A major milestone for German hydrogen infrastructure has been reached with KfW providing €24 billion for the national hydrogen core network (Kernnetz) development. The loan, signed on November 26, secures funding for the amortization account that bridges the initial cost gap between investments and network charges.
Innovative Financing Model Ensures Economic Viability
The path to Germany's hydrogen Kernnetz is now clear. Following the Federal Network Agency's approval of the construction application in October, financing is now secured. The developed model enables private network operators to achieve viable refinancing of their investments despite initially low user numbers.
The Federal Network Agency will structure network charges to remain economically feasible for initial hydrogen customers. Simultaneously, the KfW-financed amortization account ensures necessary liquidity for network operators to cover operational costs.
Balanced Risk Distribution Until 2055
As network utilization and revenues increase, surplus earnings will repay the amortization account. If full repayment isn't achieved by 2055, the federal government will cover 76 percent of the remaining deficit, with network operators bearing 24 percent. KfW itself is secured through comprehensive federal guarantees.
The Kernnetz, planned for completion by 2032, spans 9,040 kilometers, with 60 percent utilizing repurposed natural gas pipelines. The €19 billion total investment creates essential infrastructure connecting production sites and import points with industrial consumption centers.
Core Network as Backbone of Energy Transition
With Germany's projected hydrogen demand of 95-130 terawatt hours annually by 2030 and an expected import quota of 50-70 percent, the core network is an indispensable element of German and European hydrogen strategy.
"This pioneering project is crucial for scaling up predominantly green hydrogen," emphasizes KfW CEO Stefan Wintels, particularly highlighting its importance for transforming energy-intensive industries.
