标普+公用事业手册2023：西欧管制气体-英

Utilities

Handbook

2023:Western

Europe

Regulated

GasClaire

Mauduit-Le

Clercq,

DirectorFederico

Loreti,

AssociateSept.

20,

2023This

report

does

not

constitute

a

rating

actionContentsKey

RatingDrivers31011Regulated

Gas

UtilitiesRatingsComparison

OfGas

Regulatory

FrameworksComparison

OfRatingDriversRated

Companies

Snapshots384561RelatedResearch

And

AnalyticalContacts2Key

Rating

Drivers–

This

handbook

examines

rated

regulated

gas

utilitiesin

eight

countrieswithin

Western

Europe

wherenatural

gas

plays

an

important

role

in

the

energy

mix,

namely

theU.K.,

Ireland,Germany,

theNetherlands,Italy,France,

Spain,andPortugal.

S&PGlobalRatingsrates

15transmission

anddistribution

systemoperators

(TSOsandDSOs)inthatregion.

We

use

forecasts

fromS&PGlobalCommodity

Insights.–

Through

2030,

we

expect

regulated

gas

operators

in

most

countries

will

experience

a

limited

and

gradualdecline

in

residentialand

industrialdemand.

Government

decarbonization

efforts

focuson

reducing

gas-to-powerevenifgaswillremain

key

tobalancing

energy

markets.–

This,

paired

with

supportive

regulatory

frameworks

across

all

jurisdictions,should

underpin

healthy

andpredictable

cash

flows

for

network

operators

in

the

nextthree

to

five

years.–

However,

we

foresee

a

sharper

drop

in

demand

from

2030,

which

heightensbusinessrisk,

makingleverage

reduction

increasinglyimportant

for

maintaining

creditworthiness.

Asregulatory

periods

end,operators

couldfacehigherregulatory

reset

risk,

depending

onthe

paceoftheenergy

transition.

Regulatorysupport

willbeamajorvariable

including

timeliness

ofcost

recovery,

tariffsetting

changes,

andcompensation

fordecline

ingas

usage.–

A

pickup

in

green

gases

could

reduce

the

risk

of

stranded

assets

for

gas

networks,

but

significantinvestments

andrelated

regulation

areunlikely

thisdecade.

We

see

regional

differences

inthe

paceofdevelopment

andtypicallymore

growthpotential

onhydrogen

forTSOsandonbiomethane

forDSOs.3Deleveraging

Will

Be

Critical

As

The

Energy

Transition

IntensifiesSector

dynamicsEnergy

policiesCurrent

stateChallenges

aheadPossible

mitigantsGas

remains

key

inbalancingenergy

marketsNet-zero

targets

push

forreducedreliance

on

natural

gas

inpowerand

heatingEuropean

Commission’sThirdGas

Package

&

BritishEnergy

Security

StrategyResidential

and

industrial

demanddecline

isgradual

inmost

countriesuntil2030Natural

gasdemand

forresidential

heatingdeclinessharply

from

2030Pickup

ofgreen

gases

couldreduce

risk

ofstranded

assetsGas

demandRegulationdue

toelectrificationTimelypass-through

ofopex

andcapex

protects

remuneration

ofassets

and

investmentsRisk

ofadjustments

torenumeration

toaccountforlower

demandRegulators

tograduallyincentivize

investmentsingreen

gasesStrong

and

predictable

cash

flowssupport

credit

quality

over

the

nextthree

to

five

yearsBusiness

and

financial

risks

could

increase

betweenregulatory

reset

and

potential

pick-up

in

green

gases,makingitcritical

tohaveprioritized

leverage

reduction

overshareholder

distributions

ahead

of2030Rating

impactOpex--Operating

expenditure.

Capex--Capital

expenditure.

