Frontier will support the European Commission with their impact assessment of future regulation of dedicated hydrogen networks.

In its EU Hydrogen Strategy in July 2020, the European Commission has made clear that hydrogen is a key priority to achieve the European Green Deal and Europe’s clean energy transition. The Hydrogen Strategy sets out a roadmap for building a hydrogen economy in Europe over the next decade. This includes the ambition of installing at least 40 GW of electrolyser capacity by 2030.

A key prerequisite for a widespread use of hydrogen is the availability of network and storage infrastructure to connect supply with demand. This will most likely include dedicated hydrogen networks alongside approaches of blending hydrogen into the natural gas network. This does raise questions about the need to regulate this infrastructure and the form this would take.

For example, can the hydrogen market benefit from past experiences in the natural gas and electricity market? Although, it is important to note that the situation in the infant hydrogen market is different from the situation two decades ago, when regulation was introduced in an already mature and developed market.

The European Commission has asked Frontier, in collaboration with Guidehouse, to support their impact assessment of possible regulatory measures for the future hydrogen infrastructure that will advance a functioning EU hydrogen market.

Our study will accompany pre-existing work done in the field, and provide quantification of impacts of different regulatory measures where possible. The study also aims to shed further light on the controversially debated question: ‘Should natural gas TSOs be enabled to repurpose natural gas pipelines to hydrogen and operate them as part of their regulated natural gas business?’. As part of this, we will be looking at the potential for cross-subsidisation in order to foster hydrogen network development in early stages, or whether hydrogen and methane networks should be kept separate to guarantee cost-reflectivity.

Frontier regularly advises on energy infrastructure regulation and Europe’s clean energy transition.  For more information please contact media@frontier-economics.com, or call +44 (0)20 7031 7000.