Your partner for hydrogen infrastructure:
Your partner for hydrogen infrastructure:
Supporting the hydrogen ramp-up and the transformation of natural gas infrastructure
- bayernets GmbH
- Gas Connect Austria GmbH
- GTG Nord GmbH
- Trans Austria Gasleitung GmbH
In this dynamic environment, we have been able to contribute our regulatory expertise in several projects for various clients and have dealt with the following topics, among others:
- Designing the regulatory framework
- H2 start net Germany
- Support for PCI applications
- Capacity building for hydrogen expertise
1. Regulatory framework design
The EU Commission's draft H2 package of 15 December 2021 sets a wide range of conditions for the development of the H2 infrastructure - including the ownership unbundling model as the only permissible unbundling model. The ITO and ISO models, which are also widely used by gas and electricity TSOs, would be permissible only during a transitional phase. This would exclude numerous gas TSOs from an H2 business perspective.
In a joint project with Schönherr Attorneys at Law, we
- analysed the planned unbundling regime for hydrogen network operators and its justification;
- analysed the impact on vertically integrated gas transmission system operators;
- evaluated the unbundling provisions of the 3rd internal market package;
- investigated whether and to what extent the EU legislator is entitled to impose such restrictive unbundling requirements;
- developed possible legal remedies against an unbundling regime contrary to Union law;
- formulated a stringent line of argument.
The unbundling proposal clearly violates the Constitution of the European Union and infringes the fundamental rights of vertically integrated gas companies and member states by:
- Violation of the principle of subsidiarity (Art. 5 (3) TEU);
- Violation of the principle of proportionality (Art. 5 (4) TEU);
- Violation of the fundamental right to freedom of enterprise and the fundamental right to property as provided and granted in the Charter of Fundamental Rights of the European Union.
If the planned model of ownership unbundling should come into effect,
- a legal challenge at various levels (by Member States, gas TSOs and their owners) is foreseeable; and
- the legal uncertainty pending a (final) court decision would undermine the goal of a rapid development of a European hydrogen grid infrastructure.
In subsequent proposals, the EU Council and the EU Parliament follow this legal opinion and consider all established unbundling models as permissible.
2. H2 start net Germany
For the ramp-up of the hydrogen economy, the grid connection for priority hydrogen sites (major industrial centres, storage facilities, power plants and import corridors) must be realised in time by 2032. For this purpose, a hydrogen start network is planned in Germany, which is to be planned and implemented jointly by the German gas transmission system operators.
As a gas TSO and part of a large multi-sector energy corporation, the client faced the following questions:
- Which parts of the natural gas infrastructure (including IPCEI projects) should become part of the Germany-wide H2 start network (and thus form the corporation’s hydrogen start network)?
- What measures are therefore required (new constructions or conversion from existing infrastructure, replacement measures for continued natural gas supply, etc.)?
- In what timeframe and at what cost can the client's own hydrogen start network be realized?
- What are the regulatory perspectives (including drafts of the Hydrogen and Decarbonised Gas Package, EnWG, WasserstoffNEV) for hydrogen network operators, especially with regard to distribution system operators in the context of the H2 start net?
- Identification of suitable infrastructure elements for the H2 start net
- Selection, evaluation and description of H2 start net planning variants
- Analysis of the current regulatory framework conditions for H2 network operators (at EU and federal level) and those currently being coordinated
- Analysis of the hydrogen financing proposals of FNB Gas and the federal ministry (BMWK) with regard to overall risks, individual risks from a company perspective, appropriateness of risk compensation and open points for the implementation of the financing proposal and
- Preparation of and support for strategic management decisions
- H2 roadmap: Description of the company hydrogen start network to be deployed into the start net and the corresponding timeframe
- Regulatory decision support
- Hydrogen network financing simulation tool
- Recommendations for adapting the hydrogen financing proposal
3. Support for PCI applications
- The status of "Project of Common Interest" (PCI) was introduced by the European Union to support the realisation of infrastructure projects with particular relevance for sustainability, security of supply and market integration in the energy sector. Projects confirmed as PCIs can benefit from accelerated approval procedures, are eligible for funding from the Connecting Europe Facility and enjoy other regulatory advantages.
- Since 2022, the PCI status has not been granted to (pure) natural gas projects, but only to hydrogen projects. Furthermore, the procedure of application, assessment and confirmation of PCI projects has been redesigned.
- Against this background, the question of a potential PCI application arises for a client as part of their implementation planning for a large H2 pipeline project.
- Analysing the relevant EU legislation and the process requirements of the relevant institutions (DG ENER and ENTSOG)
- Conducting interviews with experts from other gas transmission system operators on their "lessons learned" from hydrogen PCI applications
- Survey of key EU stakeholders on the PCI application process
- Preparation of the findings
- Workshop tailored to the specific questions and requirements of the client’s experts involved and presentation of the results
4. Capacity building for H2 expertise
- As part of its strategic activities in the field of hydrogen transport, a gas transmission system operator in Germany approached WECOM to focus on the future topic of hydrogen and its impact on medium-term decisions (including marketing/tariff model, IT systems and personnel development).
- In addition to the perspective of 2025 and onwards, a specific use case for a current H2 pilot project was to be analysed.
In cooperation with the client, the following training programme was developed and carried out by WECOM:
1. Introduction to Hydrogen: A Network Infrastructural Perspective
- General basics of production, transport and use of hydrogen
- Hydrogen strategy ~2030-2035 (regional, national and EU-wide)
- Brief overview of the legal/regulatory aspects
- Prospective role of hydrogen in the context of a decarbonised German energy system (production, storage, transport, use/end customer application 2050; see also our KOMMID2050 case study)
2. Analysis of a specific use case with a limited number of producers and consumers
- Definition and specification of the use case
- Conceptualisation of necessary role models and allocation of responsibilities
- Considerations regarding capacity marketing, tariffication, transport registration, transport control and transport settlement (incl. balancing)
3. Current status of H2 infrastructure regulation (in particular EU Hydrogen Package, national regulation and its implications for H2 infrastructure operators)
- Current national regulation in Germany (EnWG, WasserstoffNEV, BNetzA requirements/network access)
- EU Hydrogen Package (unbundling (ownership & vertical, accounts/horizontal), ban on cross-subsidisation, cross-border cost allocation & tariffs)
- Network development (H2-NEP, IPCEI)
- H2 infrastructure perspective of the currently discussed national hydrogen strategy
4. Technical aspects of hydrogen transport
- Comparison of physical parameters (H2 and natural gas / methane)
- Safety-relevant aspects of hydrogen (e.g., explosiveness, flammability, material embrittlement, volatilisation, odorisation)
- Climate impact of hydrogen as greenhouse gas
- Hydrogen transport (compressor types and their areas of application, compression behaviour of hydrogen and thermodynamic effects, volume flow incl. dynamic viscosity and erosion rate)
- Measurement of hydrogen (volume conversion, measurement methods, instrumentation technology)
- Multiple training workshops for a large number of experts across various departments within the company (network marketing, transport management, law/regulation, and strategy) including presentation of results