https://orcid.org/0000-0002-3159-8354
Abstract
This article examines the legal framework for hydrogen production in Austria within the broader context of European Union (EU) regulations, focusing on a company site in Tyrol. At the EU level, the Industrial Emissions Directive, the EU Hydrogen Strategy, the REPower EU Plan, and the Delegated Acts to the Renewable Directive are addressed. For the national regulation in Austria, regulations for electrolyzers (e.g. licensing and safety regulations) as well as the regulation of hydrogen networks—or the absence thereof—are examined. The study assesses the impact of these regulations on an operating location in Tyrol. This analysis reveals the intricate legal landscape shaping hydrogen production in the EU and, specifically, in Austria, highlighting challenges for project development and compliance. The study underscores the need for clarity and harmonization in regulations to support the growth of a sustainable hydrogen economy.
Introduction
The cornerstone of national energy policies is to enhance the sustainability of the energy system by significantly reducing CO2 emissions, aligning with the commitments outlined in the Paris Agreement. The objectives of the Paris Agreement include limiting global warming to within 2°C above pre-industrial levels, with a further aspiration to cap it at 1.5°C. In Europe, climate objectives encompass three key aspects: First, they include achieving a minimum 55 per cent reduction in greenhouse gas emissions by 2030 compared to 1990 levels and striving for complete decarbonization across all sectors by 2050, in accordance with the European Union (EU) Climate Law, which writes into law the goals set out in the European Green Deal.1 Secondly, they aim for at least 42.5 per cent of total energy consumption to come from renewable energy by 2030, as mandated by the Renewable Energy Directive (REDIII2). Lastly, endeavouring to decrease final energy consumption in the EU by at least 11.7 per cent by 2030 compared to the projected energy use for 2030, based on the 2020 reference scenario, as specified in the Energy Efficiency Directive.3
Clean hydrogen has emerged as a promising solution for achieving climate objectives; however, the legal infrastructure governing its production, storage, distribution, and incentivization remains in a formative stage. This article seeks to clarify the existing legal framework surrounding clean hydrogen to facilitate informed decision-making and policy development in this important field.
The legal framework surrounding hydrogen production has emerged as a pivotal area of interest as nations strive to transition to sustainable energy systems. Austria, with its commitments to renewable energy development and climate neutrality until 2040, provides an intriguing case study.4 This article delves into the legal framework for hydrogen production in the EU and Austria, considering the perspective of local hydrogen production at an industrial company site in the region of Tyrol. The article is structured to shed light on various facets: ‘General EU regulation on hydrogen’ section examines the overarching EU regulations on hydrogen, The ‘General regulatory requirements for hydrogen projects in Austria’ section details the specific regulatory requirements for hydrogen projects within Austria, and the ‘Funding for hydrogen infrastructure and projects’ section discusses funding for hydrogen projects. The ‘Impact of the legal framework for an operating location in Tyrol, Austria’ section asseses the tangible impact of this legal framework on an operational site in Tyrol, Austria. Lastly, in the final section, conclusions are drawn regarding the effectiveness, challenges, and potential improvements within Austria's legal framework for hydrogen production. Through this analysis, we aim to contribute to the evolving discourse on sustainable energy practices and the legal landscape that shapes them.
General EU regulation on hydrogen
Currently, comprehensive legal uncertainties impede the accelerated implementation of the hydrogen economy. Under EU law, the production of hydrogen is subject to the strict regime of the Industrial Emissions Directive (IED), which is aimed at a continuous reduction of pollutant emissions.5 In the recent amendment to the directive (Directive (EU) 2024/1785 of April 2024), it was decided to introduce a threshold for hydrogen generated through water electrolysis6: exceptions in the approval process are granted for electrolyzer with a production capacity of less than 50 tonnes per day (Article 10 and Annex I, 6.6 IED).7
In principle, the EU Hydrogen Strategy envisions the following ramp-up for the hydrogen market:
By 2024: 6 GW of electrolyzers and 1 million tonnes of domestically produced renewable hydrogen.
By 2030: 100 GW of electrolyzers and 10 million tonnes of domestically produced renewable hydrogen.
