Amid concerns that the EU’s energy transition goals are heading towards a reset, Germany provided good news for the hydrogen industry, with a new milestone in its hydrogen network.

State-owned bank KfW signed off a €24 billion ($25.3 billion) loan to finance an “amortisation account” that the government will provide for the implementation of the core network. Berlin said last month the 9,040 kilometres of pipeline will be financed privately by network operators.

However, due to high investment costs and a cap in network fees, to ensure affordability to users from the outset, initial revenues will be low. KfW says it will provide the necessary compensation payments for the amortisation account, and as soon as the network operators’ revenue exceeds costs, the additional revenue will be returned to the amortisation account.

“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,” comments KfW chief executive Stefan Wintels. “A successful transition to hydrogen is particularly critical for energy-intensive industries.”

He explains that the amortisation account will play a key role, making a “significant” contribution to a “viable” financing concept for the hydrogen infrastructure, which should come online by 2032. The mammoth project consists of the repurposing of existing natural gas and the construction of new hydrogen lines.

It will connect potential hydrogen production sites to key industrial centres to enable industrial use. This part, however, is another challenge that companies and governments must address if climate targets are to be met.