Green

gases

include

biogas

(including

biomethane)

and

green

hydrogen.4Residential

Gas

Demand

Decline

Accelerates

From

2030–

Residential

demand

is

a

major

componentRepowerEU

Heat

Pump

Addition

Targeted

Pace

Of

2

Million

Annually

Is

Below

The

Paceof

current

fossil

gas

demand,

and

80%

of

itis

heating.

This

is

especially

true

inthe

U.K.,Germany,

France,

Italy

and

the

Netherlands,the

largest

pools

ofresidential

consumers(about

120

bcm

in2022).Required

To

Decarbonize

The

Residential

SectorAnnual

additions

of

heat

pumps:

historic

sales

and

projectionsMillions

peryear–

Policies

and

surging

gas

prices

boost

heatpumps

additions.

Decarbonization

ofresidential

heatingwillcome

primarily

fromhybrid

heat

pumps,

building

efficiency

and,from

2030

onward,

district

heating.OUTLOOKSAnnualadditions

required

to

fullydecarbonize

the

building

sector

by

adefined

dateAnnualreplacementrequirementby

2050by

2040by

2030Historicsales2022–

But

heatpump

deployment

strategies

muststrengthen,

and

hurdles

be

removed,

toaccelerate

the

drastic

cut

in

residentialdemand

beforeHydronicAir-to-air2030.

Practical

performance

andaffordability

(consumer

acceptability)

needtobeaddressed

on

top

ofsupplyramp-up.2021Hydronic

Air-to-air2020

HydronicAir-to-air–

The

pace

of

gas

boiler

bans

should

largelyshape

actual

fossil

gas

usage

declineand

thus

Transition

Risk

for012345678910infrastructures.Based

on

data

from

IEA,

estimates

from

S&P

Global

Commodity

Insights.5How

Will

Gas

Grids

Prepare

For

Increasing

Challenges

After

2030?–

Gas

remains

critical

in

balancing

the

energy

mix

through

2030,

but

demand

is

likely

to

drop

sharply

thereafterdue

to

EU-impulsed

decarbonization

efforts.

This

decline

will

be

underpinned

by:•••Lower

demand

for

gas

topower,

asembedded

in

EU

&U.K.net-zero

targets;Astrong

decline

in

residential

demand

from

2030,

due

toelectrification

ofheating;

andReduced

industrial

demand,

even

if

someprocesses

remain

hard

to

electrify.–

While

a

pickup

in

renewable

gases

could

reduce

the

risk

of

stranded

assets

for

gas

networks,

we

envision

a

step-up

in

relatedinvestments

only

from

2030.

Uncertainty

remains

on

thetiming,

cost,and

magnitude

of

the

repurposing

of

natural

gas

pipelines.That

said,

we

seeprogress:••The

European

Comission’s

Third

GasPackageplans

tointroduce

hydrogen

regulation

from

2031.REPowerEU

focuses

onreplacing

fossil

natural

gas

in

heating

and

power

generation;

and

targets

10

million

tonnes

(mt)ofgreen

hydrogen

by2030

(plus

10

mtofimports)*.•In

the

U.K.,the

statehas

committed

to

provide

more

clarity

on

hydrogen

regulation

by

2026.–

As

regulatory

periods

end,

gas

network

operators

face

increasing

exposure

to

regulatory

reset

risk,

with

potential

pressure

onremuneration

to

reflect

the

demand

trajectory.–

Future

rating

actions,

or

revisions

of

credit

metrics

expected

at

the

rating

level,

may

reflect

how

deleveraging

paths

raisebalancesheet

flexibility

ahead

of

the

next

investment

cycleand

before

regulation

provides

sufficient

visibility

ongreen

gas

infrastructure.*The

European

Hydrogen

Bank

should

lead

auctions

from

this

fall

for

fixed

payments

for

10

years

per

kilogram

of

green

hydrogen

produced.

