Regulatory framework for hydrogen network

As in other markets, such as electricity, a regulatory framework for green hydrogen is essential for setting clear rules and preventing abuse of power, especially because hydrogen networks can be a natural monopoly. Key principles for hydrogen networks and regulatory frameworks include (ACER, 2021):

• Operation by a regulated entity, which remains neutral;
• A clear governance structure for a regulatory authority to monitor and provide oversight of the regulated entity;
• Transparency that promotes efficient network investments;
• Consumer protection rules (when households are the networks’ users);
• Equal access to all parties without discrimination (third-party access);
• Decoupling (“unbundling”) of the activities between networks and across the hydrogen value chain that can be competitive, preventing a single entity from controlling large parts of the supply chain or network, or having a dominant position.

However, it is important to monitor the market’s evolution in order to maintain fair access and avoid abuse, and implement rules gradually (ACER, 2021; European Commission, 2021).

Regulation of the infrastructure is necessary when a single entity may control large shares of a network. An effective regulatory framework for green hydrogen would prevent the abuse of market power in setting prices or restricting access to networks.