Payment issues

This LAP concerns the injection of hydrogen into the low pressure transmission gas grid at the local DSO level and the cost allocation, payment and incentives framework covering injection installations and hydrogen gas conveyance via the DSO network

Glossary:

Additional tariff restrictions (positive or negative) relating the transport of hydrogen compared to the regulated transport tariffs for natural gas (e.g. payment issues in connection to the injection of hydrogen or methane into gas network are: connection costs, feed-in tariffs, remunerations).

select country:

Is it a barrier?

Assessment Severity

Questions:

Question 1 Who bears the following costs and if they are shared between the DSO/TSO and the hydrogen facility operator/ supplier – in which proportion. a) grid connection costs: i. for connection facility ii. for connecting pipe line b) costs for availability of the network connection, maintenance and operation of the network connection c) feed-in costs d) remuneration for avoided network costs e) tax incentives f) others

a - i. – In Germany, with the aim to promote the feeding in of hydrogen and synthetic methane to the grid, the both of them are included in the definition of biogas in Energy Industry Act, subject to the condition that they primarily originate from renewable energy sources. This means that the privileges/incentives described below are applicable only for the injection of renewable hydrogen and synthetic methane. According to § 33(1) of Gas Network Access Ordinance the grid connection costs for the connection facility shall be borne by network operator to 75%, and by the connecting party (hydrogen supplier) to 25% ii. – a) for connecting pipeline with length < 1 km but no more than 250, 000EUR – 75% network operator, 25% connecting party (hydrogen supplier) b) for connecting pipeline with length < 10 km. for the length < 1km – see a) for the length ≥1 km < 10 km – 75% network operator, 25% connecting party (hydrogen supplier) c) for connecting pipeline with length ≥ 10 km – for the length < 10 km – see a) and b) – for the length ≥ 10 km – 100% connecting party (hydrogen supplier)

Question 1 Who bears the following costs and if they are shared between the DSO/TSO and the hydrogen facility operator/ supplier – in which proportion. a - grid connection costs: i. for connection facility ii. for connecting pipe line

b - According to § 33(2) of Gas Network Access Ordinance the network operator has to ensure permanently the availability of the network connection, but at least 96%, and is responsible for the maintenance and operation of network connection. He bears the costs for this.

Question 1 Who bears the following costs and if they are shared between the DSO/TSO and the hydrogen facility operator/ supplier – in which proportion. b - costs for availability of the network connection, maintenance and operation of the network connection

c - The water electrolysis plants for production of hydrogen and closing methanation plants are free from feed–in costs for the gas network, for which they are connected. (§118 (6) of Energy Industry Act) No feed– in costs are payable for the feed in of biogas into the transmission network.(§19(1) of Gas Network Charges Ordinance)

Question 1 Who bears the following costs and if they are shared between the DSO/TSO and the hydrogen facility operator/ supplier – in which proportion. c - feed-in costs

d - Biogas transport customers (hydrogen suppliers) receive from the network operator in whose network they feed directly, fixed remuneration of 0.07 EUR/kWh of fed biogas for avoided network costs for 10 years from commissioning of the respective network connection for feeding biogas. This applies regardless of the power level into which is fed. (§ 20a of Gas Network Charges Ordinance). These costs are transferred to all gas network customers in Germany.

Question 1 Who bears the following costs and if they are shared between the DSO/TSO and the hydrogen facility operator/ supplier – in which proportion. d - remuneration for avoided network costs

e - None

Question 1 Who bears the following costs and if they are shared between the DSO/TSO and the hydrogen facility operator/ supplier – in which proportion. e - tax incentives

f - No

Question 2 In case additional costs occur for injection of hydrogen in the grid, e.g. metrology equipment needed for measurement, in your country compared to natural gas injection, who will bear these costs? Please indicate which additional costs.

According to § 36(3) of Gas Network Access Ordinance the network operator is required to exchange the process gas chromatograph if this is necessary in order to comply with the gas billing requirements in DVGW Worksheet G 685 following injection of renewable hydrogen and if the associated costs would not make the entire connection economically unreasonable.

Question 3 Is a hydrogen injection connection point treated in the same way as a natural gas injection point with respect to the (transport) tariffs framework?

See Question 1, c)

Question 4 Does the sustainability (hydrogen in the natural gas grid) have additional financially benefits for you as a DSO besides the regular transportation fees?

Avoided network costs

Question 5 Does a DSO have contractual agreement and/or responsibilities with the supplier/shipper with regard to injection of hydrogen in the grid that could influence/affect payment issues?

The payment issues are stipulated in the connection and in injection agreements between the network operator and the hydrogen supplier.

Question 6 Are there any benefits from the national tariff-system in relation to “sustainable” / “non (or less)-sustainable” with regard to hydrogen – natural gas blend?

Yes, described in Question 1

Question 7 Are there any incentives granted for the hydrogen facility operator/supplier?

Yes, described in Question 1

Describe the comparable technology and its relevance with regard to hydrogen

Biogas

National legislation:

Energy Industry Law (Energiewirtschaftsgesetz, EnWG) >
§3 (10c) Biogas
Hydrogen generated by water electrolysis and synthetically produced methane when the electricity used for the electrolysis and the carbon dioxide or carbon monoxide used for the methanation in each case originates primarily from renewable energy sources within the meaning of Directive 2009/28 / EC
Gas Network Access Ordinance (Gasnetzzugangsverordnung – GasNZV)
Gas Network Charges Ordinance (Gasnetzentgeltverordnung – GasNEV)
§20a

EU Legislation:

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.