Auctions

for

green

hydrogen

in

fall

2023

will

be

backed

by

€800million

from

EU's

Innovation

Fund.6Dependency

Risks

May

Shift

From

Fossil

Gas

To

Hydrogen–

Gas

grids’

credit

quality

emerged

relatively

unscathed

from

Europe’s2022

energy

crisis,

and

Europe

isno

longersignificantlydependent

on

ageopolitically

risky

gassupplier.

Yetacute

gas

supplier

plightsand

economic

energy

challenges

highlighted

thecosts

ofdepending

on

imports.–

Since

2023,

the

EU

is

the

only

major

gas

consuming

region

with

binding

low-carbon

use

targets:by

2030,

more

than

1%ofenergy

usein

transport

and42%

(60%

by

2035)of

hydrogen

usedby

industries

mustberenewable,

equaling

about

5millionmetric

tons

per

year

(mtpa;10

mtpain

2035)according

to

SPCI.–

These

ambitious

targets

are

part

of

broader

REPowerEU

targeted

20

mtpa

renewable

hydrogen

use

by

2030,

of

which

halfimported.

The

20

mtpa’s

energy

equivalent

(660TWh)would

savean

appreciable

63bcmofnatural

gas

orone-sixth

of

currentuse.Germany’sstrategy

updated

in

Julysees

3-4mtpa

2030demand,

over

50%covered

by

imports.–

As

the

EU

gradually

swaps

fossil

natural

gas

for

hydrogen,

what

dependency

risks

does

this

strategy

carry?•Building

a10

mtpa-consistent

infrastructure

is

aconsiderable

challenge,

with

necessarytransport,

storage

anddistributioninfrastructure.

There

is

uncertainty

onregulation

until

2031and

on

technology,

which

has

yettoprove

its

economic

viability.•Renewable

power

feed

will

be

competing

with

thehigher-ranking

goal

ofdirect

electrification:

Producing

just

5mtpa,requiring

about

35GWelectrolyzer

plus

50-150

GWrenewable

generation

capacity,

mayabsorbone-eighth

of

total

EUrenewable

capacity.•

Even

assuming

itcould

produce

10mtpa,

the

EUstillneeds

to

source

the

same

quantity,

forwhichthe

U.K.

and

Norwaywillbe

clearly

insufficient,

generating

anewtype

ofdependency

on

non-European

gassources.7The

Energy

Crisis

Leaves

Demand

Weaker,

Prices

Higher–

Gas

prices

spiked

in

2022

and

until

2025

they

are

set

to

remain

elevated,

at

multiples

of

2019

European

/

future

U.S.

levelsTTF,historicalHenryHub,historicalHenryHubS&PS&PTTFassumption(June'23)TTFfuture(@Aug.4)2019-1H21TTFavg($4.6)E.U.€180/MWh

power-cap-implied

gasprice70605040302010140120100806040200019-Jan19-Jun19-Nov20-Apr20-Sep21-Feb21-Jul21-Dec22-May22-Oct23-Mar23-Aug24-Jan24-Jun24-Nov25-Apr25-Sep26-Feb–

High

gas

prices

translated

in

industrial

demand

destruction,

with

hard-to-abate

like

chemicals,

mining,

and

steel

most

affected.

Seebelowfor

the

structure

ofindustrial

gasconsumption

inEU27

+the

U.K.

in2021

and

2022

(inbcm).202120222520151052121191816161413101010766555433210OtherChemicalsHydrogenproduction

NonmetallicmineralsPulpandpaperRefineriesIronandsteelTransportMachineryNonferrousmetalCement8Regulated

Gas

Utilities

Ratings

|

Western

EuropeLong-termIssuerOutlookStableStableNegativeNegativeStableStableNegativeStableStableStableStableStableStableStableStableStableBusiness

risk

profileExcellentExcellentExcellentExcellentExcellentExcellentExcellentExcellentExcellentExcellentExcellentStrongFinancial

risk

profileIntermediateIntermediateAggressiveAggressiveSignificantSignificantSignificantAggressiveAggressiveAggressiveAggressiveSignificantAggressiveAggressiveAggressiveAggressiveVolatility

tableLowSACPaICRN.V.