From 2030 onwards: Technologies for renewable hydrogen are mature.8
The REPowerEU plan, which aims for the exit from Russian natural gas well before 2030, also emphasizes the importance of hydrogen in decarbonization. The draft of the EU Hydrogen and Decarbonized Gas Package (revision of the Gas Directive and Gas Regulation) was intially published in 2021. The EU Council and Parliament reached a provisional agreement in December 2023, and it was adopted in April 2024. Key areas of the Hydrogen and Decarbonized Gas Package include several significant measures. First, the differentiation between hydrogen transmission and distribution networks, which facilitates the implementation of a fair and effective unbundling system (both horizontally and vertically) for new infrastructure (Articles 43, 50, 62, 68, and 69 Gas Directive (EU) 2024/17889). Moreover, the package extends exemptions from unbundling and third-party access regulations to existing hydrogen networks (Article 51 Gas Directive (EU) 2024/178810). Additionally, it integrates considerations regarding heating and cooling plans into distribution network development plans, representing a positive step forward in ensuring comprehensive infrastructure development (Article 38 Gas Directive (EU) 2024/178811). Furthermore, the introduction of the European Network of Network Operators of Hydrogen (ENNOH) as an autonomous entity dedicated to coordinating the planning, development, and operation of EU hydrogen infrastructure marks a pivotal advancement in the hydrogen sector (Article 57 Gas Regulation (EU) 2024/1789).12
Additionally, the two Delegated Acts adopted in Parliament and Council in June 2023, as specifications for the REDII,13 define what qualifies as renewable hydrogen (or ‘renewable fuel of non-biological origin (RFNBO)’), and how greenhouse gas savings for all RFNBOs are to be calculated.14 The definition of renewable hydrogen in the Delegated Act (Delegated Regulation (EU) 2023/1184) is applicable to hydrogen without a direct connection to a renewable electricity generation plant and, therefore, with grid connection under the following conditions:
When the generation facility is located in a bidding zone with a renewable share exceeding 90 per cent of gross electricity consumption (minus pumped storage).
When the generation facility is located in a bidding zone with a CO2 intensity of less than 18 gCO2/MJ, along with Power Purchase Agreements (PPAs) with renewable generation facilities and the criteria for temporal and geographical correlation are met. This provision allows hydrogen from power grids with high shares of nuclear energy to be considered renewable. In contrast to the ‘additionality’ criterion (see below), the PPA can also be concluded with existing (even subsidized) facilities.
When energy is sourced during times when otherwise renewable electricity generation facilities must be curtailed (avoided redispatch—to be confirmed by the transmission system operator).
When the criteria for additionality, temporal correlation, and geographical correlation are met:
Additionality: From 2028, hydrogen-producing entities must ensure that the renewable electricity generation facilities (sourced through PPA) for renewable hydrogen are no more than 36 months old. Moreover, there should be no investment or feed-in subsidies for renewable energy generation.
Temporal correlation: Renewable electricity production must be accounted for in the same month as hydrogen production until 2029; from 2030, hourly correlation must be met. Temporal correlation is also considered to be fulfilled if the Day-ahead electricity price in the respective bidding zone is below 20 EUR/MWh (or below 0.36 times the current emission allowance cost).
Geographical correlation: The renewable electricity generation facility must be
(i) in the same bidding zone as the electrolyzer, or (ii) in a connected bidding zone, where the Day-Ahead prices are equal to or higher than in the bidding zone where the electrolyzer is located, or (iii) in an offshore bidding zone connected to the bidding zone where the electrolyzer is located.15
The definition of renewable hydrogen in the Delegated Act also provides for hydrogen with a direct connection to a renewable electricity generation facility, ensuring that:
The renewable electricity generation facility is either directly attached to the production site or the electricity from this facility is sourced through a direct line.
This electricity generation facility is no more than 36 months older than the electrolyzer.
