Financing Hydrogen Storage Before Demand Exists

Hydrogen infrastructure faces a classic chicken-and-egg problem: storage and transport assets must be developed before demand exists at scale. Across Europe, regulators and future operators are debating how such infrastructure should be regulated and financed.

As discussions were under way between the national energy regulator and future hydrogen infrastructure operators, a gas storage operator wanted to propose a regulatory and financing model for France.

The operator needed a model that would:

• Enable the development of hydrogen storage infrastructure while demand does not yet exist at scale.
• Be credible to the national energy regulator.
• Draw on lessons from other European countries.

Sia carried out a European benchmark and designed a three-part regulatory model:

• European benchmark: benchmarking regulatory and financing models for hydrogen infrastructure development across Europe, including Germany, the Netherlands and Denmark.
• Model design: designing the model's building blocks: cost coverage with possible CAPEX subsidies, commercial revenues, and tariff smoothing through an Inter-Temporal Cost Allocation (ITCA) mechanism.

The result was a full regulatory model presented directly to the regulator:

• A regulatory and financing model designed to support the development of hydrogen storage, backed by clear, high-impact advocacy materials.
• The model presented to the national energy regulator jointly with the client's team.

By combining regulatory expertise, European benchmarks and financial modeling, Sia helps energy companies shape the markets of the future.