Nederlandse

GasunieGas

Networks

IrelandAA-A+Class

Adebt:A-Class

Bdebt:

BBBBBB+Lowa-Lowbbb+bbba-Wales

&

West

UtilitiesFinance

PLC*LowSnam

S.p.A.LowNorthern

Gas

Networks

Ltd.Cadent

Gas

Ltd.BBB+Lowbbb+bbb+bbb+bbbbbbbbbbbbbbb-bbbbbb-bbb-BBB+LowVier

Gas

Transport

GmbHSGN

Ltd.

§BBB+LowBBBLow2i

Rete

Gas

SpABBBLowREN-Redes

EnergeticasNacionais,

SGPS,S.A.BBBMedialMedialMedialMedialMedialMedialEnagas

S.A.BBBFloene

Energias

S.A.BBB-ExcellentExcellentExcellentStrongNorteGas

EnergiaDistribucion,

S.A.U.BBB-Redexis

S.ABBB-Madrilena

Red

de

Gas,S.A.U.BBB-ICR--Issuer

credit

rating.

SACP--Stand-alone

credit

profile.

CRA--Comparable

rating

analysis.

Source:

S&P

Global

Ratings.

*Ratings

are

issue

ratings.

§Southern

Gas

Networks

Plc

and

Scotland

Gas

Networks

PLC.†Formerly

Galp

Gas

Natural

Distribuição

(GGND).9Comparison

Of

GasRegulatory

Frameworks10Key

Features

Of

Western

European

Regulatory

FrameworksU.K.GermanyStrongNetherlandsStrongItalyFranceStrongSpainPortugalIrelandStrongS&P

GlobalRatings’RegulatoryframeworkassessmentStrongStrongStrong/AdequateStrong/AdequateRegulatorOfgemBundesNetzAgenturAuthority

forConsumers

andMarkets(ACM)AutoritàdiRegolazioneper

EnergiaRetieCommission

derégulationdel’EnergieComision

Nacionalde

losMercados

ylaCompetienciaEnergy

ServicesRegulatoryAuthorityCommission

forRegulation

ofUtilitiesAmbienteType

ofregulationWeighted

averagecostofcapital(WACC)onregulatoryassetvalue(RAV)Returnonequity

(ROE)onregulatoryassetbase(RAB),revenue

capNominalWACConRABRealWACConRABRealWACConRAB••Transmission:RAB-basedDistribution:activity-basedformulawithdemandandconnectionpoints••Transmission:RoR

onRABDistribution:

RoRonRAB;

opexrecovery

(price-cap

with

a

fixedandvariablecomponentindexedtoRealWACConRABvariationconnectionpoints

anddemand)Allowedregulatoryreturns•-Averagevanilla

WACC:3.2%

forCadent•Fourthregulatoryperiod

(2023-2027)*:Proposed

RoEfornewinvestments

of7.09%pretax.

5.07%(3.51%post-tax)forold•••Transmission:

3.1%(pre-tax)in2022Distribution:

2.9%(pre-tax)in2022Cost

ofdebtandequity

componentsrecalculatedyearlywithatwo-year

laginIFRS••Transmission:

5.1%(realpre-tax)

untilend-2023Distribution:

5.6%(realpre-tax)

untilend-2023••Transmission:4.25%(realpre-tax)

untilApril

2024•Transmission:5.44%(nominal)

untilend-2026••Transmission:5.29%(base

rateofreturn)Distribution:5.49%(base

rateofreturn

for2022)3.65%

(realpre-tax)as

per

consultationonPC5,forbothtransmission

anddistribution(consultation

doesnotmeanfinaldecision)andSGNSouthern;3.24%

forWWU,

NGNandSGNScotland.Postremovalof25-basis-point

wedge,company-specificadjustmentsarepossible-Distribution:4.1%(real•investmentspre-tax)

untilApril

2024*On

June

7,

2023,

the

BNetzA

proposed

to

increase

RoE

based

on

interest

rate

environment.

