrogen network project proposed by transmission system operators (TSOs), with an overall expected investment of €18.9bn. Of the 9,040 km of hydrogen transport lines, about 60% should be converted from gas to hydrogen and 40% will be newly built. The first lines are expected to be converted during 2025, to be gradually put into operation by 2032. The network aims to connect future hydrogen clusters throughout Germany, while also considering the connection with neighbouring countries. In June 2024, the European Commission cleared a €3bn German state aid scheme to support the construction of the Hydrogen Core Network.