German state-owned bank KfW has signed a €24bn ($25.3bn) loan agreement to help finance the cost of building the nation’s 9,040km hydrogen core network (HCN).
Having been given the green light for construction last month by the Federal Network Agency, transmission system operators (TSOs) were due to finance to build with capped user fees.
Read more:Germany’s hydrogen core network secures approval
Expected to be completed by 2032, demand for hydrogen from the network is anticipated to initially be low, making it difficult for TSOs to recoup costs.
KfW has said its new amortisation account will act as a compensation mechanism to bridge the gap between high investment costs and low initial network revenues.
“KfW will provide the necessary compensation payments for the amortisation account,” explained CEO Stefan Wintels. “As soon as the HCN operators’ revenue from the network fees exceeds the costs, the additional revenue will be returned to the amortisation account.”
H2 View understands that if the funds have not been recovered by 2055, the German Government will reimburse KfW.
“The construction of the HCN is a pioneering and crucial project for the ramp-up of hydrogen that is as green as possible,” Wintels stressed. “The amortisation account will play a key role here: the funds provided by KfW via the account will make a significant contribution to a viable financing concept for the HCN.”
The network is planned to connect production centres, import terminals, storage facilities and industrial clusters, with a feed-in capacity of 101GW.
Also expected to have 13 border crossing points, 60% of the HCN is planned to be converted natural gas pipelines.
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