AgNes: Network charge reform weighs on electrolyzer ramp-up

The ramp-up of electrolysis capacity in Germany is stalling. Only around 180 megawatts of electrolysis capacity were in operation at the beginning of 2026, although the original expansion target was 10 gigawatts by 2030. At the same time, the industry is facing two regulatory reforms: the national network charge framework (A Allgemeine Netzentgeltsystematik Strom – AgNes) and a planned amendment to the EU Regulation on the internal market of electricity.

The policy brief “Electricity Network Charges and the German Electrolyzer Ramp-Up: Implications of the Ongoing Tariff Reform” by the Institute of Energy Economics at the University of Cologne (EWI) assesses how the planned changes to network charges would affect the production costs of green hydrogen. It is published with funding from the Hydrogen and Molecules funding initiative of the Gesellschaft zur Förderung des Energiewirtschaftlichen Instituts e. V. and was authored by Dr.-Ing. Ann-Kathrin Klaas.

Capacity charges increase production costs by up to 6 percent

The draft determination published by the Federal Network Agency (Bundesnetzagentur – BNetzA) in August 2026 provides for a capacity-based special network charge of 4 to 7 euros per kilowatt and year for electrolyzers producing green or low-carbon hydrogen. In a model-based analysis, EWI estimates the resulting increase in hydrogen production costs at up to 6 percent compared to a reference scenario without network charges. Only about half of this increase is directly attributable to the charges for electrolyzers. The remainder results from planned charges for battery storage and renewable energy plants, which raise electricity procurement costs.

Transitional rule puts projects under pressure to decide

The policy brief takes a critical view of the grandfathering clause in the draft determination: a full exemption from network charges is to apply only to projects that reached their final investment decision (FID) before the publication of the determination, which is planned for January 1, 2027. By spring 2026, more than 3 gigawatts of electrolysis projects in Germany had not yet taken this decision. As neither the final version of the determination nor the exact publication date is known, and the date could still be postponed due to delays in the process, many projects are under pressure to decide on a timeline that is hardly predictable.

“The ramp-up of electrolysis capacity in Germany is at a critical stage. On their own, the planned capacity-based network charges have only a minor impact on hydrogen production costs. However, given the already strained economics of many projects, any additional cost increase or restriction can be the decisive factor against an investment decision,” says Dr.-Ing. Ann-Kathrin Klaas, Head of Research Area at EWI.

EU regulatory developments add further uncertainty

Further uncertainty stems from the European level: in July 2026, the European Commission presented a proposal to amend the Regulation on the internal market of electricity that deletes the article on which the special treatment of electrolyzers has been based so far. If electrolyzers consequently had to pay general industrial tariffs, hydrogen production costs would be up to 2 euros per kilogram higher. The average capacity price for industrial consumers connected to the transmission grid in Germany is 76.7 euros per kilowatt and year, around ten times higher than the special tariff discussed in the AgNes process. A volume-based charge would come on top of this. There is no timetable for the amendment of the EU regulation yet.