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?

Yes

Type of Barrier

Structural barriers, Operational barriers, Economic barriers, Regulatory gap

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. – supplier ii. – DNO

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 - DNO

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 - In principle the H2 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. c - feed-in costs

d - DNO

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 - NA

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 - NA

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.

In principle this would be the H2 supplier

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?

In principle yes, but restricted by the 0.1% H2 concentration in the grid

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?

No additional financial benefits at present. This would need to be agreed and the benefits quantified under the UK Revenue Incentives Innovation Outputs (RIIO) scheme managed under the regulator, OFGEM

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?

In principle yes

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?

None at present. This would need to be agreed and the benefits quantified under the UK Revenue Incentives Innovation Outputs (RIIO) scheme managed under the regulator, OFGEM

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

None in place at this time. This would need to be agreed and the incentive framework included under the UK Revenue Incentives Innovation Outputs (RIIO) scheme managed under the regulator, OFGEM

Describe the comparable technology and its relevance with regard to hydrogen

Bio–methane

National legislation:

Gas Act 1996
Privatisation and unbundling of the gas industry; limiting the market power of British Gas; extending competition to industrial and domestic markets to obtain benefits of competition in terms of market entry and in benefits to customers
Gas Safety Management Regulations 1996
Pipeline Safety Regulations 1996
Gas pipeline integrity and securing safety in the design, construction, installation, operation, maintenance and decommissioning of pipelines. Establishing a safe operations framework that applies to pipelines in Great Britain and to those in territorial waters and the UK Continental Shelf
Utilities Act 2000
Provided for the establishment and functions of the Gas and Electricity Markets Authority and the Gas and Electricity Consumer Council; to amend the legislation regulating the gas and electricity industries; and for connected purposes – subsequently to become the Office For Gas & Electricity Markets (OFGEM)
UK Health & Safety Executive 1996
Creating the UK Statutory Agency legally responsible for applying all relevant EC Directives relating to the design, installation and operation of facilities and their operative workforce personnel

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.