KfW is backing the development of a national hydrogen core network in Germany, acting on behalf of the German Federal Government. This initiative is part of the government's national hydrogen strategy, aiming to establish 9,040 km of infrastructure by 2032. KfW's involvement includes financing a new instrument known as the amortisation account with a loan of EUR 24 billion. The agreement for this loan was finalized yesterday evening.
Stefan Wintels, Chief Executive Officer of KfW, stated: "The construction of the hydrogen core network is a pioneering and crucial project for the ramp-up of hydrogen that is as green as possible. A successful transition to hydrogen is particularly critical for energy-intensive industries. 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 hydrogen core network."
The core network will primarily be funded through private means. To ensure affordability from the start, the Federal Network Agency will cap network fees. A compensation mechanism will cover the gap between high initial investment costs and low early revenues from these fees. KfW will supply necessary compensation payments through the amortisation account. Once revenue from network fees surpasses costs, excess funds will return to this account.
This project involves repurposing existing natural gas pipelines and constructing new hydrogen pipelines. It aims to integrate potential production sites and connect major industrial centers, facilitating industrial use of hydrogen as a climate-neutral energy source.
Further details on financing can be found on KfW's website in German. Additionally, KfW Research has released a study titled “The green hydrogen economy is taking off – Where does Germany stand?” available in German.