Annex 4 to the SPC
TERMS OF REFERENCE
„Pre-feasibility Study of “Nordic-Baltic Hydrogen Corridor” – a hydrogen corridor from Finland to
Germany via Estonia, Latvia, Lithuania and Poland.”
March 2023
A. CONTEXT:
• The European Union (EU) countries are currently in the process of dynamic changes related to the energy
transformation and decarbonisation of the European economy. One of the essential elements in
achieving the goals of the EU's climate policy will be the development of green hydrogen production and
usage potential. Hydrogen can be used as a raw material, fuel, energy carrier or energy storage, and
therefore it will be used as one of the key fuels in the EU's energy transformation. However, to enable
the development of the hydrogen-based economy, it is necessary to efficiently transport it from the
production sites to the end users, as well as to secure storage possibilities. Hydrogen transmission
infrastructure also enables market creation as several suppliers and users are able to connect to the
infrastructure.
• Considering that a group of 31 gas infrastructure operators established the European Hydrogen
Backbone (EHB) initiative which visioned inter alia a hydrogen transport corridor from Finland to
Germany by year 2030, through Estonia, Latvia, Lithuania, and Poland. There is a significant potential for
production and use of hydrogen in countries surrounding the Baltic Sea. According to the latest analysis
by the European Hydrogen Backbone initiative, the region has the potential to produce 255 TWh/y of
hydrogen from mainly renewable sources and to become one of the most cost competitive regions in
Europe in terms of hydrogen production costs. As a result, the Baltic Sea may provide up to 38 % of the
10 Mt REPower EU hydrogen production target by 2030.
• Based on that vision gas TSOs of Estonia, Finland, Germany, Latvia, Lithuania, and Poland have initiated
a process to develop a dedicated cross-border hydrogen infrastructure corridor project to connect supply
and demand centres across the region.
• In July 2022, gas TSOs from Estonia, Finland, Germany, Latvia, Lithuania and Poland jointly submitted to
the ENTSOG 2022 Ten-Year Network Development Plan (TYNDP) an investment project assuming the
creation of a hydrogen corridor from Finland to Germany via Estonia, Latvia, Lithuania and Poland
("Nordic- Baltic Hydrogen Corridor”) and expressed their intention to apply for PCI status in accordance
with regulation 2022/869 on guidelines for trans-European energy infrastructure. The corridor concept
is based on assumptions developed in the framework of the EHB ("Corridor D") and it foresees the
construction of a corridor to transport hydrogen produced from renewable and low-carbon sources in
the concerned Baltic Sea countries to supply consumption points and industrial clusters along the
corridor, as well as in the central Europe.
• Development of the Nordic-Baltic Hydrogen Corridor also strengthens the regions energy security as well
as reduces the dependency of imported fossil energy. In addition, when the hydrogen infrastructure
develops further around the Baltic Sea, as envisioned in EHB (“Corridor D”), a strong market region for
H2 can be created enabling access to excellent and competitive renewable energy resources that are
abundantly available in the states around the Baltic Sea. This in turn strongly supports Europe’s energy
transition.
• Considering the above, the TSOs decided to perform a pre-feasibility study for establishing renewable
hydrogen transport corridor from the Nordics via Baltics and Poland to Germany.
B. OBJECTIVES:
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The overall aim of the pre-feasibility study is to define key conditions for the implementation of the crossborder corridor for the transport of renewable hydrogen from Finland through Estonia, Latvia, Lithuania,
Poland to Germany. The findings of the study are to present objective recommendations in the context
of the scope, costs, location, time schedule and economic feasibility of the infrastructure for the
transport of hydrogen from the Nordics via Baltics and Poland to Germany. The corridor project is
expected to be part of the future pan-European hydrogen network and it will constitute a substantive
contribution of the concerned TSOs to the works carried out in the concerned countries and on the
European fora (EU institutions, international industry organizations, market participants, etc.) to enable
the construction of an efficient, large scale hydrogen transmission network connecting renewable
hydrogen suppliers and demand centers across the region as well as enabling creation of an efficient H2
market in the region.
C. SCOPE
• The pre-feasibility Study should contain the results of studies in the following areas:
1. Summary of analyses of the European and regional (DE, EE, FI, LV, LT, PL) energy policies, in
particular in the field of hydrogen-based decarbonisation processes, goals and legal / regulatory
framework / strategies for hydrogen, decarbonisation and hydrogen usage plans, EU’s hydrogen and
decarbonised gas market package, etc. The analytical works are to determine whether and how the
implementation of the project fits in with the strategic goals of European and regional energy
strategies and policies. The outcome of works should present the strategic, political and legal context
of the project, in particular in the view of the ongoing decarbonisation processes and plans of
development of hydrogen-based economy. The conclusions of the works should clearly define
whether the project implementation would be justified in the light of the analyzed documents. The
conclusions of the analytical work should also input and set context for the project development to
best fit EU and national policies and strategies.
