Network Agency Reallocates Costs for Hydrogen Networks

August 4, 2026

Source: E & M powernews

The Federal Network Agency is working on new rules governing costs and returns on capital for hydrogen networks. These rules are set to take effect starting in the calendar year 2028.

For hydrogen network operators, the regulation specifies which costs they may pass on to network users via network fees and how interest is calculated on their invested capital. The agency intends to revise the guidelines on network costs and return on capital for the period beginning in 2028. The Federal Network Agency’s Grand Energy Decision-Making Chamber therefore initiated a rule-setting procedure on July 29.

The Bonn-based agency is conducting the proceeding under the title “Hydrogen Regulatory Framework on Network Costs and Methods of Return on Capital” (abbreviated as “WONKa”). It applies to operators of the core hydrogen network as well as operators of regional and local hydrogen networks, such as distribution networks or networks in industrial and commercial parks. However, the latter are subject to cost regulation—and thus to the new requirements—only if their operators have voluntarily submitted to regulation. The rules are intended to apply to all cost approval proceedings concerning network costs starting in the calendar year 2028.

Cost Rules Replace Regulation

The first part of the procedure determines which costs the federal authority will recognize for a hydrogen network operator. These eligible costs form the basis for the regulated network tariffs. The new regulatory framework is intended to replace the existing Hydrogen Network Tariff Ordinance (WasserstoffNEV).

According to the Federal Network Agency, it intends to largely continue the existing regulatory framework, provided that further discussion does not reveal a need for changes. At the same time, insights from the reform of electricity and natural gas network regulation are to be incorporated into hydrogen regulation. For the core hydrogen network, the agency also intends to build on existing requirements.

In doing so, the Network Agency is further developing the existing rules rather than completely rebuilding the cost regulation framework from scratch. For operators, the decisive factor is which expenses for the construction and operation of the networks the agency will accept and thus take into account in the network tariffs. The notice of initiation does not yet specify which individual cost items will be recognized in the future.

Interest Rates to Be Determined in a Separate Procedure

The second part concerns the return on capital invested by network operators. The current equity interest rates for the core network and for other hydrogen networks expire at the end of 2027. A method for determining the subsequent rates does not yet exist.

The Federal Network Agency is therefore examining whether the WACC method, familiar from electricity and gas network regulation, can also be applied to hydrogen networks. Under the “Weighted Average Cost of Capital” (WACC) method, the costs of equity and debt capital are combined into a weighted average cost of capital. The agency intends to examine the method separately for the core network and for other regulated hydrogen networks. To this end, it has commissioned the London-based consulting firm Frontier Economics to prepare an expert report.

As things stand, the authority does not yet intend to set specific interest rates using “WONKa.” Initially, the process is intended only to determine which method the authority will use to calculate the values. The authority then plans to set the actual interest rates in a separate determination.

The level of the rate of return is important for both sides: network operators need reliable revenue to finance investments. For network users, however, a higher rate of return could mean higher network fees. The process is intended to clarify where the Federal Network Agency will set the balance.

The agency plans to present a first draft in December of this year. The industry will then have the opportunity to comment on the proposed cost rules and calculation methods. It is not yet clear when the process will be completed.

Author: Davina Spohn