KfW Development Bank has offered €24 billion ($25.2 billion) grant to bridge the gap between network operators’ high investment costs and the initially low revenues from network charges.

KfW Development Bank has pledged €24 billion to bridge the gap between high investment costs and low initial revenues for network operators in Germany.

The German national hydrogen strategy includes a 9,000 km hydrogen network by 2032, approved by the Federal Network Agency (Bundesnetzagentur).

Initially capped network fees will ensure affordability for users, but operators face substantial investment costs. KfW’s loan will finance an amortization account to offset deficits, with surplus revenue repaying the loan once network fees exceed costs.

The network will repurpose existing gas pipelines and construct new hydrogen lines, connecting production, import sites, and industrial hubs. The first sections are set to launch next year.

“The construction of the hydrogen core network is a groundbreaking pioneering project and crucial for the ramp-up of hydrogen that is as green as possible. The successful switch to hydrogen is a critical factor, especially for energy-intensive industries,” said Stefan Wintels, CEO of KfW. “The amortization account plays a key role here: The funds provided by KfW through the account make a significant contribution to a viable financing concept for the hydrogen core network.”