Hydrogen in Slovakia

1. CURRENT STATE OF HYDROGEN PROJECTS IN SLOVAKIA

Whilst hydrogen projects, hydrogen transport and the development of related infrastructure in Slovakia are in early stages of development, there is an interest from both the public and private sectors to explore the possibilities in this area, which has been supported by the Slovak Ministry of Economy. This Ministry is responsible for the development of an implementation strategy for renewable energy and the overall decarbonisation of the Slovak industry and transport. 

Transport

The automotive industry in Slovakia is the most important sector and driving force of the economy with a 13% share of the Slovak GDP. In 2019 the automotive industry made up 49.5% of Slovakia’s total industrial production, while the export share was 46.6%. Since 2007, Slovakia has been the world's largest producer of cars per capita, producing 202 vehicles per 1,000 inhabitants in 2019. One of the biggest challenges the Slovak automotive industry faces is to reduce its carbon footprint and shift towards low-carbon energy sources, such as hydrogen. In an effort to decarbonise, car manufacturers, for example Kia Motors Slovakia, are considering producing hydrogen powered vehicles in the future.

Accordingly, there are no hydrogen powered vehicles registered in Slovakia at present and a hydrogen fuelling infrastructure for fuel cell electric vehicles (“FCEV”) does not yet exist. 

According to the Slovak Ministry of Economy, the future development and use of hydrogen technologies for transport in Slovakia will be determined by several factors. At present, customer behaviour in Slovakia in relation to the purchase of FCEVs is influenced by the relatively high price of such vehicles compared to vehicles with an internal combustion engine (“ICE”). On the other hand, FCEV prices in the M1 category (the vehicle classification system according to United Nations Economic Commission for Europe) are approximately the same level as battery electric vehicles (“BEV”) in the corresponding size and features. Another economic factor is the fuel price; hydrogen currently has a similar price to petrol and diesel. The price of hydrogen has been stable and recently decreasing due to the reduction of its production costs so this may influence customer behaviour in due course.

Industry

Currently, there are two big producers of hydrogen in Slovakia. These are the chemical plants: Fortischem and Duslo located in Nováky and Šala. Hydrogen produced is used mainly in their own manufacturing processes and is not exported. 

Heating

The Slovak government is considering potential for hydrogen injection into the natural gas grid to displace methane gas consumption and reduce emissions.

The domestic natural gas grid is well-developed (94% of the population has access to natural gas grid in Slovakia) and interconnected with a number of neighbouring countries. The natural gas distribution network provides natural gas to more than 80% of households as well as to commercial buildings. Most of the gas supplied is used for heating. 

Hydrogen blending is not yet utilised or regulated in Slovakia. However, we would expect that heating with natural gas will remain dominant so blending may be attractive for decarbonising heating. 

2. MARKET PROSPECTS FOR HYDROGEN 

The hydrogen market in the Slovakia is in early stages with significant prospects for future growth. The new Minister of Economy stated in July 2020: "Slovakia is an automotive power, so its ambition in the future is to be among the world's leaders in alternative propulsion systems [in road vehicles]. The Ministry of Economy will play a key role in this effort". Much effort has also been put into research and development of hydrogen storage technologies, including by Technical University of Košice, one of the leading institutions in this field. 

Due to the limited use of hydrogen in Slovakia, there has been little by way of private financing to date. There is however public funding available (national and EU) for the development of renewable energy resources, funded by both the State and European resources. 

Slovakia is also considering producing low carbon hydrogen using nuclear energy. With four operational pressurised water reactors in use (a fifth unit is in the construction phase and a sixth in planning), Slovakia expects to produce more nuclear energy than necessary for domestic electricity consumption so could use the excess energy for powering electrolysers to produce hydrogen.

Since most hydrogen used in the chemical industry is currently produced from fossil fuels, decarbonising the industrial sector with low carbon hydrogen is necessary. The Minister of Economy has suggested that low carbon hydrogen produced by Slovak nuclear powerplants could be sold for use in the German chemical industry.  

Finally, Slovakia is considering the introduction of hydrogen powered buses into the Slovak public transport system. Hydrogen powered buses have already been successfully deployed in the other European cities, including the Czech Republic, so would serve as models for the country. 

