ACER has recommended that Member States implement inter-temporal cost allocation schemes for hydrogen networks. The mechanism, already operational in Germany, aims to mitigate financial risks during the early deployment phase, which is marked by low demand and evolving regulatory frameworks.
The European Union Agency for the Cooperation of Energy Regulators (ACER) issued on 28 July its first formal recommendation on inter-temporal cost allocation for hydrogen networks, in accordance with the new Regulation (EU) 2024/1789. This measure seeks to support infrastructure deployment in a still-uncertain context, preventing early users from bearing high tariffs that could undermine market viability.
The recommendation addresses a structural challenge: the high production cost of renewable hydrogen and the slow materialisation of demand create a volume risk that delays offtake agreements and inhibits investment. At the same time, the lack of consolidated regulatory frameworks and delays in establishing European network codes introduce significant regulatory risk.
To address this, ACER proposes an inter-temporal cost allocation mechanism that spreads network infrastructure costs over time, so that future users also contribute to the financing. The condition is that this scheme must be approved by national regulatory authorities.
“The implementation of the WANDA scheme in Germany demonstrates that inter-temporal cost allocation mechanisms are already an operational reality in Europe,” states Juan Zurbarán.
In conversation with Strategic Energy Europe, Zurbarán highlights that the German experience provides a viable pathway for other Member States and stresses the importance of mitigating the risks associated with low initial network utilisation.
To that end, ACER recommends a flexible and progressive design, avoiding premature overregulation. It also calls for clear governance, with defined responsibilities between operators and regulators, and transparent and well-timed administrative processes.
The agency underscores the need for revision mechanisms to adjust the scheme’s duration if cost or demand assumptions deviate, and to ensure alignment with future EU regulations and potential state aid schemes.
A central element is the use of realistic demand projections, including alternative scenarios and sensitivity analyses. This is intended to ensure sustainable tariff levels and avoid excessive burdens on early users if demand fails to materialise as forecast.
ACER further recommends that the return on capital (WACC) reflect only the risks not already mitigated by public guarantees. Cost separation is also crucial: variable operating costs and service costs, such as balancing, should not be included in the long-term scheme.
Regarding governance, ACER suggests that regulators develop these schemes in coordination with operators to ensure coherence and avoid overlapping roles. It also proposes market monitoring and periodic reassessment of key parameters to enable timely corrective actions.
Meanwhile, the establishment of the European Network of Network Operators for Hydrogen (ENNOH) remains pending the national transposition of Directive 2024/1788. So far, Denmark, Austria, Belgium, and the Netherlands are developing their own regulatory frameworks, reflecting a growing—though still fragmented—interest in hydrogen financing across Europe.
ACER concludes that, given the absence of consolidated best practices and a harmonised EU framework, a prudent, flexible, and principle-based approach should prevail, allowing institutional learning to accompany the evolution of the hydrogen market.
1753903702276