This electricity generation facility is not connected to the public electricity grid, or if it is, no electricity is sourced from the public grid for the electrolyzer (otherwise, the above provisions for hydrogen without a direct connection to a renewable electricity generation facility apply).16
In the case of both a direct connection to renewable facilities and a grid connection, the rules for grid-connected facilities apply. It is explicitly also allowed to use combinations of any of the above criteria to prove renewable hydrogen production. The renewable hydrogen specifications become particularly important within potential funding frameworks, such as the European Hydrogen Bank (see the ‘Funding for hydrogen infrastructure and projects’ section).
General regulatory requirements for hydrogen projects in Austria
This chapter focuses on regulatory aspects specifically for Austria. The ‘Regulation for electrolyzers’ section addresses regulations for electrolyzers and the ‘Regulation for hydrogen grids’ section focuses on regulations for hydrogen grids.
Regulation for electrolyzers
At the national level, there is a lack of consolidation of procedures for facilities falling below the Environmental Impact Assessment (EIA) threshold—often requiring multiple permits from different authorities.17
Under Austrian law, an electrolyzer is fundamentally considered a commercial facility (Section 74 Trade Regulation Act, Gewerbeordnung), which entails corresponding licensing requirements. Additionally, regulations pursuant to Sections 84a ff Trade Regulation Act for controlling the risks of major accidents involving hazardous substances may apply (implementation of the European SEVESO III Directive on control of major-accident hazards involving dangerous substances). In the case of hydrogen, a storage volume above 5 tonnes is sufficient so that the regulation takes effect. Requirements for such Seveso operations include, for example, detailed safety concepts and specific distance regulations.18 The production of hydrogen in IPPC (Integrated Pollution Prevention and Control) plants as outlined in the EU IED (Annex 1),19 such as when derived from biomass or methane, is subject to further Austrian Trade Regulation Act provisions,20 and hydrogen from electrolyzers can also be designated as an IPPC plant.21 The EU Industrial Emission Directive was revised and amendments were adopted in August 2024; however, the revision does not exclude hydrogen from electrolysis.22 Furthermore, facilities with a production capacity exceeding 150,000 t/a (simplified procedure) or facilities in environmentally sensitive areas with a production capacity exceeding 75,000 t/a are subject to EIA requirements.23 In addition, building regulations may also apply.
In terms of hydrogen storage, distribution and transmission system operators are not allowed to be owners of energy storage facilities (which includes electrolyzers, according to, for example, the EU Electricity Directive24) and are also prohibited from constructing, managing, or operating these facilities, as storage services are intended to be market-driven and competitive. Exceptions to this rule have been implemented in Austria under Section 22a Electricity Organisation Act, Elektizitätswirtschafts- und -organisationsgesetz (ElWOG). This exemption allows system operators to construct, manage, and operate electrolyzers if the installation has a capacity of less than 50 MW, the aspect of sector coupling was taken into account in the site selection, and it is a fully integrated network component. Moreover, it is not allowed to be used for balancing or congestion management and serves to maintain an efficient, reliable, and secure network operation. Another exemption is granted if a tendering procedure has failed, in which case a consultation by the regulatory authority is conducted every 5 years.25,26
Regulation for hydrogen grids
A specific regulation for hydrogen pipelines does not yet exist in Austria. If pure hydrogen grids are to be included in the regulation of natural gas grids, this would need to be addressed by the European legislator. However, as natural gas regulation is already extensive, such an approach might hinder the ramp-up of hydrogen infrastructure.27 Regarding the blending of hydrogen into natural gas pipelines, the EU Gas Directive is applicable.28
Concerning the natural gas tax, hydrogen is equated with natural gas in Austria (Natural Gas Tax Act, Erdgasabgabegesetz).29 However, it should be noted that natural gas does not automatically include hydrogen under the Gas Industry Act (Gaswirtschaftsgesetz GWG).30 According to Section 3 Gas Industry Act, the law encompasses provisions for the long-distance transmission, distribution, purchase, or supply of natural gas, regulation of system usage fees, and the determination of other rights and obligations for natural gas companies, as well as the establishment, expansion, modification, and operation of natural gas pipelines.31 In any case, the Gas Industry Act defines:
Renewable hydrogen as ‘hydrogen produced exclusively from energy derived from renewable sources’.