This

rate

is

still

subject

to

final

decision

and

would

be

revised

at

the

beginning

of

each

year

starting

2024.

SGN

South--Southern

Gas

Networks.

NGN—Northern

Gas

Networks.

WWU--Wales

and

West

Utilities

Finance.

SGN

Scotland--Scotland

Gas

Networks.

WACC—Weighted-average

cost

of

capital.11Key

Features

Of

Western

European

Regulatory

FrameworksU.K.GermanyNetherlandsItalyFranceSpainPortugalIrelandYes,fullpass-throughwithaboutone-yearlag.Yes,pass-through.Balancingenergysystem

isorganizedat

TSOslevel

viaTradingHubEurope.Annualadjustmentsforhighly

volatilecostitems

(e.g.,

fuelgas).Theregulator

hasallowed

fullpost-calculationofYes,fullpass-throughofenergycosts

forbalancingthe

system

withalmostimmediatecashflowTSO

isresponsibleforbalancingthesystem,

80%ofcosts

foradditionalspot

volumes

arepassedthrough

withaone-year

lag.EnagasGTSYes,fullpass-throughwith

uptotwo-year

lag.ReconciliationPass-through

ofcosts

forbalancing

thesystemacquires

natural

gasinthe

marketincaseofimbalancesandthe

balanceiscalculateddailyandclearedthrough

asettlement

systemevery

week.between

forecastandactualcostswithatwo-year

lagandthe

potentialtoextendrecovery

orgive

backover

alongperiod

ifdivergenceismaterial.energy

costs

fortGasunie(GTS).Partial

recovery

forgasDSOs

from2023onwards.recognition.Inflation

linked?Yes,bothregulatedrevenue

andRAVarelinked

totheconsumerpriceindex

includingowner

occupiers’Yes,thecost

basethatflows

into

therevenue

capisYes,withannualYes,theframeworkprovides

protectionagainstinflation.RABis

calculatedevery

yearatrevalued

historicalcostandusing

anannualdeflator.Revenue

is

alsoinflationlinked.Yes,theframeworkprovides

protectionagainstinflationthroughanNo,notYes,baserateofreturnisadjustedevery

year(intraperiod),

with10-yearPortuguesegovernment

bondyields

evolution.

Theremainingparameters

arefixedforthe

period.OpexisupdatedannuallywithGDPdeflatorminus

efficiencyparameters.Yes,onan

annualbasisrevenueoperatingcosts

arelinked

with

inflation.indexation.Inthecurrentperiod

forgas,theregulatorswitched

fromrealtonominal

returns,so

operatorsreceiveadvancedcashautomaticallyCPI-linked.

Gas

TSOsandDSOsareadjustedannuallyforinflationadjustmentprovided

an

inflationallowance

inthefollowing

regulatoryperiod

only(2027),which

makes

forasubstantiallag.Fortransmissionhousing

costs(CPIH).(consumer

priceindex

[CPI])andrecovered

throughallowed

revenue.mechanism

thatadjustsfor

thedifference

betweenprojectedandrealinflation.RABandauthorized

revenuearebothinflationindexed.flows,

which

meansRABis

notindexedtoinflationannually.however,

someauditedcosts

are

apass-through(electricity,

CO2etc.)Volume

riskNonetovery

limitedNonetovery

limitedNonetovery

limitedNonetovery

limitedNonetovery

limitedOnlyDSOs.Limitedtosome,

dependingoncustomer

base(e.g.,

residentialvolume

is

lessNonetovery

limitedNonetovery

limitedcyclical

thanindustrialbutmoresensitive

toremuneration).12U.K.

|

The

Pace

Of

Decarbonizing

Residential

Heating

Will

Be

Key–

We

estimate

residential

gas

demand

could

decline

by

25%

by

2030

(versus

2022)*,

with

an

acceleration

from

2030

(about50%

until

2040)

reflecting

transformation

of

heating.

