The future role of grid operators and gas suppliers

Element 1
Element 1 planning proposal, © Tennet

Hybridge and Element Eins, two German flagship power-to-gas projects, have been put on hold. Managed by transmission system operators, the projects failed to secure government approval. Stakeholders now hope regulations will relax once Germany has introduced its national hydrogen strategy. Opponents warn that such a move would distort market competition.

Over a year ago, two pipeline operators, Hybridge (of Amprion and Open Grid Europe) and Element Eins (of Tennet, Thyssengas and Gasunie), submitted approval requests for their, at the time, largest German power-to-gas showcases. But the government refused to back their big plans. In the meantime, Element Eins has joined an illustrious project group, Living Labs of the Energy Transformation. Despite the change in status, Germany’s energy regulator still held fast to his red-light decision. The project must be “denied approval under current law,” a spokesperson for the agency confirmed.

The newly installed BDEW energy alliance workgroup is now fervently seeking a way out of the dilemma stymying both green hydrogen projects. Considering the sharp legal strictures on electricity and gas suppliers, doubts arise as to both projects’ current legality. But the biggest implementation barrier will be a new EU directive regulating the electricity market, set to be transposed into national law by Dec. 31. In Article 54(1), it states that “transmission system operators shall not own, develop, manage or operate energy storage facilities,” a category under which power-to-gas systems fall.

German government sees “promising approaches”

Nevertheless, the directive allows some exceptions. For one, operators do not have to meet “unbundling requirements” if systems are “fully integrated network components,” necessary to ensure safe and reliable gas or electric grid operation. They can also advance projects when proposal requests fail to find the required electrolyzer installers and operators. However, there are companies genuinely interested in putting up the devices. Following the lead of Hybridge and Element Eins, energy supplier RWE announced plans to build a 100-megawatt storage system in the Emsland region.

The huge federal Covid-19 stimulus package offers little help to either consortium. While it contains quite a large budget for hydrogen project funding, it makes no mention of changing rules and regulations. All transmission system operators can presently do is hope for the national hydrogen strategy to come soon. Although the government has postponed strategy publication several times, the draft version includes an interesting tidbit, namely that the government intends to test “promising approaches” that relieve the national grid, produce energy at reasonable cost and ensure competitive neutrality. The document’s authors speak of “one or two showcase projects,” following up with a sentence the Hybridge and Element Eins consortia can pin their hopes on: “Changes to the regulatory framework to create the right environment for this type of venture are under advisement.”

This article was first published on April 22, 2020, in Tagesspiegel Background Energie & Klima. At that time, the national hydrogen strategy was still in the works.

Christian Schaudwet

read more in H2-international August 2020

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