Renewable gas as ‘renewable hydrogen or gas from biological or thermochemical conversion, produced exclusively from energy derived from renewable sources, or synthetic gas produced based on renewable hydrogen’.
Synthetic gas as ‘gas produced based on hydrogen’.32
It still remains to be conclusively determined whether the Gas Industry Act fundamentally includes hydrogen in its provisions (or should include it). Storr33 views this rather critically, although the Renewable Expansion Act (Erneuerbaren-Ausbau-Gesetz, EAG) amendment to the Gas Industry Act introduced Section 7(4), stating that ‘where reference is made in this federal law to the terms natural gas, gas, or biogenic gases, […] these also include renewable gases, other gases, and gas mixtures that comply with the applicable rules of technology for gas quality’.34 In any case, according to Section 4, the aim of the Gas Industry Act is to continuously increase the share of renewable gases in Austrian gas networks (Paragraph 8) and steadily promote the use of renewable gas in the Austrian gas supply (Paragraph 10), or, according to Section 22(1) Z 5, it is the goal of long-term planning to enable the injection and supply of renewable gases.35
The Gas Quality Directive by the Austrian Association for Gas and Water (Österreichische Vereinigung für das Gas- und Wasserfach, ÖVGW) has, since June 2021, set a maximum blend of 10 per cent (volume-based) hydrogen in natural gas networks (previously 4 per cent).36 Through the Renewable Expansion Act, the option for a regulation in the Gas Industry Act (Section 133a) was introduced, allowing for the establishment of a maximum value for the technically permissible proportion of hydrogen in natural gas pipeline systems.37 For long-distance pipelines, the Network Code on Interoperability and the European standard set by the European Committee for Standardization (CEN) are used38.
Austria is clearly positioning itself in the Austrian hydrogen strategy in favour of the demand and priority for pure hydrogen and the development of pure hydrogen networks. Nevertheless, ‘further work is needed on transparency and harmonization of hydrogen tolerances in the European gas system.’39
In the final version of the Integrated Austrian Network Infrastructure Plan (Integrierter österreichischer Netzinfrastrukturplan, ÖNIP) the future hydrogen demand is juxtaposed with potential import corridors and production centres in Austria to assess the necessary hydrogen transmission network capacities in the country.40 As illustrated in Fig. 1, hydrogen pipelines are mainly envisaged at the supra-regional level between major consumption centres (Linz, Vienna, Leoben), partly through new construction and partly through the repurposing of existing natural gas pipelines. Consumption centres distant from the transmission lines (eg in Western Austria) are intended to be served by local electrolyzers. The remaining natural gas network is planned to operate solely with biomethane, and therefore, no blending is anticipated. Austria is envisioned as a transit country in the European hydrogen network (Hydrogen Backbone), particularly through the repurposing of existing natural gas routes (North–South and East–West).
Gas networks defined in the Integrated Network Infrastructure Plan for 2040. Presented are transmission pipelines and distribution networks of levels 1 and 2 (see n 39).
For renewable gases based on renewable electricity, according to the RED II,41 Guarantees of Origin are issued for quantities injected into the public gas network, while Green Certificates are additionally issued under the EAG for off-grid gas used in final consumption or for material purposes. Green Certificates are also recorded in the origin certificate database.42 According to Section 87 EAG, there are also Green Gas Labels as confirmation of sustainable production in Austria. They are issued as an additional attribute to Certificates of Origin or Green Certificates and serve as evidence of meeting the Green Gas quota and the national renewable target according to RED II. They also serve as evidence under RED II, that is, proof of the overall share of energy from renewable sources in the EU's gross final energy consumption for 2030 (also regarding the achievement of a possible Green Gas quota).43 The Green Gas Label is a certification that certain sustainability requirements and criteria for greenhouse gases in the production chain have been met (eg for hydrogen from biomass).44 The Austrian certificates for renewable gases are summarized in Fig. 2.
Certificates for renewable gas in Austria.
