Legal status of power-to-gas plants and energy storage facilities (energy consumer or energy producer)

This LAP is concerned with implementation of Power to Gas facilities, covering energy consumption (electrolyser operation), energy storage (hydrogen or otherwise), and energy generation (from hydrogen or other storage means) and the extent to which the plant has legal recognition or constrained within the current legal context

Glossary:

Power to gas (also power-to-gas) (often abbreviated P2G) is a technology that converts electricity from renewable energy sources to hydrogen or methane. The renewable gas can be transported in the existing gas infrastructure, stored and then used in a range of applications. It is reconverted when in demand. Likewise, the direct use of hydrogen, for instance in the mobility sector or in refineries, is possible.
Power to Gas is a sectoral integration system solution with which renewable energy sources can be integrated into the energy supply system. Different technologies must interact seamlessly for the Power to Gas concept to work. The most important processes include electrolysis and methanation. Water electrolysis to generate hydrogen is the core process of the Power to Gas concept. Energy storage facilities are facilities which receive energy with the objective of storing it electrically, chemically, electro- chemically, mechanically or thermally and of making it available again for use at a later time
Is it a barrier?
Yes
Type of Barrier
Structural barriers
Assessment Severity
2
Assessment
The classification of the storage facility as an end user leads in principle to the charge of the fed in and withdrawn electricity with various energy charges and allocations (for example, EEG apportionment, network charges, cogeneration apportionment, electricity tax).
There is a need for clarification at EU and national level on the legal status of PtG plants and energy storage facilities.
PtG plants are not end users and should not be categorised as such. Exemption will free them from inappropriate taxes and contributions associated with electricity purchases.

Questions:

Question 1 What is the legal status of power-to-gas plants?
In German legislation does not exist a clear classification of the legal status of power–to–gas plants. In many cases (more theoretically) they are treated as end users.
Question 2 What is the legal status of hydrogen storage facilities?
The Germany Energy Industry Act treats the energy storage facilities as end users as well as production plants. Storage facility is a facility for the storage of gas, which is owned or operated by a gas supply undertaking but with the exception of the part used for a re–conversion of electricity. (§3(33))
Question 3 Are there some burdens or privileges for power to gas plants and/or hydrogen storage facilities?
The classification of the power to gas plants as an end user leads in principle to charging twice in electricity price various energy charges and allocations (for example, EEG apportionment, network charges, cogeneration apportionment, electricity tax) – once by using electricity for production of hydrogen and then by reconversion of electricity from hydrogen. In order to avoid such double charge, there are several regulatory instruments that help to promote the development and application of Power to Gas technology. The most important ones are listed below: a) Renewable Energy Sources Act Exemption from the EEG apportionment (§61k) for the direct purchase of electricity from renewable energy sources for electrolysis and for intermediate storage, as long as the storage gas is then used to generate electricity. b) Electricity Tax Act Exemption from electricity tax for electricity used for electricity production. (§9) Manufacturing companies can request exemptions for electricity taken from the grid for electrolysis. (§9a) c) Energy Industry Act Exemption from gas and electricity network charges (§118) From gas network tax when feeding gas into the natural gas network. From electricity network tax for plants when storing electrical energy. d) Energy Tax Law Currently, hydrogen and synthetic methane from renewable energy sources are not counted towards the biofuel quota. Synthetic methane is taxed as conventional natural gas, and until 31 December 2018, it will be subject to tax reduction (§1a). e) Federal Emission Control Act Renewable hydrogen and synthetic methane currently cannot be offset against the greenhouse gas reduction rate for fuels. However, a statutory ordinance in §37 d allows the list of biofuels to be supplemented per the current European legislation. f) Combined Heat and Power Act The supportive mechanism is described in LAP 8.1.3. g) Ordinance on Gas Network Access Priority in gas network access given to feed–in of hydrogen and synthetic methane, limitation of grid connection costs for the connected party (§33). The hydrogen and synthetic methane are legally treated as biogas. The supportive mechanism is described in LAP 7.2.3.
Describe the comparable technology and its relevance with regard to hydrogen
Energy storage facilities

National legislation:

EU Legislation:

