Payment issues

This LAP concerns the injection of hydrogen based SNG (via methanation) into the gas grid at TSO or DSO level and the cost allocation, payment and incentives framework covering injection installations and hydrogen gas conveyance via the gas grid

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).
Is it a barrier?
Yes
Type of Barrier
Structural barriers, Operational barriers, Economic barriers, Regulatory gap
Assessment Severity
3

Questions:

Question 1 Is the legislation with regard to injection of Methane (SNG) via methanation from hydrogen the same as for hydrogen? if yes, question 2-9 are the same as for category 7, application 1: injection of hydrogen in the gas grid and do not have to be answered
YES
Question 2 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 connecting 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. – as for category 7 ii. – as for category 7
Question 2 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 connecting facility ii. for connecting pipe line
b - as for category 7
Question 2 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 - as for category 7
Question 2 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 - as for category 7
Question 2 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 - as for category 7
Question 2 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 - as for category 7
Question 3 In case additional costs occur for injection of SNG from hydrogen in the grid, e.g. metrology, in your country compared to natural gas injection, who will bear these costs? Please indicate which additional costs and who will bear these costs.
as for category 7
Question 4 Is a SNG from hydrogen injection connection point treated in the same way as a natural gas injection point with respect to the (transport) tariffs framework?
as for category 7
Question 5 Does the sustainability (SNG from hydrogen in the natural gas grid) have additional financially benefits for you as a TSO/DSO besides the regular transportation fees?
as for category 7
Question 6 Does a TSO/DSO have contractual agreement and/or responsibilities with the supplier/shipper with regard to injection of SNG from hydrogen in the grid that could influence/affect payment issues?
as for category 7
Question 7 Are there any benefits from the national tariff-system in relation to “sustainable” / “non (or less)-sustainable” with regard to SNG from hydrogen – natural gas blend?
as for category 7
Question 8 Are there any incentives granted for the SNG from hydrogen facility operator/supplier?
as for category 7
Question 9 Does a TSO/DSO have contractual agreement(s)/responsibilities related to the national regulation with regard to injection of SNG from hydrogen in the grid that could influence/affect fees/taxes .
as for category 7
Describe the comparable technology and its relevance with regard to hydrogen
Bio–gas

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.
  • Regulation 715/2009 on conditions for access to the natural gas transmission networks
    Regulation 715/2009 sets non-discriminatory rules for access conditions to (a) natural gas transmission systems; (b) LNG facilities and storage facilities taking into account the special characteristics of national and regional markets

    To achieve this, it sets harmonised principles for tariffs, or the methodologies underlying their calculation, for access to the network, but not to storage facilities, the establishment of third-party access services and harmonised principles for capacity-allocation and congestion-management, the determination of transparency requirements, balancing rules and imbalance charges, and the facilitation of capacity trading.
  • Regulation (EC) No 713/2009 of the European Parliament and of the Council of 13 July 2009 establishing an Agency for the Cooperation of Energy Regulators
    Article 1 Project matter and scope
    This regulation aims at:
    (a) setting non–discriminatory rules for access conditions to natural gas transmission systems taking into account the special characteristics of national and regional markets with a view to ensuring the proper functioning of the internal market in gas;

    Article 8 “Tasks as regards terms and conditions for access to and operational security of cross border infrastructure
  • Commission Regulation (EU) 2015/703 of 30 April 2015 establishing a network code on interoperability and data exchange rules
    The network code on interoperability aligns the complex technical procedures used by network operators within the EU, and possibly with network operators in the Energy Community and other countries neighbouring the EU.Article 7, Measurement principles for gas quantity and quality. In addition to interconnection points, Article 17 shall apply to other points on transmission network where the gas quality is measured. Article 18 shall apply to transmission systems. This Regulation may also apply at entry points from and exit points to third countries, subject to the decision of the national authorities.