The Renewable Gases Act (Erneuerbaren-Gase-Gesetz, EGG), approved by the Council of Ministers and currently in Parliament (as of February 2024), addresses gases produced from renewable sources (eg biomethane and renewable hydrogen) and sets mandatory Green Gas quotas for suppliers until 2030. By 2030, at least 9.75 per cent (or at least 7.5 TWh) of gas quantities sold to end consumers is to be substituted with renewable gases. According to the consultation draft, the Green Gas quota is to be introduced in 2024 at 0.35 per cent and is expected to increase to 15 TWh by 2035. If the quota cannot be met, suppliers are required to pay a compensation amount, initially set at 15 ct/kWh.45
Funding for hydrogen infrastructure and projects
The Austrian hydrogen strategy specifies priorities in Austria for the use of hydrogen: According to the strategy, the preferred areas of application are sub-sectors of industry, mobility, and the electricity system as a flexibility option. The specific objectives of the hydrogen strategy include replacing current fossil hydrogen with renewable hydrogen by 2030, as well as establishing an electrolysis capacity of 1 GW by 2030.
The hydrogen strategy of Austria considers funding and incentives for hydrogen production and infrastructure as essential for a timely market ramp-up. Austria is participating in the International Projects of Common European Interest in the hydrogen sector with a budget of €125 million until 2026. Additionally, companies will be supported in funding applications through the EU Innovation Fund. Furthermore, construction and operating permit procedures, as well as zoning regulations, will be simplified in this regard. Additional funding based on the hydrogen strategy is intended to benefit, among others, industrial businesses (‘Transformation of the economy’, sustainable promotion of transformation processes) and R&D (demonstration plants, living labs, etc).46
With the European Hydrogen Bank, the European Commission has launched an auction-based financing instrument dedicated to directly funding hydrogen production via operation-based incentives, in contrast to investment-based incentives.47 These operation-based incentives are awarded in terms of fixed premiums in EUR per kilogram of hydrogen. The first EU-wide pilot auction closed in February 2024 and offered total support of 800 million euros. Additionally, Germany participated with 350 million euros in a purely national auction (‘auction as a service’).48 In future, Austria also plans to participate in national auctions. According to the recently published draft of the Hydrogen Promotion Act, a total funding volume of 400 million euros will be made available.49 A central requirement, both for the European Hydrogen Bank and national Austrian funding, is that hydrogen projects must comply with the renewable hydrogen criteria as defined in the delegated acts to the RED II (see ‘Introduction’ section).
Besides the direct funding instruments for renewable hydrogen production in Austria, several indirect incentives in terms of, for example, fee exemptions also exist. The amended ElWOG under the EAG package stipulates that no connection fees are required for facilities converting electricity into hydrogen if the following conditions are met:
To be exempt from grid access charges, the facility must have a minimum capacity of 1 MW, must not feed into the gas network, must operate solely on renewable electricity, and must have a grid connection quotient of up to 200 m per MW (Section 54(6) ElWOG).
To be exempt from grid provision charges, the facility must operate solely on renewable electricity, have a minimum capacity of 1 MW, and must not feed into the gas network (Section 55(10) ElWOG).50
Facilities converting electricity into hydrogen are also exempt from ongoing grid usage charges and grid loss charges under Section 111(3) ElWOG if the facility has a minimum capacity of 1 MW and exclusively uses renewable electricity. This exemption applies for 15 years from commissioning.51
According to Sections 73 and 75(1) of the EAG, facilities converting electricity into hydrogen can be exempted or have reduced rates of the Renewable Energy Support Fee and the Renewable Energy Support Contribution (to be specified in a regulation). Again, this applies to facilities with a minimum capacity of 1 MW, exclusively using renewable electricity, and not feeding into the gas network. According to the EAG, blending hydrogen into the natural gas network is therefore not eligible for subsidies.52
Furthermore, considerations could be made to extend privileges for network access for ‘large new infrastructures’, as established for natural gas infrastructure in the GWG, to hydrogen infrastructure.53
According to Section 73(8) GWG, no network usage fee is to be paid for gas taken for the purpose of mixing with hydrogen and then re-injected into the network. Additionally, fees for network access for renewable gas (for biogas plants) are reduced (Section 75(3) and (4) GWG).54
Under the Natural Gas Tax Act (Erdgasabgabegesetz), hydrogen is subject to a natural gas tax of €0.021 per cubic metre. However, hydrogen can be exempt from this tax if it is produced renewably, if it is further used to produce synthetic gas, if no fuels are produced from it or with it, and if sustainability requirements are met (Section 3(2) Erdgasabgabegesetz).55
Impact of the legal framework for an operating location in Tyrol, Austria
This section deals with the impact of the legal framework analysis on the operating location of an exemplary project in Tyrol. The ‘Description of operating location’ section gives an overview of the example system; the ‘Implications of EU regulation on operating location’ section discusses the impact of EU regulation; and the ‘Implications of Austrian regulation on operating location’ section discusses the implications stemming from Austrian regulations on the project site.
