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REFILE-Grid firm OGE warns policy bottlenecks hamper pipeline switch to hydrogen

Vera Eckert and Christoph Steitz and Tom Käckenhoff
·2 min read

(Fixes typo in headline)

* OGE urges policymakers to tweak regulation

* Says investors need greater clarity over earnings potential

* Wants signal before current government's term is up

By Vera Eckert, Christoph Steitz and Tom Käckenhoff

FRANKFURT, Jan 14 (Reuters) - Open Grid Europe (OGE), Germany's biggest natural gas carrier said policymakers need to remove bureaucratic hurdles this year, so that pipelines and storage capacity can switch from transporting gas to hydrogen in the long run.

Germany, which has 40,000 kilometres of high pressure gas grids and vast storage caverns, could adjust this infrastructure to transport carbon-free hydrogen from renewable sources, OGE chief executive Joerg Bergmann told Reuters in an interview published on Thursday.

"Upgrading and converting existing gas networks to hydrogen costs only around a quarter compared to building new lines," he said.

"However, we are missing legal and regulatory requirements and a corresponding financing framework to give investors the necessary planning certainty," he said, adding the government needed to set this process in motion before general elections in September.

Germany and the European Union are seeking to usher in a new system of "green" hydrogen production based on renewable power that is run through water at electrolysis plants, and on the basis of biogas from crops.

OGE is in a prime position to lead the way in the technical switch of transport facilities as it operates 12,000 kilometres of pipelines providing cross-European gas supplies for industry and heating.

Currently, gas grids are allowed to absorb 2% of hydrogen.

Bergmann said the entire network should be made hydrogen-ready in stages, to reach 100% by 2050.

OGE and sector peers last year already laid out a plan to devote 5,900 km solely to hydrogen use much sooner, for example by reviving unused parallel trunks.

Changes were needed in the Energy Industry Act, to ensure operators can amortise investments through long-term earnings streams and in the approaches taken by the energy regulator that reports to the Economy Ministry, Bergmann said.

The Berlin government has recognised hydrogen production costs must come down and started adjusting legislation for that part. (Reporting by Vera Eckert, Christoph Steitz, Tom Kaeckenhoff, editing by Edward Taylor)