The ongoing hydrogen revolution – business cases for power-to-gas

The energy transition is on the way. Multiple technologies are already mature to help reaching the emission reduction objectives set by the Paris agreement. Hydrogen technologies are one of them. As an energy carrier, it allows to decarbonize transport, heating, and store energy from intermittent renewable energy sources. One of the biggest challenges to enhance the energy transition is to find profitable business cases to integrate these technologies into the energy system.

The EU goal to cut green house gas emissions by 80-95 percent implies reducing transport emissions by 60 percent by 2050. In fact, the mobility sector is particularly difficult to decarbonize in Europe. Hydrogen mobility is an important part of the solution. However, it is facing the chicken or egg problem. On one side, investors are not ready to invest in hydrogen refuelling stations (HRS) yet because there is only a small amount of cars on the road. On the other side, car manufacturers do not want to deploy vehicles in regions with a low density HRS network.  Currently, the stations are financed mostly by Public-Private-Partnerships.

Hydrogen is profitable today

How can hydrogen innovations be lucrative today and in future? A study by Hinicio and Tractebel Engineering financed by the Fuel Cell and Hydrogen Joint Undertaking examines under which conditions Power-to-Gas can be economically viable today (2017) and in 2025. One of the key findings is that cost-effective business cases of hydrogen refuelling stations already exist today. Therefore, the chicken or egg problem could be solved more easily than expected.

Hydrogen is not a primary energy source that is naturally available. One way to produce hydrogen is via water electrolysis, the decomposition of water into hydrogen and oxygen through electricity. In order to achieve low emissions from Well-to-Wheel, the life cycle analysis of transportation fuels, electricity must come from renewable sources with low carbon emissions. As electricity cost is the most influent part in the overall cost of hydrogen, it needs to be as low as possible. Modelling allows to spot the most favourable places in Europe from an electricity point of view. Discount electricity can be received where a large amount of curtailed electricity is available, meaning electricity is produced but the grid cannot take it up, and grid congestion happens.

Next to producing hydrogen for a mobility market, the electrolyser could inject hydrogen into the natural gas grid greening the heating network whilst providing balancing services to the electrical grid operator. The study showcases that the business case of providing hydrogen to a HRS, combined with revenue streams from gas grid injection and flexibility services allow to de-risk the investment of a Hydrogen production plant.

Especially interesting for this business case is the semi-centralized hydrogen logistic model, with regional hydrogen production hubs. These electrolyser plants can be strategically located in areas with locally curtailed electricity available at discounted prices, low grid charges and positioned close to the gas grid in order to avoid expensive connectivity costs.

Realizing the hydrogen mobility across Europe

Hinicio has been developing a unique competence centre in the field of hydrogen energy within Europe since 2007. The region has ambitious plans for a future Hydrogen Economy. Many countries have demonstrated an ambitious Hydrogen mobility roadmap. For example, countries like Germany, France, Denmark and Great Britain have planned to deploy hundreds of HRS over the next decade. The Hinicio-Tractebel study shows that the electrolysis market with the described conditions of profitability in these four countries provides 1300 MW in 2017, which is sufficient to produce the amount of hydrogen planned.

“Hinicio has been developing a unique competence centre in the field of hydrogen energy within Europe since 2007.”

For creating more “sweet spots”, the study recommends to develop a clear regulatory framework of access to curtailed electricity from renewables. Furthermore, grid charges exemption has to be extended to other EU member states. Also, hydrogen injection into gas grids should benefit from the same rules and tariffs as bio-methane injection and system services (especially Frequency Containment Reserves) also accessible for electrolyser plants.

One step at a time, hydrogen technologies demonstrate that they are an integral part in the energy transition and have great potential of being an important cornerstone of the future energy system. Now, the evolution of the regulatory environment is crucial for developing the niche market and make this silent revolution, louder in the near future.

Featured authors: Wouter Vanhoudt, Thibaut De Lacroix, Vanessa Vivian Wabitsch



Study on Early Business Cases for H2 in Energy Storage and more broadly Power to H2 Applications is available at



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