KfW Supports Development of the Hydrogen Core Grid

KfW is supporting the construction of a national hydrogen core grid on behalf of the German Federal Government. This forward-looking project is a key component of the Federal Government’s national hydrogen strategy, as a result of which infrastructure with a total length of 9,040 km is to be created by 2032. By financing a new instrument - the amortisation account - KfW will be making a significant contribution to the implementation of this technology of the future. KfW is providing a loan for the amortisation account in the amount of EUR 24 billion. The loan agreement was signed yesterday evening.

Stefan Wintels, Chief Executive Officer of KfW: "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 grid is generally financed privately. By capping network fees, the Federal Network Agency will ensure that the costs for users are affordable from the outset. A compensation mechanism will finance the difference between the high investment costs of the core network operators and the low revenues from network fees in the initial phase. KfW will provide the necessary compensation payments for the amortisation account. As soon as the hydrogen core network operators’ revenue from the network fees exceeds the costs, the additional revenue will be returned to the amortisation account.

For the hydrogen core grid, existing natural gas pipelines will be repurposed and new hydrogen pipelines built. Integrating potential hydrogen production sites and connecting key industrial centres will enable the industrial use of hydrogen as a climate-neutral energy source.