As announced on 8 April, according to a study, future grid usage costs for hydrogen will be significantly lower than the fees for the electricity grid that users would have to pay to the operators of such infrastructures. The study was carried out on behalf of the DVGW, Deutscher Verein des Gas- und Wasserfaches with the participation of member companies from the gas distribution network industry.
The analysis was based on a model-based scenario in which H2 and electricity grids were considered to be independent of each other. The grid expansion requirements up to 2045 were calculated in Germany and for each federal state for electricity and hydrogen as well as the resulting transformation costs.
When calculating the grid utilisation costs for hydrogen, it was assumed that around two thirds (9.2 million) of the current domestic connections (13.7 million) for households and the commercial/trade/services sector will continue to exist. The grid utilisation costs for electricity were calculated in accordance with the 2023 grid development plan, in which the current household connections will be almost completely electrified or supplied with heating networks.
Prof. Dr. Gerald Linke, Chairman of the DVGW Executive Board, draws an initial conclusion: „A look at the so-called preferred regions, which are experiencing either gas or electricity grid expansion, provides an indication that the costs for the use of hydrogen would be significantly lower than the costs for a supply grid operated purely with electricity.“
Investments in the H2 grid totalling 24 billion euros
Based on the draft application for the H₂ core network of the transmission system operators (TSOs) from 15 November last year, investments of around 19.8 billion euros would be required to build the H₂ core network by 2032.
Converting the existing gas distribution networks to hydrogen operation would cost an additional 4 billion euros, while maintaining the existing natural gas distribution network in future H2 operation would cost a further 43 billion euros by 2045.
In a „DVGW scenario 2045“, transformation costs for H2 would be as follows: Taking into account the capital and operating costs for the core and distribution network as well as the capital costs for the residual values of reallocated assets in the core and distribution network, the full costs for the H2 network per year amount to around 6 to 9 billion euros (depending on interest rates on the capital markets).
The assumed infrastructure could supply consumers such as private households, commercial and industrial customers with hydrogen for 1.8 cent/kWh.
Investments in the electricity grid totalling around 730 billion euros
„Electrification will be one of the key pillars of the energy system. In addition to the transmission grid, the distribution grids will play a key role. In order to achieve climate neutrality by 2045, not only the heat sector, but also the areas of mobility and, in particular, decentralised generation must be considered together", says Dr Marco Greve, Managing Director of ef.Ruhr GmbH, on the transformation costs of electricity, which the company was responsible for calculating.
To estimate the need for grid expansion in the distribution grid, the future expansion capacity was distributed over the area under consideration and the necessary grid infrastructure was determined. This results in a number of additional kilometres of lines and transformers, which, priced accordingly, enables an indicative estimate of the grid expansion costs.
In this way, a grid expansion requirement across all German grids and federal states of around 730 billion euros was determined. The costs include the grid expansion costs of 301 billion euros published for the transmission grid within the grid development plan. In the distribution grid alone, this would mean an annual investment requirement of 20 billion euros. This would correspond to a quadrupling of the expenditure in 2022.
According to the scenario calculated by the EWI, Energiewirtschaftliches Institut an der Universität zu Köln, the higher investment requirements in 2045 will cause grid fees to rise across all consumers. For industrial customers, for example, the grid fees would rise by 7.0 cent/kWh, for commercial customers by 15.2 cent/kWh and for household customers by 18.0 cent/kWh.
„Gas distribution networks are the biggest lever for the energy transition“
„Hydrogen and green gases are therefore more than just an option for industry, commerce and private households, not only from the perspective of climate protection, but also from a purely economic point of view. Ultimately, the tipping point is the grid costs for hydrogen and not the pure H₂ production costs. The analysis shows that the bottom line is that the supply of green gases is enormously cheaper than the supply of electricity“, summarises DVGW boss Linke. In the opinion of the DVGW, there is no way around maximum tariff openness for an energy transition that is affordable for consumers.
„Any demand that deals with the dismantling of the hydrogen-compatible gas infrastructure, which has already been written off several times, is negligent, jeopardises investment incentives and damages Germany as a business location overall. Gas distribution networks are the greatest lever for the energy transition“, summarised the DVGW boss.
Further link: www.dvgw.de/nutzungskosten
(Source: DVGW)