Policymeasures

aresignalingthe

startofarapidtransformation

away

fromfossil

naturalgas

asaspace

heatingfuel.

Abanon

gasboilers

innewhomes

will

take

effectin2025

(2029currently

proposed

in

the

EU)andon

all

newgasboilers

in2035.

The

government

targets

decarbonizing

residential

heatingby

installing

600,000

heat

pumps

by2028,

over8xthe

2022

pace.

Further

subsidies

(ontopofthe

current

BoilerUpgrade

Scheme)

are

needed

toaccelerate

the

uptakeand

make

them

cost-competitive

(current

pace

ofinstallation

is72,000

in2022

from

30,000

in2021).–

Industrial

gas

demand

should

be

more

resilient.

The

transition

toblue

hydrogen

will

fuel

demand

forfossil

gasforindustrial/transport

use.

Gas’

role

inthe

powermixshould

halve

by

2030.

Thestateaimstoexitgas-firedpower

generationby

2035

byadvancing

on

offshore

wind

deployment

anddelivering

newnuclear

power.–

Gasoperators

will

benefit

from

supportive

regulation

until

2026,

with

no

exposure

to

volume/inflation

risk

and

full

pass-through

ofshrinkage

costs

(costs

recovered

the

year

after

incurred).

How

theregulator

willadaptremuneration

oftransport

anddistribution

activities

todeclining

natural

gas

usage

will

bekey.–

The

uncertainties

on

the

transition

to

green

hydrogen

and

required

infrastructure

should

remain

until

2026.

The

state

targetslow-carbon

hydrogen

capacity

of

10

GW

by2030,

with

at

least

half

from

electrolysis

(green

hydrogen

and

the

rest

in

blue

hydrogen).Current

public

investment

package

on

clean

energy

amounts

to£375

million

ofwhich

£240million

is

earmarked

for

the

net-zerohydrogen

fund.

By

2026,the

state

has

committed

todesign

new

business

models

and

regulation

to

support

development

ofhydrogentransport

and

storage

infrastructure.–

We

are

monitoring:•

The

pace

of

residential

heating

decarbonization

through

installation

ofheat

pumps

(hybrid

andfully

electricity-based)•

How

green

gas

ambitions

will

be

incorporated

in

the

regulatory

framework

from

2026.*Based

on

data

from

S&P

Global

Commodity

Insights.13U.K.

Gas

Demand

And

Generation

Mix

TrendsResidential

Demand

Could

Decline

By

25%

By

2030

(bcm)Green

And

Blue

Hydrogen

Supplies

Could

Exceed

Domestic

DemandFossilnaturalgas

Greengasownsupply

Lowcarbonnetexport

BluehydrogenResidentialIndustrialandtransportCCGTOther85654525580604020052741514422132019121419688645875371628-338343212-133128-152022202320252027203020232025203020402050Residential

&

Industrial

Demand

Could

Halve

In

The

2030s

(bcm)Gas

Could

Drop

To

17%

In

Power

Mix

By

2030

From

38%

In

2022

(TWh)ResidentialIndustrialandtransportCCGTOtherFossilnaturalgasHydroNuclearOilRenewables60402008006004002000314717328624205017203020402022202420262028203020322034203620382040bcm--Billion

cubic

meters,

TWh--Terawatt-hours.

CCGT--Combined

cycle

gas

turbine.

Hydro

refers

to

hydroelectric.

Source:

S&P

Global

Commodity

Insights,

Low

carbon

net

export

includes

green

and

blue

hydrogen,biomethane.14The

U.K.

Has

A

Strong

Regulatory

AdvantageRegulatory

Advantage

Overview

For

U.K.