2. Analysis of the hydrogen market development potential (supply and demand in 2030, 2040 and
2050). Planned production and hydrogen demand in the region (countries defined in point 1) with a
particular emphasis on the production potential in Finland and the demand potential in Germany.
Conducting a detailed summary of market potential in the field of:
• potential supply, including entities interested in producing hydrogen from renewable and
low-carbon energy sources, e.g. wind farms – offshore, onshore, photovoltaic farms,
hydropower plants, nuclear power plants, etc.,
• potential demand, including hydrogen valleys / clusters, industrial customers, electricity and
heating sector, etc.
The contractor will be tasked with conducting a survey among TSOs to gather market intelligence
information about hydrogen production and consumption projects and planned projects. The survey
results will be used to estimate the level of production and demand for hydrogen, as well as the
interest in its transport (cross-border context - planned export and import directions) and storage.
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The contractor should gather the input provided by the TSOs and data available from other sources
to examine the hydrogen market development potential in the concerned countries.
Conclusions from the inquiry should be supplemented with conclusions from the analyses described
in point 1, i.e. the hydrogen strategies of the countries defined in point 1, the EU decarbonisation
policy (implemented and planned legislation), available external analyses on the hydrogen market
development and hydrogen supply & demand needs, etc. The analysis should also take into account
hydrogen infrastructure plans: EHB, ENTSOG TYNDP (hydrogen), National Network Development
Plans, others.
3. Identification of the key project assumptions.
Identification of the key project assumptions should be carried out in several (at least 2) scenarios.
Proposals for such scenarios should include, inter alia:
a) Optimistic scenario, i.e. a fast path of decarbonisation with extensive use of hydrogen in significant
sectors of the economy (including e.g. industry, transport, electricity and heating) in the EU and
in the region (countries defined in point 1),
b)Conservative scenario, i.e. limited supply and demand for hydrogen in the EU and the region
(countries defined in point 1), i.e. hydrogen market potential limited to sectors considered hardto-electrify, e.g. refinery, steel, chemical, heavy transport, due to the decarbonisation of
economies with the use of other energy sources and carriers.
The key project assumptions that should be defined within the analytical works are in particular:
• the location (routeing) of the hydrogen gas corridor (pipeline and necessary ancillary
infrastructure, including storages, compressor stations, metering stations, etc.), including
potential entry and exit points along the route through the countries defined in point 1,
taking into account the results of analytical work in point 2, in particular potential sources of
renewable and low-carbon hydrogen supply in the region (e.g. wind farms – offshore,
onshore, photovoltaic farms, hydropower plants, nuclear power plants, etc.), potential
centers of hydrogen demand in the region, including e.g. hydrogen clusters / valleys, large
industrial recipients, power and heating generation sector, etc. The scope of work shall be
executed by a desk top study (without the need of physical interventions). New routes and
alternatives shall be identified and evaluated by constraint mapping using routing software
running in an GIS environment or, if this data is not accessible, Google Earth or other readily
available aerial images. The route analysis shall consist at least of analysis of the following
constraints: topography / constructability, geology, hydrology, geohazards along the route,
as well as, if applicable: security along the route, environment and protected areas, social
Impact. It is expected that the desktop study as defined above will enable definition of a
preferred corridor route with a width of 5-10 km. In relevant cases the Contractor should
propose alternative corridors which may be routed in different ways. The routeing design
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should consider all relevant aspects, like e.g.: installation methods, lay radius, approaches,
environmental constrains, as well as potential production and consumption points etc.;
route alternatives analysis. The contractor together with the TSOs should investigate at least
two alternatives depending on technical, environmental, economic, supply, demand, etc
aspects. The analysis will include general characteristics of the area, in which the
infrastructure will be constructed or repurposed, as well as the estimation of costs for each
considered alternative route. The review of the route alternatives shall be performed with
an overall aim to minimise pipeline length and intervention requirements considering the
principles of routeing optimization, such as inter alia: required upstream / downstream tiein locations and consequent definition of the theoretical “straight line” route between
pipeline start and end points, minimizing crossings / fragmentation of existing rights-of-way,
bypass (as far as possible) protected biotopes, nature reserves and protected landscapes,
bird sanctuaries, Fauna-Flora-Habitats, designated water protection areas, large forest areas,
cultural and archaeological monuments, densely populated areas, etc. The optimal routeing
will be accepted by the TSOs.