Description of operating location
Figure 3 provides an overview of the proposed system concept at the project site in Tyrol. The industry site has a significant local electricity and heat demand, currently supplied via local electricity and heat production in combined heat and power (CHP) plants (approximately 3.5 MWelectric). A grid connection allows us to both draw from and supply energy to the public electricity grid. The energy system can supply additional heat locally by using gas boilers and a Power-to-Heat system. A dedicated photovoltaics (PV) system delivers additional electricity. Energy can be stored in a battery storage and a hot water heat storage unit. Within the expansion scenario examined here, the energy supply of the industrial company is converted to local hydrogen use. On one hand, hydrogen is to be imported via pipelines. On the other hand, local hydrogen is produced via a 2 MW electrolysis unit, which can be expanded to 6 MW in the future. Due to local constraints, the electrolysis unit is thought to be only supplied by the public electricity grid. Hydrogen is stored on-site and delivered to a dedicated hydrogen demand, the CHP generation units, and the gas boilers. The hydrogen demands are locally separated from the production unit, and local pipelines are used to transport the gas from the electrolysis unit to the consumers. In perspective, the system is also extended with heat pumps and a supply line to a local district heating grid.
Representation of the system concept of the project in Tyrol. Hydrogen (H2) components are coloured in blue, electricity components in yellow, and heat components in red.
Implications of EU regulation on operating location
The electrolyzer size of the industrial hydrogen supply is intended to be below 50 MW, and therefore the IED is likely not relevant. In general, the consideration of renewable hydrogen in the IED is questionable irrespective of the minimum size, as no local emissions, regardless of size, are generated.56 The original inclusion of hydrogen in the IED arises from the fact that most hydrogen production today is carried out using unabated fossil fuels, where actual emissions occur.57
As hydrogen is intended to be, at least partially, produced at the local site in Tyrol through local, grid-connected electrolyzers, the grid-connection criteria for the definition of renewable hydrogen become relevant. This is particularly important if such a project is to be eligible for direct funding provided by the European Hydrogen Fund or the Austrian Hydrogen Promotion Act. The CO2 intensity of Austrian electricity in 2020 was 39.7 gCO2equ/MJ, and the share of renewable energy in gross electricity consumption was 78.2 per cent in 2021, thus not satisfying the two first grid-connection criteria defined in the ‘General EU regulation on hydrogen’ section.58 Therefore, meeting the criteria might only be possible by simultaneously meeting the additionality/temporal/geographical correlation criteria. To qualify as renewable hydrogen under the EU directive, a PPA must be concluded with a new, unsubsidized generation facility in Austria, whose production must correspond to the electrolyzer's consumption on a monthly basis until 2029 and on an hourly basis from 2030 onwards. Geographical correlation can, however, also be complied if the Day-ahead price in the bidding zone of the electrolyzer is below the price in the bidding zone of the renewable energy power plant. In this case, no electricity grid congestion between the bidding zones is assumed, and there should be no grid restriction for the renewable energy flowing to the electrolyzer. Table 1 compares the mean Day-ahead prices of Austria with its neighbouring bidding zones for 2023. In this year, only Germany and Czechia had, on average, lower Day-ahead prices. Table 1 also compares the number of hours in 2023, where the Day-ahead price in the neigbouring countries was higher than in Austria. As can be seen, especially in Italy, the prices were higher for most of the year, whereas Germany had more periods with lower prices. For a more detailed evaluation, however, a detailed time series would have to be analysed, as low prices can correlate with high renewable generation. Nevertheless, the prices suggest that renewable energy plant locations in Germany and Czechia might be unfavourable for electrolyzers in Austria.