Gas

ActivitiesRegulator:Office

of

Gas

andElectricity

Markets

(Ofgem)TSO:National

Gas

TransmissionKey

rated

players:DSOs:

Cadent

Gas,

Northern

Gas

Networks,

Scotia

GasNetworks,

and

Wales

and

West

UtilitiesTotal

expenditure,

regulatory

asset

value

based.

Capitalexpenditure

isset

by

theregulator

atinception

of

theregulatory

period.Tariff-settingmethodology:Low-carbon

hydrogen

capacity

target

of

10

gigawatts(GW)by2030,withat

least

halfcomingfrom

electrolytichydrogen.Green

gas

regulatoryincentives:Gas

Transmission

Regulatory

PeriodsRRI

I

IOO--GTT1

1RRI

I

IOIO-

G-TT222013-20212021-2026Gas

Distribution

Regulatory

PeriodsRIIO-GD12013-2021RIIO-GD22021-202615Germany

|

Residential

Demand

Declines

Despite

Hydrogen

Progress–

We

expect

residential

demand

to

decline

by

about

30%

by

2030

from

2022*

and

industrial

/transport

demand

to

plateau

at2022

historic

low

level.•Residential

heating

is

gradually

moving

away

from

fossil-fuel

with

the

state

subsidizing

hybrid

systemsolutions

(e.g.

upto

20-45%

ofthe

initial

costof

theheat

pump)and

proposed

banning

new

fossil

fuel

heating

by

2025.

Target

is

500,000

new

heat

pumpsannually

by

2024

to

reach

aninstalled

stockof

6million

by

2030.•Industrial

demand

is

likely

toremain

stable

through

2022-2030

despite

gas

supply

risksand

high

market

prices.

Demand

couldbe

less

resilient

with

government

subsidizing

cleaner

industrial

process

in

less

hard-to-abate

industries.−

Gas

grid

operators

benefit

from

supportive

regulation

through

2027,

in

our

view,with

no

exposure

to

volume

or

price

risk,andthe

costbase

being

adjusted

annually

forinflation.

Investments

commissioned

post

2023

benefit

fromaccelerated

depreciationuntil

2045,

front-loading

their

effective

remuneration.

However,

weforesee

limited

investments,

especially

forDSOs.–

Germany

has

the

most

ambitious

targets

and

advanced

strategy

on

hydrogen

in

Europe

(National

Hydrogen

Strategy

updatedin

July

2023).

It

targets

10GWofdomestic

electrolysis

capacity

by

2030(tomeet

demand

of

95-130TWh).

The

state

aims

tofoster

development

oftransport

infrastructure

byprivately

owned

operators

through

incentives

(e.g.

contracts

for

difference);and

setup

astart-up

grid

of

1,800kmof

converted

and

newly

built

hydrogen

lines

via

IPCEI

funding

by

2028,

targeting

atotalhydrogen

backbone

of11,200

kmby

2032.–

We

are

monitoring:•

Legislation

on

heat

pumps

and

thepaceof

implementation;

and•

Progress

in

green

gas

penetration

and

implementation

of

hydrogen

strategy

notably

thestep-upof

alegaland

regulatoryframeworkon

infrastructure

and

advances

on

deploymentof

thehydrogengrid.IPCEI

–

Importabt

Projects

of

Comon

European

Interest.

*Based

on

data

from

S&P

Global

Commodity

Insights.

Sources:

S&P

Global

Ratings,

Federal

Ministry

of

Economic

Affairs

And

ClimateAction

(BMWK),

IEA.

TWh

:

terawatt-hours16Germany’s

Gas

Demand

And

Generation

Mix

TrendsResidential

Demand

Could

Drop

31%

By

2030

From

2022

(bcm)Low

Carbon

Gases

ToJumpTo

30

Bcm

By

2040ResidentialIndustrialandtransportCCGTOtherFossilnaturalgasGreengasownsupplyLowcarbonnetimport100806040200100806040200145311431234304232372746901821852120286918441317363330252023202520302040205020222023202520272030Residential,

Industrial

Demand

Could

Contract

40%

By

20