  • Directive 2010/75/EU on industrial emissions (integrated pollution prevention and control (IED)
    The Directive, which applies to the production of hydrogen (production on an industrial scale by chemical or biological processing) (Annex I, point 4.2) contains inter alia:
    • Basic obligations of the operator (Article 11)
    • The content of permitting applications (Article 12)
    • Permitting Conditions (Article 14)
    • Emission limit values, (Article 15)
    • Monitoring requirements (Article 16)
    • Access to information and public participation (Article 24)

    The meaning of "production on an industrial scale by chemical or biological processing in Annex I section 4" has been clarified by the EU Commission, in support of transposition and implementation measures. :

    Annex I Section 4 (“chemical industry”) refers to “production on an industrial scale” and contains no quantitative capacity thresholds. The scale of chemical manufacture can vary from a few grams (of a highly specialised product), to many tonnes (of a bulk chemical product); yet both may correspond to “industrial scale” for that particular activity.

    Various criteria should be taken into account to decide whether production is “on an industrial scale”, including such factors as the nature of the product, the industrial character of the plant and machinery used, production volume, commercial purpose, production solely for own use, environmental impact. Such considerations should take account of the primary objective of the IED as expressed in Article 1 as to "prevent or, where that is not practicable, to reduce emissions into air, water and land and to prevent the generation of waste, in order to achieve a high level of protection of the environment taken as a whole", complemented by the general principle set in Article 11 (c) that "no significant pollution is caused".

    The fact that the activity is carried out for "commercial purposes" may be a strong indicator of "industrial scale", […] However, it may not be sufficient to use the “commercial purpose” of an activity as the sole determinant of "industrial scale". It may also be important to take into account the potential environmental impact of a production sequence.


    Directive 2010/75/EU established an integrated approach towards prevention and control. This integrated approach means that the permits must take into account the whole environmental performance of the plant, covering e.g. emissions to air, water and land, generation of waste, use of raw materials, energy efficiency, noise, prevention of accidents, and restoration of the site upon closure. The permit conditions including emission limit values must be based on the Best Available Techniques (BAT).
  • Directive 2009/72/EC of the European Parliament and of the Council of 13 July 2009 concerning common rules for the internal market in electricity
    Directive 2009/72/EC establishes common rules for the generation, transmission, distribution and supply of electricity, together with consumer protection provisions. It lays down the rules relating to the organisation and functioning of the electricity sector, open access to the market, the criteria and procedures applicable to calls for tenders and the granting of authorisations and the operation of systems. It also lays down universal service obligations and the rights of electricity consumers and clarifies competition requirements.


    Article 25 establishes the “Tasks of the distribution system operator” which include: ensuring the long-term ability of the system to meet reasonable demands for the distribution of electricity […] as well as to ensure that the system operator does not discriminate between system users or classes of system users including e.g. when setting rules for the charging of system users, etc. Article 25 allows, however to require the distribution system operator to give priority to generating installations using renewable energy sources or waste or producing combined heat and power.

    Article 32 sets the rules on “Third party access”: access to the transmission and distribution system, and LNG facilities shall be based on published tariffs, without discrimination between system users. The transmission or distribution system operator may refuse access where it lacks the necessary capacity. Duly substantiated reasons must be given for such refusal,
  • Directive 2009/73/EC concerning common rules for the internal market in natural gas
    Directive 2009/73/EC establishes common rules for the transmission, distribution, supply and storage of natural gas.

    Its provisions and obligations apply to Hydrogen Gas by virtue of Article 1 (2), which states that the rules established by this Directive for natural gas, including LNG, shall also apply in a non–discriminatory way to biogas and gas from biomass or other types of gas in so far as such gases can technically and safely be injected into, and transported through, the natural gas system.

    Article 25 establishes the “Tasks of the distribution system operator” which include: ensuring the long-term ability of the system to meet reasonable demands for the distribution of gas […];shall provide any other distribution, transmission, LNG, and/or storage system operator with sufficient information […] as well as to ensure that the system operator does not discriminate between system users or classes of system including, including e.g. when setting rules for the charging of system users, etc

    Article 32 sets the rules on “Third party access”: access to the transmission and distribution system, and LNG facilities shall be based on published tariffs, applicable to all eligible customers, including supply undertakings, and applied objectively and without discrimination between system users.