(Frankfurt, Germany) – The state-owned KfW banking group is financing the national hydrogen core network on behalf of the German government with a loan of €24 billion. The funds will be used to build an infrastructure with a total length of 9.040 kilometers. Completion is planned for 2032. The Federal Network Agency approved the project, which had been planned and prepared by the transmission system operators for a long time, in October.
The core network operators participate together in a special purpose vehicle. This manages the amortization account. KfW finances the amortization account with a credit line of 24 billion euros. The funds are used to finance the initial compensation payments to the hydrogen core network operators. © KfW
While the core network is primarily financed through private sector funding, the Federal Network Agency has ensured that costs are manageable for users from the outset by limiting network charges, according to KfW. The principle is that a compensation mechanism finances the difference between the high investment costs of the core network operators and the low revenues from network charges during the initial phase. KfW provides the necessary compensation payments for the amortization account. As soon as the network operators' revenues from network charges exceed the costs, the surplus flows back into the amortization account and is intended to offset the initial lower revenues by 2055 at the latest. As previously reported, the hydrogen core network will largely utilize existing natural gas pipelines and partly involve the construction of new hydrogen pipelines.
"The construction of the hydrogen core network is a groundbreaking pioneering project and crucial for the ramp-up of the greenest possible hydrogen," says Stefan Wintels, CEO of KfW. The successful switch to hydrogen is a key factor, especially for energy-intensive industries.
KfW Research has published a study entitled "Ramping up the green hydrogen economy – Where does Germany stand?". The paper is available free of charge as a PDF (13 pages).
Photo above
The state-owned KfW banking group is financing the national hydrogen core network with a loan on behalf of the federal government. © KfW image archive / Rüdiger Nehmzow
