The EU’s Hydrogen and decarbonised gas market package (2024) aims to support the development of a competitive hydrogen market and the integration of renewable gases into Europe’s energy system. To achieve this, the package extends the role of ACER to include new hydrogen-related tasks.
One of these tasks, set out in the Regulation on hydrogen and decarbonised gas market, requires ACER to issue a recommendation on the methodologies for setting the inter-temporal cost allocation by 5 August 2025 and update it at least every two years.
To inform the drafting of this recommendation, ACER will seek stakeholder input through a public consultation from 10 to 31 March 2025.
What is inter-temporal cost allocation?
Developing a European hydrogen market will require significant infrastructure investment to transport hydrogen from supply sites to end users. However, funding this infrastructure through traditional regulated tariffs (fees paid by network users) could result in extremely high fees for early users, making hydrogen less affordable and potentially discouraging further demand.
To address this issue, the Regulation on hydrogen and decarbonised gas market grants Member States the authority to allow hydrogen network operators to recover infrastructure costs over time through inter-temporal cost allocation mechanisms. These aim to ensure a fair distribution of costs between early and future hydrogen consumers, ensuring that the former are not disproportionately burdened.
ACER’s recommendation will provide guidance to Transmission System Operators (TSOs), Distribution System Operators (DSOs), hydrogen network operators, and National Regulatory Authorities (NRAs) on how to develop and implement these mechanisms effectively.
Brief
On March 10, 2025, the European Union Agency for the Cooperation of Energy Regulators (ACER) initiated a public consultation to inform the drafting of a recommendation on methodologies for setting inter-temporal cost allocation. The consultation aims to provide guidance to Transmission System Operators, Distribution System Operators, hydrogen network operators, and National Regulatory Authorities on developing and implementing mechanisms to ensure fair distribution of costs between early and future hydrogen consumers.
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Purpose
The European Union’s Hydrogen and Decarbonised Gas Market Package 2024 aims to establish a competitive hydrogen market by integrating renewable gases into Europe’s energy system. This package extends the role of the Agency for the Cooperation of Energy Regulators (ACER) to include new hydrogen-related tasks, such as issuing recommendations on methodologies for setting inter-temporal cost allocation.
Effects on Industry
The Regulation on Hydrogen and Decarbonised Gas Market grants Member States authority to allow hydrogen network operators to recover infrastructure costs over time through inter-temporal cost allocation mechanisms. This aims to ensure a fair distribution of costs between early and future hydrogen consumers, making the fuel more affordable and competitive in the market. The extension of ACER’s role is expected to provide clarity and guidance to Transmission System Operators (TSOs), Distribution System Operators (DSOs), hydrogen network operators, and National Regulatory Authorities (NRAs) on implementing these mechanisms effectively.
Relevant Stakeholders
The stakeholders affected by this update include:
- Hydrogen network operators: Responsible for transporting hydrogen from supply sites to end users.
- Transmission System Operators (TSOs): Involved in the transmission of hydrogen across regions.
- Distribution System Operators (DSOs): Responsible for distributing hydrogen within local areas.
- National Regulatory Authorities (NRAs): Regulate and oversee the activities of TSOs, DSOs, and hydrogen network operators.
- European Union agencies: ACER will play a key role in providing guidance and recommendations to these stakeholders.
Next Steps
To inform the drafting of ACER’s recommendation on inter-temporal cost allocation methodologies, a public consultation will be conducted from 10 to 31 March 2025. Stakeholders are invited to provide input through this process. The updated recommendation is expected to provide clarity and guidance for hydrogen network operators, TSOs, DSOs, and NRAs on implementing these mechanisms effectively.
Any Other Relevant Information
The extension of ACER’s role is part of the European Union’s broader effort to support the development of a competitive hydrogen market and integrate renewable gases into Europe’s energy system. The Regulation on Hydrogen and Decarbonised Gas Market aims to create a level playing field for hydrogen producers, transporters, and consumers, making it more affordable and attractive for end-users.
