There should be a gradual approach to regulating hydrogen networks in Europe, with interventions dependent on how the sector evolves, Europe’s energy regulators have said.
On 9 February, the Council of European Energy Regulators (CEER) published a white paper focused on when and how to regulate the hydrogen networks of the future. Specifically, it sought to explore circumstances under which regulation is needed, how existing hydrogen infrastructure should be treated, and how to address regulatory challenges related to the repurposing of gas infrastructure for dedicated hydrogen transport.
Unlike when regulation was brought in for gas and electricity networks, hydrogen infrastructure is not in place in most member states. The market also still needs to be developed. The availability of infrastructure for connecting supply and demand was cited as a condition for widespread use of hydrogen as an energy carrier in the EU in the EU’s Hydrogen Strategy, with the paper noting the future development of this is where the potential need for regulation would stem from.
Together with the Agency for the Cooperation of Energy Regulators (ACER), CEER set out several issues in need of consideration when addressing the regulation of hydrogen networks as part of a proposal for energy system integration.
As well as the need for a gradual approach, it called for a dynamic regulatory approach to be taken as well, based on periodic market monitoring. This would include an assessment of the market structure and circumstances that would increase the risk of abuse of a dominant position by hydrogen networks. It also called for regulatory principles to be clarified from the outset, providing certainty to investors as to when regulation should kick in and regarding the general principles that will be applied to future European regulation of the hydrogen sectors.
The regulatory framework should be clarified from the outset for private hydrogen networks constructed as business-to-business networks as well. There is a need to foresee temporary exemptions to future regulation, which may be explicitly foreseen in forthcoming EU legal framework, avoiding that point-to-point pipelines are unnecessarily impacted while ensuring those exemptions are given under the same EU regulatory framework.
Consideration of the benefits of repurposing gas assets for hydrogen transport was also recommended, for both gas and hydrogen end users. This would be assessed on a case-by-case basis through cost benefit analyses, taking all relevant factors into account. Elsewhere, cost reflectivity should be applied to avoid cross-subsidisation between the gas and hydrogen networks.
