European Commission approves €3 billion German state aid to support hydrogen transmission
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In a press release, the European Commission announced that it has approved a €3 billion German scheme to fund the construction of the “Hydrogen Core Network (‘HCN’)”.
The initiative will endow funds to boost the efforts to achieve the EU Hydrogen Strategy and the ‘Fit for 55’ package. The state aid is directed towards the establishment of the hydrogen transmission infrastructure required by 2030.
The scheme to establish the HCN will reportedly be the “backbone of long-distance transport pipelines for hydrogen” in Germany. It will also become part of the EU’s hydrogen backbone, which will connect several member states.
The endowed funds will be used to repurpose existing gas pipelines and construct new ones, as well as compressor stations.
The first major pipeline is expected to commence operation in 2025, and the entire HCN project is slated to be fully completed in 2032.
The financial support will be provided as a state guarantee to hydrogen transmission system operators (TSOs) chosen by the German state. These TSOs will receive preferential loans to cover initial losses during the early stages of the HCN’s development and operation.
The national promotional bank Kreditanstalt für Wiederaufbau (KfW) will distribute the funds at its own refinancing cost, which is below market rates.
The amount allocated corresponds to the extra financing expenses that the TSOs would have incurred without the state guarantee. The repayment period ends in 2055.
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