3. CHALLENGES FACING HYDROGEN PROJECTS IN SLOVAKIA

Lacking infrastructure

The most significant barrier to the rollout of FCEVs in Slovakia is the absence of a network of hydrogen fuelling stations. The Slovak Ministry of Economy has stated that a basic network of fuelling stations in the main transport hubs and clusters will be built by 2023.

With regard to hydrogen blending into the natural gas grid, technical barriers need further consideration. Even though the Slovak natural gas grid is well developed, one of the concerns around hydrogen injection is the possible corrosion of the pipelines in the gas grid in the case of a higher concentration of hydrogen. This matter is now subject to ongoing engineering and scientific inquiries. 

Legislative framework

As in many other jurisdictions, there is no specific regulatory framework in Slovakia for hydrogen technology and projects. 

The main legal provision governing hydrogen is § 2 (4) Act No. 309/2009 Coll. on the Promotion of Renewable Energy Sources and Highly Efficient Cogeneration and on Amendments to Certain Acts, which recognises hydrogen as a source of renewable energy: “for the purposes of this Act, a fuel produced from renewable energy sources (hereinafter referred to as “biofuel”) means (j) biohydrogen, which is hydrogen produced from biomass”. The regulation of hydrogen in Slovakia is discussed in more detail, below. 

4. REGULATION OF HYDROGEN 

Legislation

There is very little legislation that specifically relates to hydrogen projects. Instead, hydrogen projects must navigate the existing legislative landscape which applies to renewable energy projects and gases generally. The most significant relevant laws are:

  • Energy Act No. 251/2012 Coll. and on Amendments to Certain Acts;
  • Act no. 309/2009 Coll. on the Promotion of Renewable Energy Sources and Highly Efficient Cogeneration and on Amendments to Certain Acts; and
  • Act no. 250/2012 Coll. on Regulation in Network Industries.  

The Slovak gas market is regulated by the Regulatory Office for Network Industries, a government administration body for the national regulation of network industries. 

The Slovak Ministry of Economy and its Slovak Innovation and Energy Agency are crucial for further development of hydrogen projects in Slovakia. They lead and coordinate efforts in the field of renewable energy and oversee allocation of appropriate government and European funds. Since March 2020, the development of hydrogen projects and technologies has been promoted by the Minister of the Economy. 

Injection into the gas grid – blending hydrogen into the existing gas networks

The injection of hydrogen into the gas grid is not explicitly regulated at present. Existing laws on injection, transport and use of gas would apply to hydrogen as they do for methane gas. Slovakia has not introduced its own legislation regarding hydrogen blending. Instead, Slovakia is monitoring the efforts of other EU countries which have introduced limits on the injection of hydrogen into the gas grid and are undertaking research to raise the limit to between 20 and 30%. 

Real Estate and Consenting

Major hydrogen projects are likely to be considered as significant national investments which may be subject to faster planning proceedings. Significant investments are defined and regulated by Act No. 175/1999 Coll. on Certain Measures Concerning the Preparation of Significant Investments and on Amendments to Certain Acts. 

In case of building a new site as part of a hydrogen project or rebuilding an existing site for such purpose, all relevant provisions of Act No. 50/1976 Coll. Act on Spatial Planning and Building Regulations (Building Act) must be complied with. 

In relation to storage and production of hydrogen on site, an Environmental Impact Assessment (“EIA”) may be required according to Act No. 24/2006 Coll. on Environmental Impact Assessment and on Amendments to Certain Acts. 

Health and Safety 

Health and Safety relating to hydrogen is not explicitly regulated. However, the following health and safety regulations, that deal with the treatment of dangerous gases, would have to be complied with: 

  • Act No. 124/2006 Coll. on Safety and Health at Work and on Amendments to Certain Acts
  • Act No. 67/2010 Coll. on Conditions for Placing Chemical Substances and Chemical Mixtures on the Market and on Amendments to Certain Acts (Chemical Act)
  • Act No. 128/2015 Coll. on the Prevention of Serious Industrial Accidents and on Amendments to Certain Acts, which lists hydrogen as a dangerous substance.

