ENERGY LAW AND HYDROGEN INFRASTRUCTURE OWNERSHIP MODELS

1. Introduction

Hydrogen infrastructure ownership law determines who may own, control and operate hydrogen pipelines, transmission networks, storage facilities and terminals. As hydrogen markets develop, ownership becomes important because vertically integrated companies may simultaneously produce hydrogen, own networks and supply customers, creating risks of discriminatory network access and cross-subsidisation.

The European Union provides one of the clearest modern frameworks through Directive (EU) 2024/1788 and Regulation (EU) 2024/1789. The legislation extends traditional energy-network principles—particularly unbundling, third-party access, operator independence, certification and regulatory supervision—to hydrogen infrastructure.

2. Principal Ownership Models

Several ownership structures may be used for hydrogen infrastructure.

Ownership unbundling separates hydrogen transmission ownership and operation from hydrogen production and supply interests. Its purpose is to remove incentives for network owners to favour affiliated suppliers. EU legislation regards ownership separation as an important mechanism for preventing conflicts of interest and discriminatory infrastructure access.

An independent system operator model allows another entity to own network assets while an independent operator controls network operation, access and development.

An independent transmission operator model permits a vertically integrated group to retain network ownership, but extensive organisational, managerial and regulatory safeguards must preserve the operator's independence.

Public, private and public-private ownership structures can therefore exist, provided that applicable unbundling and competition requirements are satisfied.

3. Vertical and Horizontal Unbundling

Article 68 of Directive 2024/1788 establishes rules for the unbundling of hydrogen transmission network operators. The framework is intended to separate network control from commercial hydrogen production and supply interests.

Article 69 addresses horizontal unbundling. Where a hydrogen transmission network operator belongs to an undertaking involved in natural-gas or electricity transmission or distribution, it must generally be independent at least in its legal form. Member States may grant derogations following a positive cost-benefit assessment and regulatory review.

Accounting separation is additionally required under Article 70, reducing the risk that revenues from regulated infrastructure subsidise competitive activities.

4. Existing and Integrated Networks

The legislation recognises that early hydrogen infrastructure may originate from natural-gas networks or vertically integrated industrial systems. Existing hydrogen networks may therefore receive temporary derogations in defined circumstances. However, exemptions can terminate where networks expand significantly, interconnect with other networks or create risks to competition or efficient hydrogen-market development.

This approach balances rapid infrastructure investment against the longer-term objective of establishing neutral network operators.

5. Case Law

Case Name/Citation

Commission v Germany, Case C-718/18, EU:C:2021:662.

Facts

The European Commission challenged Germany's implementation of EU electricity and natural-gas legislation, including provisions concerning vertically integrated undertakings, transmission-operator independence and regulatory authority.

Legal Issue

Whether national rules provided sufficiently effective separation between network operation and electricity or gas production and supply activities.

Judgment

The Court of Justice upheld the Commission's action and found deficiencies in Germany's implementation of EU unbundling requirements.

Legal Principle/Ratio

Effective energy-market regulation requires genuine independence of network operators from production and supply interests so that network access and investment decisions are not distorted by vertically integrated commercial interests.

Significance

Although the case concerned electricity and natural gas, the principle is directly relevant to the EU's newer hydrogen regime, which deliberately extends similar unbundling concepts to hydrogen transmission infrastructure.

6. Related Case

In Staat der Nederlanden v Essent NV and Others, Joined Cases C-105/12 to C-107/12, Dutch rules restricted private ownership and vertical integration of electricity and gas distribution networks.

The Court recognised that measures restricting capital movements may potentially be justified by public-interest objectives such as undistorted competition, consumer protection and security of energy supply, subject to proportionality requirements.

The case demonstrates that infrastructure ownership restrictions can serve legitimate energy-market objectives rather than merely determining property ownership.

7. Regulatory Governance

Modern hydrogen ownership governance therefore combines operator certification, third-party access, transparent tariffs, independent management, accounting separation and regulatory supervision. Regulation 2024/1789 additionally requires cooperation among hydrogen network operators and establishes the European Network of Network Operators for Hydrogen to promote coordinated cross-border infrastructure development.

8. Conclusion

Hydrogen infrastructure ownership law seeks to attract large-scale investment without allowing network ownership to become a mechanism for market foreclosure. The principal models—ownership unbundling, independent operation, regulated integrated ownership and public or private ownership—must therefore be assessed against competition, independence and infrastructure-access requirements. Commission v Germany and Essent demonstrate the broader legal principle that ownership structures in strategic energy networks may legitimately be regulated where necessary to preserve competition, investment neutrality and energy security.