Day-ahead market parameters of 2023 for Austria and its neighbouring bidding zones. Data are retrieved from the ENTSO-E transparency platforma
| Bidding zone | Mean Day-ahead price (EUR/MWh) | Hours with Day-ahead price above Austria | Hours with Day-ahead price below 20 EUR/MWh |
|---|---|---|---|
| Austria | 102.02 | – | 356 |
| Czechia | 100.79 | 4275 | 588 |
| Germany | 95.04 | 3471 | 671 |
| Hungary | 106.82 | 5265 | 515 |
| Italy (North) | 127.78 | 7717 | 35 |
| Slovenia | 104.33 | 4911 | 535 |
| Switzerland | 107.47 | 4584 | 350 |
| Bidding zone | Mean Day-ahead price (EUR/MWh) | Hours with Day-ahead price above Austria | Hours with Day-ahead price below 20 EUR/MWh |
|---|---|---|---|
| Austria | 102.02 | – | 356 |
| Czechia | 100.79 | 4275 | 588 |
| Germany | 95.04 | 3471 | 671 |
| Hungary | 106.82 | 5265 | 515 |
| Italy (North) | 127.78 | 7717 | 35 |
| Slovenia | 104.33 | 4911 | 535 |
| Switzerland | 107.47 | 4584 | 350 |
ENTSO-E, Day-ahead Prices [12.1.D]—entsoe Transparency Platform [Online]. <https://transparency.entsoe.eu/> accessed 28 February 2024.
Day-ahead market parameters of 2023 for Austria and its neighbouring bidding zones. Data are retrieved from the ENTSO-E transparency platforma
| Bidding zone | Mean Day-ahead price (EUR/MWh) | Hours with Day-ahead price above Austria | Hours with Day-ahead price below 20 EUR/MWh |
|---|---|---|---|
| Austria | 102.02 | – | 356 |
| Czechia | 100.79 | 4275 | 588 |
| Germany | 95.04 | 3471 | 671 |
| Hungary | 106.82 | 5265 | 515 |
| Italy (North) | 127.78 | 7717 | 35 |
| Slovenia | 104.33 | 4911 | 535 |
| Switzerland | 107.47 | 4584 | 350 |
| Bidding zone | Mean Day-ahead price (EUR/MWh) | Hours with Day-ahead price above Austria | Hours with Day-ahead price below 20 EUR/MWh |
|---|---|---|---|
| Austria | 102.02 | – | 356 |
| Czechia | 100.79 | 4275 | 588 |
| Germany | 95.04 | 3471 | 671 |
| Hungary | 106.82 | 5265 | 515 |
| Italy (North) | 127.78 | 7717 | 35 |
| Slovenia | 104.33 | 4911 | 535 |
| Switzerland | 107.47 | 4584 | 350 |
ENTSO-E, Day-ahead Prices [12.1.D]—entsoe Transparency Platform [Online]. <https://transparency.entsoe.eu/> accessed 28 February 2024.
Temporal correlation under the REDII and its delegated acts can also be complied with during periods in which the Day-ahead price is below 20 EUR/MWh. The motivation behind this threshold is that, during such times, renewable energies with zero marginal costs should be pushing fossil energies out of the power market’s merit order, leading to zero-emission electricity from the grid.59 Table 1 compares the number of hours for 2023 in which this was the case. The value of 356 for Austria, corresponding to a capacity factor of 4 per cent, would probably be too low to solely justify an economic operation of the electrolyzer. However, as combinations of several criteria are also possible under the EU directive, these periods could still be exploited.
Implications of Austrian regulation on operating location
The storage volume requiring SEVESO Directive classification (lower tier) is 5 tonnes of hydrogen. This volume is already achieved with an energy storage content of 165 MWh. A 3.5 MWelectric CHP plant with 45 per cent efficiency could then be supplied for approximately 21 h. To enable more continuous operation, larger hydrogen storage units might be needed in order to be able to decouple the electricity consumption of the electrolyzer and the electricity production of the power plant.