Everyone involved in the control of handling hazardous chemical substances in the workplace must be familiar with the EU legislative framework for dangerous substances, including health and safety legislation concerning protection of employees from health and safety risks in general and from hazardous substances in the workplace. Also, employers are required to carry out a workplace risk assessment for all safety and health risks, including those arising from hazardous substances, and to lay down appropriate protective and preventive measures.

Transport of hydrogen by road

Slovakia is a member party of the European Agreement concerning the International Carriage of Dangerous Goods by Road (“ADR”). 

The ADR regulates the transport of hydrogen, which is classified as a dangerous good under Annex 5.

Drivers transporting hydrogen in Slovakia must receive appropriate training and vehicles must meet specifications required for hazardous cargoes. 

5. REGULATORY BODIES AND RELEVANT GOVERMENTAL AND NON-PROFIT BODIES 

There is no specific regulatory body which is responsible for regulation of hydrogen projects in Slovakia, but several Slovak ministries, government agencies and local authorities have the development of hydrogen projects on their agendas. 

Regulatory Body

Role

Local Authorities / Town Planning Authority and the District Office

  • Regulates the use of land
  • Undertakes Environmental Impact Assessment

The Office for the Regulation of Network Industries

  • Exercises control over compliance with regulations of the internal electricity market and regulation for internal natural gas market

 

Ministry of Economy

  • Responsible for support of innovations and new technologies and for the energy sector
  • Oversees subsidy schemes for the support of renewable sources of energy and renewables-based means of transport.

Slovak Innovation and Energy Agency

  • Responsible for raising awareness about energy efficiency, renewable energy sources and innovations in all fields of economy and provides expert consulting in those areas.
  • Represents the Slovak Republic before relevant international institutions.
  • Oversees the deployment of national and EU funds to decrease demand on energy, introduce low carbon technologies and grow competitiveness, innovative solutions and smart specialisation of the economy.

The Slovak Renewable Energy Agency (“SK REA”), a non-profit organisation established in 2006 to promote the development of renewable energy sources in Slovakia, is a useful point of reference in relation to future hydrogen projects. The activities of SK REA range from helping to raise public awareness on energy-efficient solutions to providing support in the dialogue between the private sector and politicians, particularly on economic and legislative issues. 

6. UPCOMING DEVELOPMENTS 

Although use of hydrogen is in its early development, there are interesting upcoming developments underway or in planning stages.

In the village of Močenok, the EU has approved funds for the development of a new wind powerplant park with an electrolyser to produce hydrogen. This development will be built next to the chemical factory, Duslo. Once operational, is planned that the factory will no longer have to produce hydrogen for its own needs using natural gases but, instead, will get it from wind electricity. As yet, there has been no confirmed date for construction to begin.

The Slovnaft refinery in Bratislava plans to build a large new hydrogen production plant from natural gas in the coming years. Hydrogen from this production plant will be predominantly used for internal technological processes, including the desulphurisation of oil. However, later production may be used for transport. 

The production of hydrogen vehicles by Kia Motors Slovakia. The owner of Kia Motors, Hyundai Motor Group, has hydrogen cars in its portfolio already. The CEO of Kia Motors Slovakia stated that, in the future, a certain proportion of the production of hydrogen cars could take place in the Slovak factory in Žilina. 

The Slovak Innovation and Energy Agency was ordered by the Minister of the Economy to build 4-8 hydrogen filling stations before the end of 2020. There have also been talks about utilising 11 CNG filling stations operated by the major energy supplier in Slovakia, Slovenský plynárenský priemysel a.s.(“SPP”) to become hydrogen filling stations. 

A hydrogen research centre has been proposed by the Technical University of  Košice to focus on the use of hydrogen to power passenger vehicles. This project has been supported by the Minister of Economy following discussions with the University and, though a timeframe has not yet been established, the project has a good prospect of being established. The intended centre would facilitate both basic and applied research in the production, storage and combustion of hydrogen for the automotive industry. 

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Oliver Werner
Partner (Vienna) I Managing Partner (Bratislava) I Attorney-at-law for corporate law/M&A & compliance
Vienna