analysis of the direction of hydrogen flows on interconnection points (unidirectional /
bidirectional) based on an analysis of supply and demand in the region (countries defined in
point 1);
the pipeline capacity based on an analysis of supply and demand in the region in line with
the output of the analysis performed based on point 2 (countries defined in point 1). The
analysis should also consider the potential need to offer buffer storage services, at least in
the initial period of infrastructure operations. The level of capacity and the scope of potential
additional services that go beyond the transmission services, should take duly into account
the need to optimise the costs of infrastructure construction and operation. This task shall
be performed based on a hydraulic modelling / simulations of the hydrogen flow scenarios
(agreed with the Client) with the use of modelling techniques (relevant software). It is
expected that the analysis will take into account also the possible volatility of RES power
generation, which may result in intermittent hydrogen supply when the demand is supposed
to be rather linear;
the capacity and potential location of the hydrogen storage(s) based on the conclusions from
the analysis of the capacity and location of the hydrogen corridor (pipeline), including in
particular possible storage needs to guarantee continuous transit services, as well as the
other necessary ancillary infrastructure, e.g. compressor stations, metering stations, etc.;
basic feasibility criteria ("road map") for the project, including the identification of the
necessary legal framework (technical standards, permitting procedures, regulatory and
financial regulations, etc.) enabling the implementation of hydrogen infrastructure
investments, as well as determination of a reasonable time schedule for the project
implementation (milestones taking into account the development of legal, financial and
organizational framework, including potential model of the organizational structure based
on the applicable legislation, development of the hydrogen market, preparatory works,
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including the process of building a financial structure to establish grounds for an investment
decision, implementation process, including the permitting and construction phases);
preliminary project financing analysis, including:
o estimation of the financial framework for the implementation and operation of the
Project (CAPEX, OPEX, least-cost investments - based on available data). It is expected
that, if possible, the cost estimation will be based on or in line with the recognized
standards of investment cost valuation;
o estimation of transmission charges (tariffs), in particular their initial calculation based on
the costs of the Project (CAPEX, OPEX) and supply and demand analysis, tariff-business
model (long-term contracts, EU’s hydrogen and decarbonised gas market package, other
regulatory mechanisms, etc.), broken down into countries defined in point 1. It is
expected that hydrogen transmission tariffs will be estimated under two variants: 1) per
country (meaning tariffs collected at each interconnection point between member states
along the route), 2) per project (meaning tariffs collected at the entry point and exit
point, without the possibility to collect tariffs at interconnection points between
member states), for relevant tariff models and demand and supply scenarios within an
Excel-based tariff model, set up by the Contractor.
o sensitivity analysis. The analysis will demonstrate how the determined risk factors (e.g.
political, financial, technical, social, environmental, etc) will influence the costs, timeline,
etc of the project. It will be presented as a summary and assessment of the risk factors
and it will describe a methodology of carrying out an analysis including identification of
risk factors, selection of critical variables, determination of the percentage changes in
critical variables, and breakdown of probability of the abovesaid variables.
review of possible sources of project financing (including instruments planned or expected /
necessary at the national and European level), including, inter alia, EU funds1, government
funds, credit funds, etc.
a proposal of a funding strategy with the list of potential sources of financing for the Project,
including e.g. by means of loans, grants and long-term capacity bookings.
analysis of risks related to the implementation of the project ("risk map"):
o business risks, including those related to the plans of the legislative framework
(hydrogen and decarbonised gas market package, proposed lifting of IP tariffs, etc.);
o political, geopolitical and other risks;
impact of the project on the achievement of goals related to the decarbonisation of the
economies (countries defined in point 1 and the EU in general), including:
o impact on energy security;
o impact on the reduction of greenhouse gases emissions, including the fulfilment of
national obligations in this respect;
o impact on the regional energy market (countries defined in point 1), including reference
to the EU policy objectives on energy security, diversification of energy supply,
development of energy infrastructure and the ability to decarbonise economies in an
economically sustainable manner;
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including possibility to obtain the co-financing from the Connecting Europe Facility in line with Regulation (EU)
2021/1153 of the European Parliament and of the Council of 7 July 2021 establishing the Connecting Europe Facility.
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o Impact on economic growth of concerned countries;
o Impact on the development of hydrogen market;
simplified Cost Benefit Analysis (CBA) based on the outcome of own analyses and of both
draft CBA methodologies, i.e. CBA methodology developed by the ENTSO for Gas in line with
art. 11.1 of Regulation (EU) 2022/869 of the European Parliament and of the Council of 30
May 2022 on guidelines for trans-European energy infrastructure, used in the PCI process,
and draft “Harmonised system-wide cost-benefit analysis for candidate hydrogen projects”
prepared by JRC. It is expected that CBA will include also simplified comparison of costs of
transporting hydrogen from Finland to Germany via pipelines versus transporting
comparable energy volumes from Finland to Germany via electric grid.
The CBA should provide the basis for determining the next steps in the project
implementation process.
4. RECOMMENDATIONS
The extensive conclusions and recommendations, based on the outcome of the analytical works
(points 1-3), have to provide the ultimate and clear definition of the project, including necessary
technical, legal, organisational, economic and other aspects determining its feasibility.
D. DELIVERABLES
1. Interim report:
- Summary of analyses of the European and regional energy policies
- Analysis of the hydrogen market development potential
2. Final report:
- Summary of analyses of the European and regional energy policies
- Analysis of the hydrogen market development potential
- Analysis of the key project assumptions
- Recommendations
- Executive summary and presentation on the results of the Pre-feasibility study
3. Final workshop
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