To surpass the EIA-mandatory threshold of 75,000 tH2/a, an average hourly production of 8.56 tH2 is required. This corresponds to an electrolysis capacity of 404 MW, assuming 70 per cent efficiency. The EIA criterion for project production capacity is thus not met at the local production site. Since electrolyzers likely fall under the IPPC plant regime, such approval is however necessary.
In case the hydrogen within the project is produced using renewable energies (the definition of energy from the grid is unclear, see EU regulations) and because the connected electrolysis load is greater than 1 MW, the project is eligible for the Austrian exemptions from grid access charges, grid provision charges, ongoing grid charges, and Renewable Energy Support Fee and Renewable Energy Support Contribution.
According to the ÖNIP, no hydrogen pipeline connections on a supra-regional level are to be expected in Tyrol. Therefore, local hydrogen consumption would have to be supplied by local production via electrolysis. However, as there is currently no separate regulation for hydrogen networks in Austria, significant uncertainty exists regarding the regulations of a possible pipeline connection. It is also unclear whether a potential hydrogen pipeline from an electrolysis unit not directly placed at the industrial system would be legally considered as a natural gas pipeline or, at least fall under the Austrian Gas Industry Act (see discussion in ‘Regulation for hydrogen grids section). Since the pipeline will transport pure hydrogen, any regulations regarding blending are, in any case, not applicable.
As the hydrogen in the project is not intended to be injected into a public network, Green Gas Certificates, including the Green Gas Label, are relevant (and not Guarantees of Origin). If a Green Gas Label exists, the certificates can also be traded and thus used to count towards the Green Gas quota for suppliers. There may still be uncertainty about whether EU rules for the definition of renewable hydrogen also apply here, or if the definition according to the Austrian GWG prevails, stating that hydrogen is only considered renewable if it is ‘exclusively produced from energy from renewable sources’.60
Conclusion
This article examined the current regulatory and legal frameworks, as well as the funding landscape for hydrogen projects in Austria. For local hydrogen production via electrolysis, several, often safety-related, regulations must be considered. For hydrogen supply via pipelines, there is still significant uncertainty regarding the legal status compared to natural gas regulation. From a European point of view, the REDII/REDIII and the hydrogen sustainability criteria defined therein are relevant, especially to comply with public funding prerequisites. The regulatory frameworks were studied for a concrete case study of a local hydrogen supply of an industrial site in Tyrol, and relevant legal requirements were identified. It was found that the planned electrolysis size is small enough to be exempt from some stricter legal obligations (Industrial Emission Directive), but sufficiently large to be eligible for several grid fee exemptions. Complying with EU hydrogen sustainability criteria to be eligible for operation-based incentives might only be achievable in Austria with, at least partially, the additionality criteria. However, ongoing renewable energy additions and current trends in electric demand reductions might change compliance with grid criteria in future. Besides further analysing the requirements for complying with these sustainability criteria, future research should also focus on the crucial role of regulatory definitions of hydrogen grids to avoid uncertainty for project developers.
Funding
This research was carried out as part of the NEFI project H2Factory (grant number FO999894489), which is funded by the Austrian Climate and Energy Fund as part of the Energy Showcase Region and the Federal Ministry for Climate Action, Environment, Energy, Mobility, Innovation and Technology (BMK).
Footnotes
EU, ‘Regulation (EU) 2021/1119 of the European Parliament and of the Council of 30 June 2021 Establishing the Framework for Achieving Climate Neutrality and Amending Regulations (EC) No 401/2009 and (EU) 2018/1999 (“European Climate Law”)’, 2021. [Online]. <https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32021R1119> accessed 14 May 2024.
EU, ‘Directive (EU) 2018/2001 of the European Parliament and of the Council of 11 December 2018 on the Promotion of the Use of Energy from Renewable Sources (recast)’, 2018. [Online]. <https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A02018L2001-20240716> accessed 14 May 2024.
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